When judging the success of a paid-search campaign, one strategy is to spend a fixed amount each month: if sales come in, the campaign’s a win. But a more sophisticated approach and the possibility of greater ROI depends on a closer look at the metrics of search marketing, according to a recent report on search metrics from MoreVisibilty.com.
“The constraint on the first strategy is the amount of money that can be spent,” says Joe Laratro, CTO at the search marketing services firm. “The second approach incorporates a much greater degree of understanding of the program, which requires key data points being discovered.”
One such data point central to a deeper understanding of how campaigns are working, for example, is the average dollar amount of each order placed. Understanding that metric is especially useful for marketers just beginning to try to evaluate referring search engines. Average order value varies between natural traffic and paid traffic, but sometimes marketers are able to identify a winning engine across both types, Laratro says. In that case, that engine’s performance can provide a benchmark against which to test other online advertising opportunities such as media buys or e-mail, he adds.
Average order value is important at the keyword level in deciding which words to keep in campaigns, Laratro says. For example, a term may produce good click-through and conversion rates. But if the resulting orders are less than the cost per order—defined as the ad spend divided by the number of orders—a retailer should adjust spending on that keyword or drop it from the campaign, he says.
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