October 31, 2007, 12:00 AM

Search Strategy

Five things to consider when evaluating pay-per-click management tools.

For companies just starting out with online marketing, and for many who have been online for years, pay-per-click search is a tried-and-true method of driving traffic to your web site and increasing revenue. To meet the quick deadlines and ambitious revenue goals of the Internet retailer, some marketing executives may be tempted to jump in feet first with a recognizable name like Google AdWords. But search is far more complex these days than it used to be, and e-commerce is a vertical industry with highly specialized requirements. Online retailers really should do their homework before investing in pay-per-click advertising in order to maximize the revenue from this powerful channel.

Overwhelming data

As the search marketing industry has matured, the proliferation of data that must be monitored, managed and acted upon to keep an organization’s search campaigns running optimally can become overwhelming. And as the performance data piles up and your search strategy becomes more multifaceted, so does the need for tools that help manage it all.

There is an abundance of pay-per-click management tools available, but e-commerce retailers must weigh their options and assess their needs carefully in order to determine which tool is right for them. Certain things, however, are universal in their appeal.

These are the top five things to consider when evaluating search management tools.

1. Reporting

Many pay-per-click management systems have a large selection of pre-built reports, but no custom report-writing capabilities. This will invariably become a problem when managing complex search campaigns. Advertisers should have the ability to extract specific data that could have a significant impact on campaign performance. For example, a books retailer may want to query all textbook-related keywords with conversion rates over 5% and over 200 clicks during July to determine where they can get the best returns during the college pre-enrollment season. Without a custom reporting feature, this type of analysis would be difficult, to say the least.

2. Conversion tracking

Assuming that you are optimizing your campaigns to an ROI metric (either cost-per-acquisition or return on ad spend), conversion tracking capabilities become extremely important. There are three options for tracking conversion data with a pay-per-click search management system: search engine conversion tracking, pay-per-click system conversion tracking and third-party analytics conversion tracking. Each option carries pros and cons:

— Search engine conversion tracking is supported by almost all pay-per-click system vendors, making it easily accessible. However, this option is the most limited when it comes to reporting. Raw conversion data, including things like order ID, order amount, IP address, etc., are not available through search engine tracking and therefore cannot be used for other reporting purposes, such as analyzing the click path specific users took to get to a sale. Also, because it does not take into consideration duplicate conversion events due to browser plug-ins or user error, this tracking option can be less accurate. Some browser plug-ins read the HTML code on a web page in much the same way your browser does, causing a tracking pixel to be fired a second time. Visitors accidentally hitting the “submit” button more than once can also lead to false conversions. Moreover, tracking can be a hassle because each search engine requires a separate piece of code, or conversion tracking script, to be added to your web site.

— Pay-per-click system conversion tracking varies from vendor to vendor, which allows you to choose the provider that best meets your needs. It is easily integrated into existing operations and the system vendor can provide support from conversion tracking. Just as the pros vary from vendor to vendor, so do the cons-testing is important to find the right vendor. One common potential problem to look out for is the management, or mismanagement, of duplicate conversion events. Does the vendor allow you to define the amount of time until a cookie expires? Does the vendor only track through a user’s session? Does the vendor use first-party or third-party cookies? These are questions you must address before choosing a provider.

— Last but not least, third-party analytics conversion tracking provides the most detailed reporting on conversion metrics and beyond. Reports on the average time spent on a site, average page views per dollar spent, conversions resulting from multiple channels, etc., can be tracked to give you a more holistic view of consumer behaviors and trends. For example, a consumer may have clicked on a banner ad one day, then on a search ad the next day, then converted. In this situation, the conversion cannot be attributed exclusively to the search ad. This level of detail can provide you with strategic insight that can help you optimize multi-channel campaigns. On the negative side, this option requires additional development work to integrate analytics data with a pay-per-click management system and support from both vendors.

Whatever conversion tracking process your company has decided to adopt, you will want to make certain that the pay-per-click search management system will support it.

3. Managing the long tail

Most automated bid management tools can properly optimize a keyword to meet a specified return on ad spend or cost per acquisition metric. By looking at the conversion rate and average order price for a keyword, it is a simple calculation to determine the optimal cost per click necessary to achieve a target return on ad spend. But, considering that 80% of sales are driven from 20% of keywords, what about the remaining 80% of keywords, often referred to as the long-tail, which may only get three or four clicks per month? You certainly can’t expect that one sale out of four clicks will accurately predict a keyword’s conversion rate at 25%. To manage long-tail keywords effectively, you must group them into portfolios or categories that combined provide the necessary statistical significance.

Why are the long-tail keywords important? Because they can constitute 20% to 30% or possibly more of your total sales volume. Consider the fact that the long-tail often consists of 3- to 4-word phrases which are specific to what you are selling. These specific searches are more likely to convert into sales than the more generic keywords that may be more popular. If long-tail keywords are an important part of your search marketing mix, make sure the system you select can properly manage them.

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