By Udayan Bose

The explosive growth of Paid Search Advertising has attracted advertiser masses. Marketers across industries are rushing in to capitalize on this “new-found panacea to their advertising woes” – an option that’s measurable and direct and has the benefits of reaching out to many new potential customer segments that would otherwise have seemed impossible to reach.

The road to success through paid search advertising (PPC Advertising) is not as easy and bright as it might look to a marketer. In fact, we have come across a greater number of PPC advertisers who are “spending more on PPC advertising than the returns they have been able to derive” - than those who are able to consistently get a positive return on their investment.

This article offers tips to the SMBs that are venturing into PPC advertising with the expectation of being “consistently profitable”. We have – for this article – considered only the directly measurable performance aspects of a PPC Advertising campaign like Sales (Units & Revenue) and Return on Advertising Spend (ROAS). The performance aspects like brand lift, that are important but not directly measurable, have been excluded. The advice offered is largely an outcome of more than 80,000 cumulative person-hours spent by our team on PPC Campaign management and optimization and associated research. A conscious effort has been made to keep the content as simple and devoid of jargons as much as possible.

The entire PPC Campaign process can be broadly divided into five stages:

- Strategy Formulation and Setting up of an Execution Plan
- Keyword Research, Development and Selection
- Creative Development and Landing Page Testing
- Keyword Bid Management
- Performance Measurement, Analysis and Optimization

Our experience tells us that adequate focus on all the five stages is a necessity for running an optimal PPC campaign.

Stage#1: Strategy and Execution

We advise an advertiser to write down her goal – overall goal for her marketing plan, how and why PPC advertising fits into the plan and objectives to be achieved by the PPC Campaign. The objectives need to be translated – as much as possible – into measurable numbers. The execution process focuses on the optimal way to achieve the objectives. This includes basic issues like which search engines to advertise on, an assessment of capabilities and available resources (people, infrastructure, technology, in-house expertise, budget, time), aligning the IT, Sales and Marketing, Customer Services departments to the objectives, drafting a checklist of activities and stage specific sub-objectives along with review checkpoints (quality, execution time, etc.), setting up of SOP(define: Standard Operating Procedures) for each campaign stage.
This stage is arguably the most important one in the complete PPC campaign management process as it sets clear targets, timelines, resources, aligns the organization to the importance of the campaign and establishes guidelines for operating optimally.

All the other stages have to be in alignment with the execution plan or stage#1.

Stage#2: Keyword stage

By the end of this stage, you should be able to come up with the first set of potentially optimal keywords (the keywords where you would want your ad to be listed) that “based on available data” and (to a lesser extent) “based on your gut feel” would help you achieve your pre-defined campaign objectives.

To help you build SOP’s for this stage you would want to do:

2a. Industry research: Competition websites - PPC price-performance benchmarks - estimated spends – competition ads and offers - industry trends (seasonality, buyer types, buying cycle, etc)

2b.Analyze your website (yet again!): You need to chart out your focus areas - what is that you want from the PPC Campaign and which sections of your site(s) address the "NEEDS OF THE VISITOR" who comes to your site from PPC ads. After this you should clearly draw up a list of strengths - the areas you would like to focus - and finally have some sort of an idea as to which are the keywords you would want to focus on for PPC campaign

2c.Keyword Research and Generation: Now that you have some idea "what you want to do" you can use tools like KeyWord Discovery tool from Priority Submit, WordTracker, Overture Suggestion tool and Google Adwords Keyword Tool to generate a list of keywords. There are some tools like KeywordTumbler that give you the combinations and tools like SearchSpell that generate misspellings.

The idea here is to generate a comprehensive list of keywords from which you can select the optimal list.

2d.Keyword Selection - Now you have a bunch of need to select the most optimal set...this can be tricky and ideally needs a lot of data testing.

You need to treat each keyword as a potential revenue generator for you that would help you achieve your set objective but has a risk or a certain cost attached with it. Therefore, your budget and your campaign objectives need to be divided on a per keyword basis – each keyword has a target.
(For optimal campaign performance-ideally speaking- keywords can not and should not be considered individually. They should be treated as a “portfolio” where each keyword has a contribution factor associated in terms of costs and returns. However, for simplicity sake and with the assumption that complex and large PPC campaigns are beyond the scope of this article, we choose to avoid discussions on portfolio model)

At the end of this stage you would have a set of keywords, each with an assigned target – clicks/CTR/conversions, etc and a budget. The keywords form – quite literally – your advertising arsenal. These are ready – almost – for the live campaign stage.

If stage#1 and 2 are done properly – with sufficient focus – 50% of your PPC Campaign Performance worries get taken care of!

Stage#3: Creative Development Stage

Now comes a part that's difficult for most and easy for some. The funny part is this phase looks easy to all because of its apparent simplicity and lack of technology influence.

Writing ad copy:
This is a time consuming job and requires expertise and creativity. You may have selected the best set of keywords, but if the copy is not effective, what's the use?? No one would click your ad...and a strict Search Engine like Google would give you a poor score on relevancy (read CTR) and push your site down in the listing. Three things warrant a mention here.

- The need for customization: The other week the NetElixir copy writing team went berserk writing ad copy for a client who had 5,000 keywords on Google and 200 ad groups and wanted 500 unique ad copies. Unique ad copy was needed because of the vast product range of the client, the need for differentiation and need to have multiple ads per ad group to test efficacy.

- Competition Research: It’s advisable to set up a system to regularly check the competitor ads. We would recommend that this is done at least once every week. Other than identifying any change in text and potential differentiators used, this also helps in keeping track of any special offer made by competitor

- Constant Testing: We can not overemphasize this. An “ad-copy performance tracker” that helps you to constantly evaluate how effective each individual ad copy is a very useful system. Just keeping a basic tab on CPC, clicks, conversions, %CTR, %conversions, would help.

The ads have been written and you have in place a reasonably efficient ad copy performance tracking system.

Now you need to specify the "optimal destination/landing page URL's". It’s of no use leading a visitor to a page that does not contain the information she wants. We have observed that 80% of the sites DONOT specify the appropriate landing URL and thereby lose out on conversions.
It’s often useful to design a customized landing page for a campaign. An optimal landing page can have substantial impact on conversions (and therefore ROI).

At the end of Stage#3, your listings are ready for search engine submission and live action!

Stage#4: The Keyword Bid Management Phase

Till very recently and sometimes even now, advertisers think PPC Campaign optimization is only an outcome of efficient bid management.

We beg to differ.

We have found that this stage’s importance has been over-hyped. Efficient bid management resulting in optimal listing placement contributes to a maximum of 25% in final campaign performance improvement (the % denotes the relative importance of this stage in the entire process measured in terms of campaign’s performance enhancement).
For bid management to generate optimal result, the keyword bids are to be changed keeping in mind the performance objectives (targets per keyword, budget per keyword, etc.).
This can only be done by monitoring and changing bids for each keyword so that the objectives specified are attained. In a competitive category like travel the bids can change for the top keywords maybe even 300 times in a day! This can therefore affect your site's listing position and also the performance. Your site might have been in top position at 10am CST but at 10.30am CST, for the same CPC, it might not be there in the top 10! Keeping a round-the-clock vigil is especially important for competitive sectors. Bid management can be done manually if the number of keywords in management is less (100 or less) and if bid managers can work 24/7. Else, bid management tools are advised. Though the number of bid changes that a tool can make is limited (ex. max 24 bid updates in 24 hours per keyword in Yahoo), the tool helps in managing a large number of keywords – something manual systems cannot do efficiently. The choice of bid management software should be determined by individual campaign objectives and available resources and budget. A detailed comparison is beyond the scope of this article.

Side Note: It would be unjust if a brief mention is not made in this article about the menace of click frauds – as per our estimate approximately 12-15% of the budget on an average goes down the drain because of fraudulent clicks. You must have sufficient capability to capture instances of fraud and bring them to Search engine's notice. Also, you must keep a very close watch over the visitor logs and take immediate action. Again, pro-active measures like keeping a constant check over visitor logs (especially keeping a check on sudden spikes in clicks) helps, as an immediate action can be taken to minimize the extent of loss. There are tools and services available that help in monitoring, auditing and reporting the fraudulent clicks. I must mention here that the process of reimbursement by the search engine is often a painful and time consuming process.

Conducting keyword bid management in an efficient and rigorous manner is painful- in competitive industries you have to maintain a 24 hours vigil - no breaks - no off days (the visitor does not recognize off - days).However, if this stage is carried out meticulously, it can have a considerable impact on the final campaign performance.

Stage#5: Performance Analysis and Optimization

Do you know how effective your campaign is? Are you making money? How many additional conversions did you receive after you made an incremental increase in your budget? How many visitors are visiting your site from PPC search engines? What pages on the site are they visiting? How much time they are spending per page? Which links are they clicking? Whats the conversion ratio - click to leads to sales? What's the cost per lead? What’s the campaign’s Cost Per Acquisition? Are you "in the range" compared to competition?

If you don't, either you are not serious about your marketing... or probably you just don't care...

Get one of the numerous analytics tools available in the market TODAY. Or better still, get your tech team to build a basic performance measurement system – customized to meet your requirements.

The campaign is to be optimized based on performance data – review is to be conducted against the set objectives and then appropriate actions are to be taken to minimize the deviation of actual performance from the set objectives. Again, a sophisticated marketer with the ability to measure, analyze and optimize performance on a real time basis has an edge over others. However, even a daily performance measurement and optimization system is adequate for the purpose of a basic PPC Campaign. The most important aspect here is the regularity with which the above operation is conducted.

PPC search advertising is arguably the most powerful advertising choice available to a marketer today (According to Piper Jaffrey (April05), the cost to acquire customers using paid search is lowest at $8.50. This is substantially lower than other medium like Yellow Pages ($20) and e-mails ($60)), however, with increasing competition and entry of bigger players in the space, the costs are increasing quite dramatically every month. It has become extremely important to pay adequate attention to the economics of PPC advertising campaigns. Because, not doing so might quite radically affect your marketing budget and performance.

Have fun and wish you success with PPC.

Udayan Bose is the founder and CEO of Ann Arbor based Paid Search Advertising Performance Management & Optimization firm, NetElixir Inc