The Search Marketing Advisor Newsletter Article:
January 2006, Volume 5, Issue 1

PPC Keyword Evaluation: Why Below Average Doesn’t Have to be Bad

by Michelle Stern, Paid Search Manager, iProspect

So, you’re doing your best to keep the New Year’s resolutions you’ve made – going to the gym, organizing your closet, spending less money, and so forth. But perhaps the New Year also offers the opportunity to make some resolutions regarding your pay per click advertising campaigns.

There are four basic “levers” you can pull to improve your paid search results: ad copy, design and content of landing pages, keyword bid pricing, and keyword selection. Maybe it’s time to clean house at the start of the New Year – evaluate your keywords and stop spending on those that don’t help achieve your campaign goals. The big question is, “How do you know which keywords to keep around?”

Let’s explore the evaluation process of keywords that produce below average return on investment (ROI), but not necessarily negative ROI. And let’s also take a look at keywords that produce little traffic.

Evaluating Keywords with Below Average ROI

Every campaign has keywords whose ROI is lower than the overall ROI. For example, let’s say you run an online clothing store and the site’s ROI goal is 300%. You can safely assume that the store’s name (as a keyword) will have an ROI much greater than 300%, allowing you to bid on more generic keywords, such as “cargo pants,” which may have an ROI less than 300%. If, however, you are able to maintain an overall campaign ROI of 300%, then it’s important to include as many of these non-branded clothing-related keywords as possible to generate revenue volume.

It may be part of a firm’s marketing strategy to always bid on certain keywords, even if these keywords have not only a below average ROI, but a negative ROI. For example, it wouldn’t be surprising if most brokerage houses bid on keywords, such as “financial advisor,” “financial guidance,” etc. This is a branding exercise intended to get consumers to associate their companies with, not only financial products, but services as well. However, it’s important to note that such a strategy should be devised at the beginning of the campaign in order to effectively manage and track performance toward campaign goals.

Evaluating Keywords with Below Average ROI and Little Traffic

What do you do with keywords that garner little traffic? If they’re not generating clicks, then shouldn’t you remove them from the campaign? Not necessarily. It may make perfect sense to keep keywords with below average ROI, even negative ROI, if you don’t have enough data (i.e., clicks) for each one.

Let’s say your campaign’s overall conversion rate is one percent. On average, it should take about 100 clicks before you see a conversion. “Keyword A” may have gotten a conversion on click 14 and has an above average ROI. “Keyword B” has had 12 clicks, but not a single conversion, giving it a negative ROI. Does this mean that Keyword A is better than Keyword B? The answer is that you won’t know until you have at least 100 clicks for each keyword to make this assessment. Due to these keywords’ low traffic, you aren’t spending that much on them, so it makes sense to wait and re-evaluate them after they have more clicks.

In summary, it’s imperative that you evaluate your keywords on an ongoing basis, keeping in mind that there is often value – in the form of revenue volume – in keywords that produce below average ROI, so long as your overall ROI goal is being met. And also keep in mind that keywords that produce little volume often simply need a longer period of time – and more data –to demonstrate their true ROI.

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The Search Marketing Advisor Newsletter Article: January 2006, Volume 5, Issue 1

PPC Keyword Evaluation: Why Below Average Doesn’t Have to be Bad

The Search Marketing Advisor Newsletter Article:
January 2006, Volume 5, Issue 1