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Paid Search: A Different Perspective


Search Engine Marketing has finally arrived and is putting a major dent into the online marketing budgets of many businesses both large and small. In fact, a study done by SEMPO (Search Engine Marketing Professional Organization) in December 2005, states that in North America “SEM was a $5.75 billion industry in  2005, and will grow to $11.1 billion in 2010.”

Paid Search Marketing has evolved into a multi-faceted business channel where complexity,
relevancy and structure is considered a best practice. During its infancy
stage, we were measuring success based simply on clicks/increased traffic and
CTR%. Then as the paid search engines matured, they started to supply its users
with all kinds of nifty “bells & whistles” that allowed us to try and get
the most out of our budgets. But with all of the tastes and scents that the
engines have been throwing at us, isn’t it time to take it even deeper to find
that “right mix” that really makes sense from a business perspective.

With the birth of Analytics programs such as Omniture’s
Search Center
, we can now track the ROI% performance not only by search engine,
but at the campaign and even keyword levels of each engine. However, quite
possibly, a super-optimized campaign filled with high CTR% & ROI% could in
retrospect, be affecting your business’s bottom line if there is not a clearly
defined (CPA) Cost-per-acquisition and
Cost/Margin
for each and every product or service that is using online
advertising dollars.

Werenotworthy
Have we been so consumed with real-time performance
based analytics and metrics, that on the outside looking in, we have been “blind-sided”
to not focus our attention on the traditional CPA and Cost/Margins to decide
whether the product or service is even “worthy”
of a certain percentage of online advertising dollars? Are these business goals
and benchmarks really being addressed? Are you unintentionally hurting your
bottom line?

Here are some common perceptions:
One would think that driving high volumes of online traffic makes up a successful SEM Strategy. Another would classify
success by not only driving a high volume of qualified traffic, but also
achieving high CTR% and tracking ROI % performance at the campaign and keyword
levels for each engine. But even then, it is enough?

Well, it’s not a matter of performance as much as it is online marketers getting into the
habit of thinking and looking at Cost/Margins and CPA for each and every specific
product or service. Based on these factors and these factors alone, we can then
decide whether it even deserves to spend money on driving qualified traffic,
regardless of the traditional success factors such as CTR% and ROI%.

We need to consider, that with all of the best practices and techniques out there that are
being applied to SEM campaigns, we need to focus on: (1) How much are we willing
to spend to get a customer? (2) How much money are we willing to spend to sell
a specific product/service?

In the scheme of things, as paid search budgets and competition continues to increase
year after year, the idea of looking at the fundamental “offline” business
practices definitely deserves deep consideration, especially as other search
marketing tactics such as SEO become more difficult to win.

Filed under: Paid Search in General

2 Responses to "Paid Search: A Different Perspective"

  1. Greg,
    Would it be possible to contact you via email? There’s a new search engine, http://www.zibb.com, that I wanted to intorduce you to.
    Regards,
    James.

  2. Brian Carter says:

    Perfect point, Greg. I make a similar one at the URL above.
    If the profit margin minus the cost per conversion isn’t positive… it’s a failure!
    It’s somewhat surprising to have to preach the importance of profit, but I see this as traditional marketing butting heads with scientific marketing in the form of online marketing and web analytics.
    Some marketers are always going to think creative is more important than results, I suspect.
    Better for business leaders if they hire fewer of these people though.

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