Figuring out how to maximize pay per click advertising is not easy work. The world of pay per click advertising is a complex place. With so many variables affecting each other, such as cost-per-click, click through rate, quality score, and average ad position, just to name a few, managing these moving parts can seem overwhelming. As the Paid Search Account Executive here at FSC Interactive, part of my job is to find ways of achieving this daunting task. Though I am relatively new to the pay per click game, my background in math and statistics offers me some interesting and valuable view points.
To start, let us consider what exactly can be maximized, or in other words, what the goals of someone investing in pay per click advertising might be. It is generally accepted that a pay per click advertiser would want to maximize one of three things:
- Clicks
- Conversions
- Profit
Depending on which one of these you want to maximize, different strategies should be applied, and what you want to maximize depends on the type of service you offer. If you have an e-commerce business that generates a lot of sales online, then it is possible to maximize for conversions or profit. If you are not an e-commerce business or cannot track online sales, then your main goal for pay per click advertising might be to generate traffic to your website. In this case, you would want to maximize clicks. Either way, this question should be considered before you start advertising, because your actions will be guided by the goal you choose.
Now that we know what can be maximized, we have to ask how we can do it. This is where things get complicated. There are many options available and no one practice is considered best. But, in order to even derive a method, we must first examine what variables we can directly adjust. They are:
- Max Cost Per Click Bids
- Quality Score
- Average Ad Position
- Keywords and Negative Keywords
- Ad Content
- Location Targeting
- Campaign Budgets
- Seasonal, Daily, and Hourly Bid Adjustments
- The Website Itself (i.e. Landing Pages)
Now, many of these variables are not numeric. For example, Ad Content directly affects Click Through Rate, but it is not a numeric variable. To determine the quality of these non-numeric variables, they must be tested, over and over again. On the other hand, numeric variables, such as Max CPC Bids and Average Ad Position, offer the convenience of data, which can be collected and monitored over time to reveal trends.
Each one of the variables listed above directly affects volume of impressions, clicks, conversions, cost, and ultimately profit. But, in order to maximize for clicks, conversions, or profit, it is necessary to understand how they are affected by the other variables. To get a basic idea, view and download the FSC search engine marketing flow chart:
Obviously, the flow chart above is not very simple. It is only the beginning, though. Keywords, ads, and landing pages must be tested over time. Data must be collected. Correlation matrices can be made. Seasonal, monthly, daily, and hourly trends can be found. Predictive models can be built. From the predictive model, various scenarios must be tested. And, finally, the whole processes can be optimized. Then, repeat.
Once an idea of the rules or models that govern your AdWords account is obtained, it is possible to set up automated bid managing. There are three main types of bid management systems:
- Rules-based
- Portfolio-based
- Evolutionary
Rules-based bid management systems automate bid changes based on strict rules. For example, if you discover that the optimal ad position for a keyword is 2, then you could set the bid to automatically adjust on a daily basis to keep that keyword at position 2. Portfolio-based systems use theoretical models to reach overall account goals. In portfolio-based systems, not every keyword is subject to strict rules. Instead, the performance of the account as a whole is given priority, so even though a specific keyword may not be optimized, if that causes the account as a whole to be optimized, then it is allowed. The third type, the evolutionary bid management system, is a combination of the first two types. There is no consensus on which type is the best. They each have their advantages and disadvantages. But, to be done efficiently, none of them are easy.
If you know how to do all of these things for your pay per click advertising, then that is good for you. If not, contact FSC Interactive, and let us do the hard work for you, while you watch your pay per click advertising take off.