At the beginning of every month, I find it is necessary to look back and review my Pay Per Click (PPC) Campaigns. Although I have emphasized the importance of daily/weekly reviews in my previous posts, monthly reviews are done for two main reasons:
1) Reporting to the client
At the beginning of every month, clients will typically provide you with a budget (See Matthew’s post on Creating a PPC Budget for an eCommerce site). Marketing dollars are allocated at the beginning of every month/quarter for certain channels of marketing, including grass roots marketing tactics such as television, radio advertising, event marketing, digital marketing etc. Businesses are starting to invest more into PPC advertising because they understand that consumers are doing more research online, and although everybody wants to be #1 on Google for certain keywords and phrases, it is not always that simple. In line with your SEO efforts, PPC is the next best thing to allocate budget for. If you can convince the client or your boss the benefits of Search Engine Marketing (SEM), they will have no problem investing some of their marketing budget for your campaigns. Of course, you need to show the results.
What I like to indicate in my reports:
Margins and ROI
As a marketer, my job is to bring in revenue, plain and simple, right? Meh, kinda. A lot of the time, marketing focuses entirely on revenue and are more concerned about the quantity of sales their marketing campaigns generate. But from an accounting perspective, (I am not even close to being an accountant) you have to look at the profitability those campaigns generated. Working directly with business owners and marketers, we have to show these numbers in order to keep budget, or even better, receive more.
To a marketer these numbers look great. The margins show that 13% of what was generated in revenue was spent. But of course, at what point do these campaigns generate profit? Is 13% considered profitable? Leave that up to accounting.
% of Total…
What do I mean by “total”?? Percentage of total sales, percentage of total transactions, percentage of total visits etc. Why is this important? I had a professor at Fanshawe once tell our Operations class during a lecture on forecasting that when looking at a review and seeing that a representative (whether it was a sales rep, or marketing rep) amounts for 30% of your income for that month/quarter, that it may be worth replacing that rep. I thought to myself, really, 30% is not enough in your eyes? Wow, that’s a little cut throat. But then again to his point, it’s about profitability. Hence why I like to show these numbers. The way I see it (because I still disagree with that statement), if I indicate that 20% of total revenue, transaction etc…was generated through PPC advertising, that’s 20% of all those things we could have missed out on for the month.
A great way to make the claim that 20% is enough to keep budget or increase it is by looking at the number of new visits. If 20% of those sales were generated by new visits, your campaigns are converting and acquiring new customers. Which brings me to my next point: customer acquisition.
Cost Per Acquisition
Here is a great way I can get accounting back on my side when you show that marketing dollars are acquiring customers. Look back at overall performance and calculate the Cost per Acquisition (CPA) using the following formula:
ad campaign cost/[number of impressions x CTR x CR]=CPA
or for the more visual learners, here are the actual results of one of my campaigns for a client who is B2C:
$538.67/[38,676 x 0.0247% x 0.022%] = $25.63
Depending on what is the acceptable CPA, the lifetime value of that customer is extremely important to business owners. Show owners, and accounting the CPA, and let them determine if that is acceptable, or if you need to go back to the drawing board.
The second reason I review monthly PPC:
2) Determine What I Need To Do Better
Being a huge sports fan, it always inspires me to watch a player on the NFL network watching their own game film. Jerry Rice, the all time great Wide Receiver would never watch his highlight film after the games. He would watch the tape of passes he dropped (which rarely happened), or the cut he made which put him 1 second shy of being where he needed to be to make a play. Why would he do it? To get better.
What you need to look back at to improve:
Anything above 85% is pretty darn good to me. But looking at the Ad Group or Campaign that only received a 60% doesn’t sit well with myself, the accountant, or the owner. I don’t need to be an accounting wiz to understand that this specific campaign was probably not profitable. I need to do some work.
– Keyword and Ad Performance
In my previous post I went over testing ads against each other to make decisions on how customers and traffic are reacting to your ads. Google Analytics and Adwords records this data, so USE IT! Sorry, didn’t mean to yell 😉
Looking at this ad performance it is quite clear that the first ad is my champion ad. This is where I need to look at the second ad and see what my Quality Score is, how much am I bidding, am I testing landing pages, should I be rotating the ads more frequently, showing the ads 50/50 etc…