The downward spiral of search marketing

The great thing about marketing on the internet, especially in search, is how accountable the dollars are. You can spend a few dollars, see what happens, and then decide whether to keep spending there. If you set it up right, you can calculate an ROI on every dollar you spend. “Half the money I spend on advertising is wasted; the trouble is I don't know which half” doesn’t have to be true on the web.

Unfortunately, it’s really difficult to “set it up right”. Some of the most sophisticated clients I’ve seen track sales generated by every keyword, and then they update bids constantly to make sure they get the ROI they want. That’s a good start and way ahead of most internet marketers. Most sites have a median click-to-purchase latency of at least a few days, though, so future sessions need to get attributed to previous keyword purchases – with the right tracking system, that’s an easy step, but most analytics packages don’t do it automatically. More subtly, the purchase of some keywords has an impact on OTHER keywords you purchase. A keyword can be unprofitable by itself but still have enough of an impact to make your campaign more profitable overall. Basically, every search term you buy increases your “branding” and makes the rest of your search terms perform better. Search is the rare place that lets you actually quantify this effect.

Some recent research suggests that you can “leverage non-brand search terms to drive searchers toward brand terms later in the searching and purchase consideration process.” Our own data show some pretty amazing correlations – more detail in another post.

At Clickshift, we’ve seen how ignoring these cross-keyword (and cross-channel – the same thing happens when you buy banners!) effects leads to a downward marketing spiral. A client analyzes his search campaign first by segment then by keyword, and he keeps cutting words and bids so that each keyword (or each keyword’s first session after click!) is profitable. But with many of those cuts, he degrades the whole campaign, making many other words marginally less profitable. Then more words end up below the profitability line, more cuts are made, more words fall off, and on and on. In the end, you’re left with a campaign where every keyword is profitable – but you make less money overall. Perfectly good intentions led to a nice downward spiral. Your campaign looks good – every word is profitable – but you’re missing out on a lot of extra upside.

With good search engine marketing discipline you can avoid the downward spiral. Make sure to keep track of cross-keyword and cross-channel effects!

Related Tags: search engine marketing, online advertising, statistics