What Is Worth?
How do you set your Search CPC bids? Is it based on what everyone else is bidding? Is it based on a feeling for the position you think you should occupy for certain phrases? Do you bid low because of a limited search budget? Or is it based on a complete comprehensive understanding of your return on investment (ROI) and visitor life time value (LTV)?
If you are not doing the latter, its time to wake up to the whole reason why online is a killer channel, its accountability and measurability. Whatever your online business model, if you do not know what a visitor or conversion is worth to you then you will continue to use guesswork to allocate your online marketing budget, so don’t expect stellar results.
Because paid search is so flexible and accountable it is difficult to separate it from a sites underlying performance and business model. Search marketers should be the first to question a sites conversion rate or revenue model, because they really need a visitor or conversion value model to do their job properly.
And don’t think it’s easy to define the value of a click or conversion. Firstly clicks from different sources and for different search phrases will have different values, so this needs to be analyzed and defined. Also basing ROI on the first conversion can also be misleading if that customer goes on to make future transactions or recommends the site to others. Finally what conversion methodology are you using; Direct, Latent, Acquisition or Campaign based conversion? Each methodology will produce quite different numbers and so you need to understand what you are measuring before using it to make marketing decisions.
So start today and work out what a search click is worth to you and then go from there.
Jon Ostler is the Founder and Managing Director of First Rate. First Rate offers services and technology covering areas such as Online Strategy, Search Engine Optimisation (SEO), Search Engine Marketing (SEM), Email Marketing, Performance Marketing, Online Advertising and ROI Tracking.
Jon Ostler is also a regular contributor at Digital Ministry.
Tags: CPC, paid search, pay par click advertising, PPC Advertising, ROI, search engine marketing, sem