Home furnishings manufacturers, take note. I won't presume to speak for everyone, but I'm pretty sure this will sound familiar to online furniture retailers everywhere:
All the data provided by a manufacturer (who shall remain nameless) for a dining room set to retail for $1,500:
"Asian Hardwoods with Oak Veneers. Deep Nutbrown Finish. 44 x 68 x 88"
Um, OK. Does is have a leaf? (yes, but you have to take a magnifying glass to the picture to learn that). What fabric is used in the chair upholstery? Any features we should know about? Does it reflect any particular style? This is not rocket science, nor do retailers need fancy words; just some basic information. Online, it's the words and pictures that sell the product.
Want to stand apart from other manufacturers? Make it easier for e-retailers to present and sell your products. We know a thing or two about helping home furnishings manufacturers create an effective ecommerce strategy based on real-world experience, not theory.
Friday, January 27, 2006
Thursday, January 19, 2006
PPC Marketing Checklist
4 things to consider when creating a search marketing plan.
Choose PPC media on value, not CPC.
Don't think about your campaigns in cost per click (CPC) terms. If it costs the same to buy 100 clicks at one search engine as it does to buy 1,000 at another, it's tempting to choose the traffic. However, you should buy clicks based on value. The same keyword can generate much higher revenue on one engine than another, for no apparent reason.
The only metric that really matters is sales.
When conversions are difficult or impossible to trace, it's tempting to focus on something you can measure, such as brand awareness or some other "brand lift" metric. However, brand lift should ultimately lead to sales. Only brand lift among potential buyers will correlate with sales; otherwise you're wasting money.
Your media plan must be flexible--don't fall in love with an engine or position.
If you bid with emotions rather than data, you won't make good decisions. An emotional bid is when your CEO insists that "we need to own that term" no matter what. When competitors all bid emotionally, only the search engines win.
Spend carefully and don't assume.
Invest your budget as carefully as you can, and actively question the person signing the checks. Don't assume you know all the objectives of the marketing budget if you haven't asked. Senior executives tend to expect you to read their minds. Don't fall into that trap, and don't ask how I know.
Choose PPC media on value, not CPC.
Don't think about your campaigns in cost per click (CPC) terms. If it costs the same to buy 100 clicks at one search engine as it does to buy 1,000 at another, it's tempting to choose the traffic. However, you should buy clicks based on value. The same keyword can generate much higher revenue on one engine than another, for no apparent reason.
The only metric that really matters is sales.
When conversions are difficult or impossible to trace, it's tempting to focus on something you can measure, such as brand awareness or some other "brand lift" metric. However, brand lift should ultimately lead to sales. Only brand lift among potential buyers will correlate with sales; otherwise you're wasting money.
Your media plan must be flexible--don't fall in love with an engine or position.
If you bid with emotions rather than data, you won't make good decisions. An emotional bid is when your CEO insists that "we need to own that term" no matter what. When competitors all bid emotionally, only the search engines win.
Spend carefully and don't assume.
Invest your budget as carefully as you can, and actively question the person signing the checks. Don't assume you know all the objectives of the marketing budget if you haven't asked. Senior executives tend to expect you to read their minds. Don't fall into that trap, and don't ask how I know.
How Much Should I Bid?
Good question, but before you look at these and other optimization strategies to get the most from your advertising dollars, make sure you've taken a long hard look at how effectively your website encourages prospects to buy from you. Is your website a well-oiled conversion machine? Good, now let's look at your pay per click (PPC) advertising.
How can you approach bid setting in a logical way that ties back to your bottom line? How do you know what your upper limit is for any given term or AdGroup? The answer is to calculate the cost per order (CPO) ceiling that keeps you within your budget for advertising as a % of gross revenue. The easiest way to keep track of this is to look at each category, figure out what the true average ticket sale is, what the true blended margin is, and how much profit you need.
Simple Example:
Category X has an average ticket (or average price, if you don't know the
average ticket) of $100. The margin on average for Category X is
40%, or $40 gross profit per
transaction before marketing
expenses. If you need to make 20% profit, then you have $20 to
spend on advertising for each order.
How can you approach bid setting in a logical way that ties back to your bottom line? How do you know what your upper limit is for any given term or AdGroup? The answer is to calculate the cost per order (CPO) ceiling that keeps you within your budget for advertising as a % of gross revenue. The easiest way to keep track of this is to look at each category, figure out what the true average ticket sale is, what the true blended margin is, and how much profit you need.
Simple Example:
average ticket) of $100.
40%, or $40 gross profit per
transaction before marketing
expenses.
spend on advertising for each order.
Therefore, your CPO ceiling for Category X is $20. If you're spending more than this on a keyword without generating a sale, then you need to cut your bid or eliminate the keyword. If you're using a high-traffic keyword like "furniture" or "digital camera", you'll blow through that in about 3 minutes unless you're bidding a nickel per click. If you have a highly targeted term, you can afford to set your bid high, because these are likely to send a smaller amount of better-qualified prospects to your site.
If you're lucky enough to be selling products that usually convert on the initial click-through, you can just use the CPO calculations provided by nearly all PPC media outlets to gauge whether to raise or lower your bids.
If you can't rely on those numbers, then you need to start looking at ways to track customer interactions that jump from online to phone and back. Why is this so important? Well, what if 80% of your conversions are coming from 20% of your keywords (as is generally the case)? You need to know where to move your bids to get the biggest return on your ad spend.
Is that all there is to it? No, but it's a start.
While you're burying yourself in the mind-numbing detail of trying to optimize your campaigns, don't forget about optimizing your landing pages. In most cases, improving your site's ability to convert browsers to buyers will have a higher ROI than trying to affect conversion from your advertising.
Wednesday, January 04, 2006
Lousy Ad or Lousy Page?
The most attractive feature of direct response online advertising is its "trackability". There are numerous ways to track the effectiveness of your online campaigns down to a very granular level. In spite of this, I know some pretty big players who pay little or no attention to these ROI measures when making decisions about their ad spend.
While this is indeed a head-scratcher, what about the rest of you who dutifully turned on all those various conversion tracking mechanisms, dropped those tracking scripts on your web pages, and laboriously configured your web analytics, and STILL don't have a clear picture of what's working?
If you're selling low-consideration items with an average ticket of under $50, you likely have very accurate conversion stats. If you sell furniture and have 3- and 4-digit average tickets, it's another story.
Why? It's something called "lagged conversion", which just means that the customer doesn't buy the first time they come to your website. In fact, they may visit 3 or 4 times, and call you a couple of times as well, before they finally buy. Unless you have some pretty comprehensive systems in place to deal with this behavior, your conversion rates as reported by Google or Yahoo! will likely be discouragingly low because the tracking data can't follow the customer through all these steps.
The most common way to lose conversion data is when the sale is closed over the phone. Can the customer remember the keyword phrase they typed, or the ad version they clicked on, or even the site they found your ad on? Not likely.
So if you're selling something that invites a large % of phone inquiries, don't immediately assume that your online ads are worthless because of the low conversion % they show. Instead, look at the products that seem to sell strongly over the phone. Are these items easy to order without assistance online, or do they have lots of options to choose from? If people are buying a lot of certain products over the phone, maybe it's becuase they can't figure out how to buy it without help. If so, fix the page!
While this is indeed a head-scratcher, what about the rest of you who dutifully turned on all those various conversion tracking mechanisms, dropped those tracking scripts on your web pages, and laboriously configured your web analytics, and STILL don't have a clear picture of what's working?
If you're selling low-consideration items with an average ticket of under $50, you likely have very accurate conversion stats. If you sell furniture and have 3- and 4-digit average tickets, it's another story.
Why? It's something called "lagged conversion", which just means that the customer doesn't buy the first time they come to your website. In fact, they may visit 3 or 4 times, and call you a couple of times as well, before they finally buy. Unless you have some pretty comprehensive systems in place to deal with this behavior, your conversion rates as reported by Google or Yahoo! will likely be discouragingly low because the tracking data can't follow the customer through all these steps.
The most common way to lose conversion data is when the sale is closed over the phone. Can the customer remember the keyword phrase they typed, or the ad version they clicked on, or even the site they found your ad on? Not likely.
So if you're selling something that invites a large % of phone inquiries, don't immediately assume that your online ads are worthless because of the low conversion % they show. Instead, look at the products that seem to sell strongly over the phone. Are these items easy to order without assistance online, or do they have lots of options to choose from? If people are buying a lot of certain products over the phone, maybe it's becuase they can't figure out how to buy it without help. If so, fix the page!
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