Do you want to get the most out of the time and money your company devotes to online advertising? One of the best ways to make certain that you’re maximizing your pay-per-click return on investment is to put your campaign in the capable hands of a professional PPC management service.

3 Reasons You Need Professional PPC Management Services

• Stay Focused on Your Business: Running an effective PPC campaign takes time and daily commitment. If you try to do this yourself, you’ll be taking yourself away from the core tasks of running your business. Using a professional service allows you to keep your efforts directed where they need to be: on building and running a successful enterprise.

• Ongoing Assessment: Pay-per-click campaigns have to be monitored closely and optimized continually to bring about the most profitable results. Even if you’re able to set up your own campaign, chances are you don’t have the time or expertise necessary to monitor the results and make solid data-driven decisions. An expert service can provide the ongoing management that’s necessary to enjoy success with this type of advertising.

• Cost Control: Quality keyword bid management is the key to getting—and keeping—the right keywords at the best price based on the profit they create for your company. Without an expert managing your online advertising every step of the way, it will be difficult (if not impossible) for you to both manage risk and stay on top of this highly competitive, ever-changing aspect of online advertising.

eMarketer recently wrote on industry studies measuring the effectiveness of online advertising.  Over 60% of companies in one study did not believe their current approach measured web strategy effectively.  In another study, less than 40% of respondents had complete confidence that they were measuring the right things.

Why is there so much confusion about measuring online marketing, ostensibly the most measurable activity in the history of marketing?

The truth is that tying online marketing to profits involves a fair amount of complexity, yet if tied to profits, people are very confident in their strategy and metrics.  Here are three reasons why people lack the confidence they should have, and what to do about it:

1. Traditional metrics are often about web server performance, and not about customers and profits.  If your company relies on “hits”, “unique visitors”, or “time-on-site” in its top-level marketing reporting, chances are it has a problem with its web metrics.  At best, these traditional metrics are only early indicators. At worst, they are completely misleading. Web site optimization needs to be focused on measurements of engagement, value, and revenue.

2. Tying marketing to revenue and profit requires ancillary data.  Companies may realize that marketing success metrics lie with revenue, but are unable to tie revenues to marketing because sales and profit figures live in different systems, databases, or departments.  Someone, and probably Marketing, needs to bite the bullet and take ownership of this problem.  The more that these data gaps are filled, the clearer the true measurements of success will be.

3. You need to factor in time. A very common problem in assessing marketing is forgetting to factor in time, whether measuring the time from first visit to action, or from lead to close.  Revenue generated right now should not be measured against current marketing cost because the revenue being generated right now stemmed from marketing done in the past.  Whether that was yesterday or six months ago will be critical in terms of how marketing strategy, tactics, and cost are assessed.  Companies that ignore the time factor will draw incorrect conclusions about cause and effect, will devise misguided strategies based on those conclusions, and will have a very difficult time optimizing their online marketing.

The good news is that companies don’t need to live with bad metrics or uncertainty about their online marketing. Smart metrics allow for smart choices.

Affiliates often advertise on the same search keywords as the companies they work with. In theory, this is a great way to keep products exposed and sales continuous, but also an effective way to drive up bid prices. An example:

The toy company Splash has launched a search campaign for their newest squirt gun, the ICE-Blaster. XYZ Toys is an affiliate that will bolster online ICE-Blaster sales.

Both company’s search campaigns include the brand term ‘iceblaster’. Considering the direct relevance to the name and the highly-targeted traffic the SERP will attract, the cost-per-click (CPC) should be relatively inexpensive.

However, because Splash never established affiliate bidding and position rules with XYZ Toys, both companies instinctively bid for first position, raising the competition of the term and inadvertently increasing each other’s CPC.  Worse yet, both Splash and XYZ are sending search traffic to the same domain, Splash.com. Google will only display one ad per domain on a results page. Because Splash is bidding less on the term, their ad is not being displayed, which creates inconsistencies in impression share, spending and sales.

Splash can avoid raising CPCs and losing impressions by implementing and enforcing strategies such as controlling affiliate keyword lists, coordinating affiliate position targets, and requiring the affiliate to use a separate domain.

A well-designed affiliate strategy can significantly improve your online presence and provide cost-effective sales, but requires planning and coordination in order to be efficient and to allow you to maintain control of your brand.

Successful paid search marketing in the legal vertical begins when profit is reflected in your keyword optimization. Assessing campaign data with the added conclusions of realized clients, case revenue and client cycle will emphasize the effectiveness of individual keywords by giving them a tangible value that matures through its lifetime.

Measuring keyword performance on cost-per-lead (CPL) alone begets misguided bidding strategies. Although top converting keywords may have a low CPL, resulting leads must produce paying clients in order to be profitable.

Tie case revenues to their attributing keywords, developing the quantifiable effectiveness of the keyword over time. However, keep in mind that knowing current keyword values is only part of the assessment process.

Because close rates vary, it is illogical to punish a keyword for poor performance if the leads it produced have not been given the proper amount of time to be realized. Define lead-to-client cycles to avoid penalizing keywords by reducing bid prices based on incomplete data.

Other factors to consider when optimizing performance on revenue generation include assessing value by case and division type, the value of repeat business, expenses (e.g., research and travel time), targeting ads to an audience looking to act rather than conduct research, geography, and performance targets by the various branches of law to account for differing revenue by the case types.

Large ad groups can negatively affect your performance. Poor performing keywords drag down the Quality Score (QS) of better performing keywords in the same ad group. This ultimately impacts impression share and raises click costs.

QS helps determine your actual Cost-Per-Click (CPC). Google assesses the relevance of your keywords, ad text, and landing content, as well as the click-through rate (CTR) of the keyword and ad group. Optimizing an account can be difficult to do with ad groups that include too many keyword themes. To help keep QS up and CPCs down, you will need to draw as straight a line as possible from search query to keyword to ad copy.

Try distributing keywords into smaller, more tightly focused ad groups. There is no “magic” number of terms per ad group, so organize keywords into new groupings based on logical themes. For automated assistance, use the Keyword Grouper tool available in Google’s free Adwords Editor, which can identify keyword themes, create ad groups, and copy existing keywords and ads into them.

Once tighter ad groups are developed, write ad copy focused solely on the keyword themes that include the keywords in the ad group. More specific ad text attracts a more targeted audience.

One way to optimize your Google AdWords Content Network performance is to monitor the domains you are being placed on. Knowing where your clicks are coming from and if they are helping you to be profitable will give you the upper hand in optimizing performance.

Google’s Placement Report shows which domains are hosting your ads and how the placements performed. Keep in mind that impression, click and cost data can be dangerously misleading without conversion data attributing accrued leads or sales to each of the domains.

If Google conversion tracking is installed, conversion data will be included in the report. If you use a separate conversion tracking system, pull a report that includes the referring domain.

First, identify domains not consistent with your service, company or industry. Next, identify poorly performing domains by calculating each domain’s cost-per-acquisition and projected profit. Keep in mind that the Content network often requires more flexible expectations than the Search network due to its lower volume. Block these sites immediately to avoid further wasted spend.

To block domains, head to Google’s Tools page and choose Site and Category Exclusions. There you can add the domains to exclude.  Your CPA should improve.

Here‘s how to leave profitable business on the table:

1. Ignore offline leads/sales

Most companies advertising on the web can accept phone calls, and often these calls result in the most valuable sales, partner relationships, or opportunities.  Ignoring this activity when evaluating PPC performance can lead to keywords that result in calls being poorly positioned and therefore unable to take advantage of the highest volume of truly profitable activity.  Track your phone activity and record the method of company contact in your customer/lead database. Use this information to help you evaluate your PPC spend.

2. Be literal about tracked leads or sales

There is always uncertainty in web marketing, even with highly trackable Pay-Per-Click marketing.  A percentage of people who see PPC ads won’t click on them, opting instead to visit the advertised site by typing in the domain name (this is “No Referrer”, or “Direct” traffic).  In a consumer campaign that number may equal 10%-20% of the tracked PPC traffic, however with a highly technical B2B audience, that may grow to 50%-100. Excluding No Referrer/Direct actions from your analysis means the PPC numbers will always be conservative; it also gives a false sense of the actual return on PPC spend.

3. Use average values

Average values are the enemy of a performance-based Pay-Per-Click program.  Evaluating your PPC program in aggregate, or by ad engine, means missed opportunities.  You are allowing low-performing terms/ads/networks to drag down the positioning of your best performers.  Be granular.  Unless you allow the best performing pieces of your campaign to be evaluated independently, you won’t tap into the high value and the higher volume that you get in high ad position on your best terms.

4. End assessment at the web site

The interaction with the web site is the beginning of the sales conversation, not the end. If you are not feeding post-lead or post-sales data back into your campaign optimization, you are likely missing opportunities to optimize on any number of things that relate to true profitability. Yes, it is hard.  Do it anyway.

5. Don’t stay in contact with leads/customers

You just paid X dollars to capture a lead.  Why only have one conversation with them?  Companies that lead the way in maximizing the return from their Pay-Per-Click investment nurture the leads that don’t lead to immediate sales.  Keeping in touch with them will keep your company on their radar.  A percentage of aged leads will convert down the road, which raises the return value of the marketing you have already paid for.

Dan Friedman at Google recently posted that conversion rates don’t vary much by position.  This is one of the few times where Google has posted an analysis of this type with which we disagree.  We have conducted a study that looked at conversion based on individual keywords in varying positions and analyzed the conversion trends.   We came back with several conclusions:

1. First position will generally have significantly worse conversion rates than lower positions.  We believe that this is because of what we call “reflex clicking”, which simply means that a certain segment of the population will always click on the first sponsored link even if the search result is clearly un-targeted to their need.  Whether first position is a good decision for any keyword is determined by whether the substantial increase in volume at this position improves aggregate profitability given the higher cost of acquisition created from the combined increase in click cost and lower conversion rate.

2. For most campaigns, conversion rates improve as position declines, down to about 4th-6th position, where it levels out.  However, this improved profitability on a per-unit basis is offset by a significant loss in volume as position drops. Campaigns managed solely on a per-transaction CPA basis will likely undervalue keywords because the volume component will be ignored. Again, aggregate net profit is the right metric to look at.

3. For some markets, a high position sensitivity means a drop in both volume and conversion rate below a certain position. These position-sensitive campaigns can be dangerous, as your cost-per-action will rise considerably as you drop below the optimum converting position.  For this type of campaign (and many financial services or lead generation campaigns fall into this category), it may be necessary to pause keywords that are unprofitable at the optimum position while conversion improvement is addressed through landing page/site testing.

So why are our findings different than Google’s?  Our guess is that this is one of those cases where evaluating performance across all advertisers can be misleading.  The trick to evaluating position influence on performance is to isolate the analysis to the same keyword/ad and vary only position.

The big news all over search land is the just-inked deal between Microsoft and Yahoo to combine search delivery and ad-selling forces in order to combat Google.

The deal makes sense for all parties.  Yahoo gets better search technology by powering their web search properties with the Bing algorithms, and Microsoft taps into a network that is many multiples larger than its own.

From our point of view this is mostly good news.  Better, more relevant search results will make the Yahoo/MSN ad network that much more valuable, and hopefully provide a better qualified audience, especially in markets like high tech, where the valuable portion of the audience has tended to use Google.  More volume in the network also means we can perform faster performance assessment and testing, and more rapid optimization.

The only worrisome note is the talk of centralizing ad sales on the Microsoft AdCenter platform.  AdCenter has always been much more difficult to manage than AdWords, or Yahoo’s Panama platform, however API-driven tools may largely make these differences moot for agencies (aside from their development teams). Should AdCenter be the ad management platform of choice, expect to see small and local advertisers alienated by any migration away from the Panama platform.  We would strongly suggest that Yahoo/Microsoft integrate Panama as the ad management platform of choice for the combined network.

With an estimated 24 months of integration to execute this almost-a-merger, we don’t see any rapid changes in daily management, but the road ahead will be interesting as Yahoo and Microsoft address the thorny details implicit in this deal.

I have received so many links to Tuesday’s New York Times article on click fraud “Per-Per-Click Web Advertisers Fight Costly Fraud” from people that my inbox is full.

Pay-per-click advertising is on the rise.  As reported in the article, this is the only form of advertising that grew during the economic debacle that was 2008.  The attraction of this highly measurable form of advertising is more keen now than it ever has been, as companies shift their marketing dollars to the most accountable form of advertising.

It’s no surprise that the lure of those dollars attract the nefarious, with 17% of all clicks in 2008 deemed fraudulent per Click Forensics, according to the article.  The search engines are trying to keep up. They continue to improve their click fraud algorithms and do catch a fair amount of it.  It’s not a perfect science, however, and while they do offer credits for fraudulent traffic, it is still incumbent upon the advertiser to defend themselves.

While click fraud is a serious problem, it is rarely reported on accurately. Click Forensics and other panelists at the Search Engine Strategies conference in NYC last year reported that much of the click fraud that Google and Yahoo experience is in their content network. Reporters are typically blind to the difference between the content and search networks and don’t distinguish between the two. Click fraud is also a pet topic for reporters since it sounds exciting.

As an agency, we have been monitoring click fraud for our clients since the day we opened our doors in 2003.  That’s possible because we track the performance of every keyword and monitor every click.  The data we receive are analyzed every day for patterns and activity that constitute fraud and we use those data to champion our clients with the engines.  We have had countless thousands of dollars returned to clients.

Is click fraud a problem? Absolutely. Is it going away? No. And so we constantly keep vigil and protect our clients.

(If you do not track your own PPC campaigns, then let me urge you to do so ASAP and to analyze the data you obtain.  There is an outstanding standalone tracking service called ConversionRuler that you should check out.)