Whenever I’m asked to audit a PPC account, my first question to the client is: how do you measure performance? It’s a simple question and the usual response is CPA (cost per acquisition) or ROI (return on investment). If the answer is CPA, then there are some follow-up questions: how many products or services are offered? And if more than one, then do they cost the same, or are they worth the same to the advertiser? What I’m getting at is that CPA is usually is a limitation of tracking – the advertiser cannot associate true revenue with the conversion. Managing to an ROI, and moreover, managing to maximize profit margin for each keyword will open up new doors for PPC efficiency.
Clients that manage to CPA generally have several products or services. To see the underlying issue with CPA optimization, consider the situation where we have two possible conversions: one worth $20 and one worth $40. If we optimize to an avg CPA of $30, we may be only selling $20 products and losing money. With ROI optimization, this is not a possibility. If CPA optimization is the only possible route, then there are a few best practices to find a good CPA to set as a goal. If the transactions occur online, then calculate the average order value and subtract the avg variable cost to the advertiser – this is the max CPA. If the online conversion is a lead which requires offline sales, then multiply this CPA by the average offline conversion rate to define the eCPA (effective CPA). Read the rest of this entry »
CPA vs ROI Optimization…What’s The Best Practice?
March 12, 2010
Leave a Comment » | 
SEM, Trends, eSearchVision General, paid search, search engine marketing | Tagged: Audit, PPC, ROI, SEM | 
Permalink
Posted by esearchvision
Tug-of-War
October 2, 2009by: Joshua Krafchin
The beauty of paid search marketing is that results are highly trackable. We can trace revenue back not only to the keyword and match type level, but also by the hour or even by the geography of the original search queries typed into any search engine. This extensive tracking provides us the opportunity to understand not only revenue and cost implications, but a whole host of other criteria from visitor interaction with our website to offline conversions and gross margin. With this surplus of data and choice though, many marketers run into the dilemma of how exactly to define success. Shifting general business priorities outside of search, whether or not they relate to search specifically, can directly impact how we manage a search program.
One of the big tug-of-wars is between ROI and volume. Because search is so measurable and trackable, companies have come to expect hitting and surpassing ROI numbers. In turn, this ability to consistently hit ROI makes paid search revenue highly desirable, and executives will push for more and more revenue volume from paid search. Read the rest of this entry »
2 Comments | SEM, Trends, eSearchVision General, paid search, search engine marketing | Tagged: business, client, goals, ROI, SEM | Permalink
Posted by esearchvision
Bing: What Does a “New” Search Engine Mean to Advertisers?
June 5, 2009As of June 1st, Microsoft has successfully soft-launched Bing.com as the new and improved Live Search. The big question becomes: how should advertisers react, if at all, and ensure that they are in prime position to reap the benefits of all the hype, praise, and the hefty $80 – $100 Million in branding efforts from Microsoft?
As the graph below from alexa.com indicates, Bing has generated a lot of interest in the first day of production, and this trend should continue for the short term. Incremental page views translate to incremental clicks and potentially sales.
Preliminary traffic trends for Bing.com
Advertisers should anticipate increased exposure on Bing and increase budgets accordingly on AdCenter. more on Bing…
Leave a Comment » | SEM | Tagged: advertisers, bing, ROI, SEM | Permalink
Posted by esearchvision
