Why defining your PPC objective is #1 priority
Before bids, before adverts and even before keywords, PPC is all about defining your objective. Without a clearly defined and measurable objective, it’s impossible to make almost any rational decisions about how to set up and optimise your account.
There are three critical points to bear in mind when determining what your objective is:
1. Define a single objective
If you find yourself saying that you want to maximise sales and sign-ups, you put yourself into an impossible position from an optimisation perspective. If one campaign is generating sales at £50 each, and the other is generating sign-ups at £10 each, where should you put any surplus budget (or cut back, if you’ve been overspending)?
Different areas can have different objectives, of course — you just need to be aware that this means that you’ll need to manage them separately, and define the budgets individually. In the above example, there’s no conflict if the first campaign is part of a sales account, with a fixed budget, and the second is part of a lead-generation account, with a separate fixed budget.
Alternatively, assigning a value to each objective can allow you to manage the two campaigns together. In the above example, if a sale was worth £100, and a sign-up was worth £10, then you’d want to move some of your budget from the sign-ups (reducing your bids accordingly, and bringing the CPA down) and push it into the sales campaign.
You can of course apply as many constraints as you want. For example, an objective saying that you should “maximise revenue from a spend of £10,000 with an ROI of at least 200%” is workable.
Your objective should also be open-ended — to maximise or minimise something. If your objective is to generate £100,000 from £10,000 of click spend, what do you do if you are only spending £8,000 and are hitting the £100,000 figure (or can’t get close to £100,000, even from £10,000 of spend)?
2. Get granular
The second point is that you must be able to attribute your objective back to your account at the most granular level possible. If you’ve got an objective to maximise revenue from your PPC, and you know that you generated £100,000 of revenue from £10,000 of click spend, this may be sufficient to allow you to set a budget — you can certainly compare PPC to other media and assess the profitability of each.
But how much use is this from an optimisation perspective if you can’t tell which Ad Groups and campaigns generated the revenue…
If you can’t tell that, how do you know which bids to increase or decrease, or which keywords aren’t worth bidding on?
Ideally, you’ll want to be able to go further than this, and look at which adverts are more or less effective at generating sales, or whether the conversion rate changes at different times of the day, on different days of the week, in different geographic areas, or on different device types.
All of this is quite straightforward if you can use Google Analytics and feed the performance data back into AdWords. But as an absolute minimum, you need to be able to tell which campaigns and Ad Groups are generating your conversions.
3. The closer to profitability the better
For a retail client, the following would all be valid objectives, but the last one is clearly preferable to the first:
- Maximise clicks from a spend of £10,000
- Maximise sales from a spend of £10,000
- Maximise revenue from a spend of £10,000
- Maximise profit from a spend of £10,000
Clearly, if you have no way to track sales or attribute them back to individual keywords, then all you have is to maximise the clicks (you’d do this by equalising the cost-per-click as far as possible). Of course, you’ve got no idea which clicks are worth something and which aren’t.
If you have sales data, but no information about order value, then you can go one step further and maximise sales. If you’re an electricals retailer, this would view the sale of a toaster and a washing machine equally — so clearly, this isn’t ideal either if you have a better option.
If you know what the sales are worth, you can work to maximise revenue, and for most retail clients, this is fine. But if the margins on own-brand goods are different to brand-name goods, or are different by area of the business, this still doesn’t give you the whole picture.
Being able to include margin data means that you can maximise profit, which is the ultimate objective. Of course, this last objective is still a little odd — why constrain the spend if you are maximising profit? If you can make more money by spending £20,000, why limit your spend to £10,000? Unless it causes cash flow issues, it probably makes sense to remove constraints as far as possible if your objective is to maximise the profit.
For non-retail clients, it’s either much simpler or much more complicated. If you just have one conversion type, such as leads, then you are just looking to maximise these from your budget. But if you have different types of leads, or other conversion types such as sign-ups, then things become difficult.
For example, somebody filling in your contact form may be worth less than somebody requesting a call back, which is turn is worth less than somebody calling you. Without knowing the average values of each conversion type, this can cause significant issues.
If you have a feeling about the relative values of each, then you could effectively assign points to each conversion type. For example, a signup may be worth one point, and a call may be worth five points. This would allow you to manage bids to maximise points; it’s just not very helpful for setting your budget.
If you don’t know that the relative values of the different conversion types vary, then all you can realistically do is to maximise the total number of conversions.
When we take on an account, before we change anything, we are always very keen to pin down exactly what it is — this is the difference between account optimisation and account management, and it’s a fundamental difference in mindset that can, and usually is, the difference between success and failure in PPC.