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Paid Search Marketing, Understanding It

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Clients are often in with the mindset that paid search marketing, and search to a degree, works like a tap, turn the valve to let more water through; spend more to get more sales. To an extent this works, but there are implications and by-products of this mentality.

In the spirit of keeping things up to date I’m going to use the recent BP oil spill as an analogy. When the oil rig exploded in late April, it had been estimated to have been leaking up to 100,000 barrels of oil a day, and since, BP have put their best efforts to capture as much oil as they possibly could (2nd to stopping the leak!).

The diagram below (which took a whole lot longer to make than I thought it would!), illustrates how effective (or ineffective) the oil capture was being done to begin with.

Diagram 1:

BP Oil Spill

As time goes on their efforts have become more and more effective in capturing as much oil as they can given the resources and knowledge of the main areas of the spill, ala diagram 2.

Diagram 2:

BP Oil Capture

As they’ve learnt more about where the main bulk of the oil is, they’re beginning to capture as much as they can with what they have to hand. For BP, trying to capture the complete distance of every single drop of oil that leaked just wouldn’t work, it would be 90%+ sea water and 5% oil and 5% other miscellaneous junk. Even for a company the size of BP, it’s just not feasible/practical to send out ships to these areas; though if they had thousands people with buckets picking the small patches of oil across the spill this could collectively pick up some sizable litres of oil.

Now think of the same thing in terms of paid search marketing.

Total Leaking Oil = Total Potential Customers

Oil Capture = Paid Search Marketing Activity

Core Leaking Oil = Main Target Market

Diagram 3:

Paid Search Marketing Activity

When paid search marketing begins, no matter how thorough the research done to begin with, the initial phases will not be the optimum level of capturing (pay attention to this word, I’ll come back to this later) the demand for your target market. As time goes on, an effective agency/account manager should continue to adjust and tweak the activity to acquire the optimal amount of conversions for the money being spent; once confident, look to grow the campaigns to cover as much of the demand from your target market as possible.

Diagram 4:

Paid Search Marketing Activity

Now every merchant has potential customers that don’t directly fall into their main target market for which their products are designed for, hence the wide reaching total potential customers/demand circle in the above diagram. But trying to get those sales often leads to less efficient acquisition, higher CPA’s/lower ROI, not to say that it’s not practical to go after these sales, but it’s about understanding the balance. For example, if you’re a holiday tour operator that mainly deals with long haul holiday packages, bidding on keywords such as ‘cheap hotels’ wouldn’t necessarily yield you with many sales, you may get the odd bookings from that traffic, but it will be less effective as you cast the net wider.

So you’ve aligned your paid search marketing activity and are happy with the way things are performing, you begin to spend more. Now some people find this hard to understand, spending more money on the same keywords does not always mean more conversions. If you are already sitting in the top spots for you high traffic/converting keywords, chances are you won’t find many more customers through these keywords; paid search marketing isn’t that simple. Coming back to my earlier term used (capturing), what needs to be remembered is that search marketing looks to capture/service the demand that is already present and does not look to create it; so spending money on higher bids isn’t going to create more demand, remember the tap and water, if the water limited, turning the valve will only work up to a certain point.

A paid search account needs to be managed to capture more traffic through optimising CTR by testing ad copy and landing pages for conversion for the heavy-hitting keywords, at the same time look to expand the long-tail keywords (think of these as the thousands of workers with buckets) in the account to get that additional more qualified traffic through.

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