The short answer is No. It doesn’t have to be a gamble but for many companies it can be.
For many businesses paid search is a very quick way that they can increase the traffic to their sites. But as paid search has been increasingly embraced by large businesses, it has become very expensive for many businesses. And since many of the most valuable keywords are subject to intense competition, building a profitable paid search campaign can take a great deal of time and experimentation. Unfortunately, many businesses don’t find success in paid search advertising and abandon it when it starts to eat too heavily into hard-pressed marketing budgets.
So why is this? The main reason for this is that they don’t have clear idea of what success will look like for their business, they have no clear framework for measurement (see creating digital marketing framework for your business) and have no real idea whether the results have given a good return on investment and they are not looking at the results in their own data and therefore not making changes that can lead to success.
This is a report showing the revenue and costs from different traffic sources. As you can see CPC has very low revenue and conversion rate alongside high costs. Furthermore, the CPC traffic the number pages viewed per session is only 60% of site average. Not only does this appear to be very poor value for money, it also represents a huge opportunity cost. Focusing on improving referral traffic would be a much quicker way of improving traffic and conversions.
I think this happens for at least two reasons:
- Attitudes based on traditional advertising rub off on online advertising. Because measurement of traditional adverts was fragmentary at best, there has been a view that you need to throw a lot of paint on the wall and see what sticks. The fact that you can provide details of the number impressions and clicks and this is so much more than most offline adverts, there is a tendency not to dig deeper.
- There is a lack of understanding among many businesses about how much data is available that can make a huge impact the speed of improvement.
But lets dig a bit deeper and look at the location of visitors via by paid search. As you can see, London provides 80% of the revenue with less than a fifth of the visits. Simply focusing the PPC spend on London could double the conversion rate from paid search and increase total revenue by 45%. So a simple refocusing of the existing Paid search budget will have huge gains for the organisation.
Suppose we now look at paid search traffic from a different dimension – whether the user is on a desktop or a mobile device. Straightaway, we have a red flag in terms of the proportion of mobile users clicking through on advertisements. Since around 25% of the site average are mobile or tablet users, it identifies the possibility that we are leaving at lot of potential traffic and value on the table.
This small piece of data now enables us to investigate why paid search traffic from mobile devices is so low. In fact, the reason for the poor showing was a lack of understanding of the different intention of mobile users. Mobile users were coming to the site to look for events arranged by the charity or to visit various retail outlets operated by it. By tailoring adverts for events and shops that were close to the mobile user’s location, the number of clicks increased from less than 1% to 11% (an eighteen fold increase).
And as a bonus, the insights from paid search encouraged the charity to look more carefully at the optimisation of the site for needs of mobile users. As a result, the mobile display was changed to ensure that events and shop opening times and locations were displayed prominently. This increased the number of users through search by a further 5%.
Bottom line: Paid search is a powerful tool for increasing traffic to your site. However, to understand whether performing as well as it could and is adding to your company’s bottom line you need to look at the data. It will have insights that could save you huge amounts of time and get you on the road to success.