E-commerce Insights: Winning at Paid Search ’07

Analyze keyword-level efficiency by computing the ratio of cost to sales by keyword. Sort this list by descending ad cost to ensure your most expensive terms are pulling their weight. Analyze product-category-level efficiency, folding in your category margin data to ensure your campaigns are generating profit, not just sales.

12. Obsess about conversion. In the long run, the marketers with the best site conversion can afford to pay the most for paid search traffic, allowing them to grab the largest share of available inventory. The ultimate winners in search are the sites with the highest conversion, as measured by margin dollars per visit.

Conclusion

Winning at paid search in 2007 will require more expertise than in 2006. Catalogers will face more competition, more sophisticated competition and higher average click costs. Take care that your paid search program continues to be an effective marketing channel.

Alan Rimm-Kaufman is president and founder of the Rimm-Kaufman Group, a search marketing agency. Visit his blog at rimmkaufman.com/rkgblog.