Search Engine Marketing: SEM - Are You Winning?
To those on the fringes, paid search engine marketing (SEM) can appear to be black magic. There are so many variables to get right — keywords, ads, bids, landing pages, offers, etc. — and the competition can be brutal. Before you know it, you're spending more than you can afford just to stay in the game.
It's common for smaller advertisers to turn a blind eye to their profitability and just spend the budgeted amount each month on SEM. If competitors are doing it, it must be beneficial … or so they reason. Money goes out the door each month, traffic accumulates, some sales are made.
It's not enough.
Are you reviewing the profitability of every traffic source? At a bare minimum, you need to have tracking in place to reveal the causal source of every goal or conversion on your website. This will enable you to make a solid connection between traffic from paid channels and conversions.
The good news is that all the major advertising platforms available provide ready-to-use conversion tracking scripts. If you haven't already, put this script in place on your goal page to enable granular reporting. With tracking in place, you have all you need to evaluate your success.
There are three reports that, more than any others, get to the bottom of your paid search profitability. They remove the success ambiguity. They'll only produce meaningful data if you're tracking your conversion down to the keyword level, but AdWords', Yahoo's and Bing's conversion tracking scripts provide this level of detail by default.
CPA per Ad Group
If you have a predictable average order value with predictable margins, cost per action (CPA) is the number your advertising lives or dies by. It's how much you're willing to pay in advertising costs to make a sale. Too high and you aren't making the needed profits; too low and you sacrifice volume.
Timothy P. Seward is the author of the “Ultimate Guide to Amazon Advertising" (Entrepreneur Press®, 2019) and the founder of ROI Revolution, which drives growth for brands, retailers, and ecommerce merchants with its results-driven digital marketing technology and services. With his extensive marketing and retail background, he is a thought leader who has spoken at 70+ industry ecommerce and Amazon events including IRCE & Prosper, is a frequent guest lecturer at North Carolina State University’s College of Management and has contributed to key industry publications including Internet Retailer.