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GUEST COMMENT Paid Search: recovering wasted spend and optimising ROI

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GUEST COMMENT Paid Search: recovering wasted spend and optimising ROI

Beth Tait, Managing Director at Go Inspire
Beth Tait, Managing Director at Go Inspire

Paid search advertising is a critical component of a marketer’s toolkit, and with good reason, considering that a third of global ecommerce sessions are generated through paid search. However, many businesses are unable to pinpoint how much of their paid search spending is producing returns, and how much is going to waste.

 

There are two questions marketers should be asking. The first is, how can existing paid search campaigns be optimised? A review of research around campaign optimisation is eye-opening. One study of 2,000 PPC accounts found that the average account is producing all of its sales from just 12% of its keywords. Another audit of Google Ads accounts revealed that 42.3% of account managers have no conversion tracking in place. Of those accounts that are tracking conversions, only half are tracking anything meaningful.

 

Measures to improve performance include, for instance, assessing keyword relevance, deploying ‘negative’ terms to prevent your ad from being triggered by certain words or phrases, and boosting ad visibility when searches are at their highest. There are also more sophisticated measures such as focusing on profitability rather than cost-per-lead, as the success of paid search campaigns may be hiding a high cost-per-sale that could be lowered.

 

The second question marketers must ask is, when – if at all – is paid search most relevant in the customer journey? Despite the availability of CRM systems that allow businesses to understand each customer’s value, loyalty, potential and – above all – individuality, too few are taking advantage of these tools to build holistic customer views. Without this knowledge, it is impossible to gain more nuanced insights into customers’ journey to purchase, and therefore, at which stage of the journey paid search may be most effective.

 

There is still a tendency to treat all customers exactly the same, i.e. as a net new customer. Instead, customers need to be segmented by different types of behaviour, which can be tracked over time to gain a clearer idea of typical purchasing journeys and triggers. This should include both online and offline behaviour, as assumptions about how people are using physical and virtual channels may not reflect reality, especially post-pandemic. This analysis will then allow companies to speak to their customers in full recognition of who they are, what they have been doing, how valuable they are to the company, and what they might become in the future.

 

What are the stakes?

 

To get a concrete idea of just how much of paid search spend is being wasted, Go Inspire Group conducted a series of control tests with its customers between 2018 and 2020, covering the behaviours of over 500,000 consumers. The control tests were able to demonstrate typical proportional savings on paid search spend. The results of the tests were then extended across paid search budgets in multiple markets to demonstrate how much could be saved by reappraising paid search practice and adopting a more sophisticated approach.

 

Since these estimates are modelled using the lower end of the savings ranges revealed in the control tests – which vary between 8% and 10% – actual savings may be well in excess of these estimates, depending on the baseline starting point for each individual organisation.

 

Sector

Estimated wasted spend on paid search 2020

(£ million - based on annualised data on H1 2020)

UK Total

728.9

Retail

144.3

Consumer Goods

96.2

Financial Services

88.2

Computing and Consumer Electronics

75.8

Automotive

81.6

Travel

57.6

 

Where to start

 

How can marketers start to address the problem in their own businesses? The following 4 factors serve as a strong starting point for intelligent paid search optimisation.

 

1. Single Customer View

 

As mentioned above, creating a 360o customer view enables greater visibility, differentiation and control – this step is likely to produce the most dramatic return on investment. If a customer is on track and has already purchased or moved up a stage in the customer journey, then remarketing messages will be lost on them. Customers return to a website after purchase for many different reasons, for instance, to search for accessories or leave a review. At worst, remarketing messages may be perceived as a nuisance by these customers.

 

2. Brand name bidding

 

Companies must be more strategic when bidding on their own brand name. They may be presenting paid search advertising to customers who are already looking for them organically, and will just click through anyway on the organic search result. A holistic understanding of the customer journey provides insight into the customer or prospect’s ‘intent’. If a customer is lapsed, or seeking a competitor, then the paid search advert stands a chance of recapturing their attention and can be a good use of budget.

 

3. Phantoms

 

Phantoms are people who appear to visit a page, leave and never come back – often through accidental clicks or misdirected searching. Approximately 25% of these may have interacted with your company in the past, and may respond to a paid search message. On the other hand, delivering remarketing messages to the 75% of phantoms who will not respond can lead to your quality score (based on click-through rates) dropping. If your quality score drops, your cost per click will rise.

 

4.Campaign optimisation

 

A proper 360o view of the online and offline customer makes it possible to regularly optimise campaign targeting. Once customer segmentation has been established, offers and messages can be regularly re-appraised to check that they are delivering the best possible return, and to keep them as fresh and productive as possible.

 

Many marketers are acutely aware that some of their paid search advertising is going to waste, but don’t know the extent of it, and where exactly the waste is happening. Without this insight, it is a struggle to address the problem. The customer journey has changed significantly in the past year, and continues to evolve. Go Inspire’s study on post-pandemic segments revealed some of these changing behaviours among both loyal and new customers. Customers are also behaving differently on physical and virtual channels. This all serves to reinforce the importance of really understanding the customer journey; any pre-conceived ideas about customer preferences and their responses to marketing channels could ultimately prove damaging to the bottom line.

Author:

 

Beth Tait, Managing Director at Go Inspire

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