I've been asked a lot
recently about portfolio-style campaign
management. I covered the basic concepts
in an earlier
column. Today, I'll provide a
tactical foundation, and explain how to
run a portfolio-style campaign, and meet
your objectives, without damaging your
business.
Portfolio-based campaign strategies are
of particular interest to agencies that manage media
beyond search engine marketing (SEM). They look at media
plans from an overview perspective, often because they
can't accurately gauge the effectiveness of specific
media buy elements. Portfolio-approach skeptics may
point out a portfolio-based media campaign results in
higher media spending than a campaign based on strict
direct marketing maximum-allowable methods. After all,
agency commissions are generally based on a percentage
of spending.
Skeptics may also say search engines love
when marketers manage their campaigns based on a mix of
listings judged together, rather than on individual
listing results, which contribute to the bottom line at
a given metric. Several marketers and agencies have told
me reps even use the portfolio-return concept to justify
turning on contextual advertising or escalating bids on
generic keywords.
I prefer a data-driven foundation when
deciding whether to turn on contextual inventory or
escalate bids. One example of this would early buy-cycle
behavior highly correlating with both. A strategic
decision can be made based on empirical data about a
searcher's buying cycle and the time between search and
purchase. Data may also be available to support a
conclusion that future purchase behavior and brand lift
can be delivered through contextual or bid-escalation
tactics.
A well-executed portfolio campaign can
positively influence your business's overall
profitability. Yet not all portfolio strategies are the
same. Portfolio-style campaign management isn't for
every marketer or even for every campaign within an
overall strategy.
Before engaging in a portfolio-style
pay-per-click (PPC) campaign, ask the following
questions:
-
Are you judged purely on your media
spend's average results, or does management want to
know every dollar is delivering a specific return on
investment (ROI)?
-
Does your company strive to hit
volume goals or growth objectives, and is it willing
to trade efficiency in some campaign segments to get
a larger scale campaign, so long as overall results
are balanced by sufficiently high ROI campaign
segments?
-
Do you run other media that perform
significantly worse than your PPC SEM campaign? If
so, SEM may actually already be subsidizing other
media and could use an increased media allocation.
-
Is your average ROI objective
positive enough so that if some campaign segments
perform at a 30 percent variance from the object
you're still near breakeven?
-
Can you take into account media touch
points that aren't the last ones before
purchase/registration, but may contribute to the
desired behavior?
-
Can you effectively measure power
keywords' price/volume elasticity? Elasticity
measurement and prediction are critical to managing
a portfolio. If you assume you can get more volume
from a campaign by bidding more on power keywords
(those with high-volume potential) and your
competition wasn't telegraphing its true reserve
price in the auction, you can get into a bidding war
that results in a low marginal volume increase
accompanied by a significant cost spike. This is
not a good outcome, and it's very difficult to
predict in advance.
-
Are your competitors one or more of
the following:
-
Rational, thoughtful bidders
-
Rational bidders using
sophisticated campaign management systems or API
(define)-linked
campaign software
-
Brilliant marketers who know how
to squeeze conversion out of even the most
challenging keyword clickstreams and can
therefore be very aggressive
-
Marketers who manage different
keywords or engines using the same or different
strategies, some elastic, some not
-
Marketers with a strong brand
that may translate into a significant AdRank
advantage in Google (difficult to dislodge and
an inelastic landscape)
-
Irrational bidders with deep
pockets
-
Irrational bidders with venture
capital money -- who hate your guts
-
Marketers who report to a CEO who
checks Google and Yahoo daily and yells if the
brand isn't in the (insert favorite position
here)
There are no easy answers to when and how
much you should use a portfolio approach in managing a
keyword campaign. By asking the above questions, you
approach the campaign with eyes open. In a portfolio
campaign some segments vary dramatically from the
average return. You may have data supporting a portfolio
approach based on measurable conversions because lots of
conversions were less measurable but tied to the
campaign.
Discuss this internally and with your
agency or search provider, and make sure your campaign
is managed the way you want it to be at both the micro
and macro levels. Running a customized,
profit-maximizing portfolio is far superior to running a
boilerplate portfolio, just like investing in the stock
market. Have your team do the customized math regularly
and tune your keyword portfolio for maximum profit.
ABOUT THE AUTHOR
Kevin Lee is
co-founder and executive chairman of Did-it.com, LLC.
Did-it.com
uses advanced strategy and technology to optimize the
performance of its client's paid placement and paid
inclusion search campaigns. Kevin and the Did-it.com
team have been dedicated to helping search marketers
succeed since 1996. Kevin is a founding board member of
the Search Engine Marketing Professional Organization
(SEMPO) and is now the group's chairman. He also serves
on the SEM committee for the Association of Interactive
Marketers, and on the Interactive Advertising Bureau's
Search Committee. He also publishes a popular
marketing newsletter. An acknowledged expert on SEO
and SEM, Kevin is regularly quoted by the major news
media including the Wall St. Journal,
Business Week, the San Jose Mercury News,
and Catalog Age. He is also a frequent and
well-respected speaker at industry conferences.
Kevin enjoys sharing tips, tricks and strategies in
print and in person. He earned an MBA from Yale School
of Management in 1992.
