are 4 tips to balance efficiency and volume in PPC

Search marketing is often about what you measure. It’s a waste of money if it doesn’t convert (or convert with data driven attribution).

Another way to look at this is how efficiency and volume are traded off. Convert the terms you bid on (unless they are completely unrelated). The question is: Was that spend valuable and efficient?

This article will provide insights on how to strike the right balance between efficiency, volume, and a productive and healthy discussion search marketers can have about businesses.

1. Find out how the business operates

It is important to start with the overall operation of your business. Every business has its own important metrics that guide their decision-making.

• Is the company profitable?
• What is the team’s capacity?
• Is there any seasonality or market forces that could affect the business’s normal state (supply chain and holidays)?

If the product is profitable and the business has the capacity to handle additional sales, then you might be willing pay more.

It is the opposite. It is possible to reduce traffic or find only profitable sales if profitability is low or the capacity is limited.

You might need to work when the sun shines if you’re in a seasonal-driven business. These are just some of the factors that could impact your efficiency vs volume debate.

2. Forecasting at different levels

Google Ads performance planner is a great place to begin. It can be found in the top menu bar under Tools > Settings. This tool allows you to see the potential for your current campaigns.

You can choose which Performance Max or search campaigns you wish to forecast the opportunity. Select some options and input some information to generate some results.

Google will then produce an output similar to the one below. This curve provides conversions for various spend inputs.

This can be used for as many or as few campaigns as you wish. The output curves and input data will change. The more detailed you are, the more varied and specific the curves will become.

3. Analyse the incremental cost of conversion

Once you have the curve, it is time to calculate the incremental cost of conversion at different levels.

It can be easy for search marketers to concentrate on the CPA in search. There are many other options that businesses could consider investing in.

We recommend that you review the impact of different spend levels and the next level of investments on the metrics. This can be done with a table such as the one shown below.

Take the forecasted spend at different levels and subtract the new level to get the incremental cost of acquisition.

Many brands only look at total CPA and neglect incremental cost per acquisition. It will be easier to compare it to other opportunities if you look at it at an incremental level.

In the above table, you can see that going from $351 to $405 in total CPA is only 15% more. The incremental CPA is $891, or 120% higher than the total CPA at $405.

The question should be: What else can I do to get a lower CPA than $891, and what other investments should I make? This could include product enhancements and advertising spend that is not related to search (display or social), programmatic, or any other type of marketing.

It is better to invest in something else if it can beat the $891 incremental CPA. There are many other factors to consider such as level of effort and availability.

4. Choose your bid models

Take a look at Google Ads’ various automated bid models before you make your decision. You can choose to set a target CPA, ROAS or impression share, or maximize event outcomes (conversions and clicks, conversion values).

These models are also used to make incremental cost decisions.

• If you choose to aim for a CPA the optimization will prioritise hitting that CPA goal.
• If you consider maximize conversions , then the CPA target won’t be in control. Instead, volume will be the primary metric.

Each model serves a specific purpose, depending on the business priorities and your business metrics. Brands can switch between these models based on their business objectives.

Deciding between efficiency vs. volume in PPC

This matter is not a “right” choice and isn’t an easy one to make.

It is important to discuss and test the choice between efficiency or volume. This is where search excels. It is possible to adjust your aggressiveness level on a nearly real-time basis.

I managed four paid search campaigns simultaneously for mortgages at four banks. Each bank had very different CPA targets based on their business goals and metrics.

Take a look at your business from a distance and consider how incremental spending or savings could impact it.

• What is an incremental opportunity?
• What other ways can you get incremental results?
• Spend in other areas to increase the conversion flow and save money.

You will soon be able to balance efficiency and volume once you begin using data. It will be there until you have to discuss it again. Trust me, it will always be there.

The post Efficiency and volume in PPC: 4 tips for striking a balance in incremental converts was first published on Search Engine Land.