Whether you're spending millions on PPC, or just dipping your toe in the water with your first campaign, chances are you'll be asking these questions...
I’ve worked in PPC for more than seven years and throughout this time I’ve had the pleasure of working with some of the best known brands out there, from Dyson and Odeon through to Travis Perkins. But no matter how big or small the brand, I constantly come across the same set of questions from clients.
Here’s a run down of my responses to the most frequently asked client questions from the world of PPC.
A – From the 1st January 2006 Google removed all commission paid to any advertiser. There is absolutely no kick back at all. When we recommend increasing your investment on Google, this is because we genuinely feel this will benefit your business – not ours.
A – Yes that is perfectly fine and we would encourage your PPC account to include any new products if it is something you would like to push. However, if you add a new product and don’t increase your Google spend, we will need to take budget away from the current products to spend on the new product keywords. Therefore you may see sales or leads drop on your original products due to the reduction in investment. Essentially – to push in one place, we will have to pull from somewhere else. We’d always recommend upping budget to offset the addition of new products to prevent negatively impacting leads from the existing keywords.
A – Sales and leads will fluctuate all the time and a large proportion is out of our control. It is very much dependent on the market. If fewer people are searching for a product that week, it will impact our PPC and the website as a whole as fewer people will be clicking on your ads and visiting your website. It is impossible to control this natural fluctuation in consumer demand – but we love a challenge and we always do what we can to ensure we are maximising the opportunity as best we can within the budget we have available. Many things can impact leads such as weather, where national holidays fall, what your competitors are doing, brand reputation, Government budget announcements, offline advertising.
I always remember one October when it was unseasonably hot and I was working on behalf of a well-known national cinema brand. The PPC campaign and website was performing well below average and the client wanted to know what we could do about it. The honest answer, was ‘very little’. No amount of special offers, ticket discounts or big campaigns were going to persuade people away from the beer gardens, beach, family picnics in the park, into a dark room for 2 hours. Conversely, at the same time we had another client who was an online retailer who sold a variety of outdoor supplies for the home such as BBQ’s, parasols, garden tables, picnic boxes. At a time when they would typically be experiencing a high decline after the summer months, they were inundated with demand and we were able to capitalise on this with reactive targeted campaigns focused around an ‘Indian Summer’ message.
My point is that we can only be prepared to some extent. So many factors can have an impact that it’s not always easy to analyse why leads may be reduced from one month to the next or explain why one year may perform better than the other. What we can do however, is ensure we are investing at the right levels for the market, be visible across a number of different marketing channels and continue to optimise and monitor the campaigns as best we can, adjusting the campaigns in line with performance. It also pays to make sure we reduce investment at times we definitely know we aren’t going to drive the return such as Christmas week – unless of course you are a company which sells gifts.
A – Firstly your cost per lead will be impacted by demand in the market and your on site conversion rates. When consumer demand is lower, it will cost more to drive sales and leads as we have to try and squeeze as much as we can from a reduced market (same number of competitors, fewer leads to be had in the market). Also, it drives up competition in the market as your competitors will also be feeling the reduction and so every one else starts to increase their PPC keyword bids at the same time as they push for more leads – this results in an increase in click cost and cost per lead. Also, if you had a really compelling offer one month, but not the next, this could impact your conversion rates as fewer people may enquire/buy and so again this would impact your cost per lead. Another reason could be a new competitor entering the market, this can have a similar impact as one competitor increasing their Google budget. If a new PPC ad appears, this means more competition for the top advertising spaces and as a result, again the click cost may increase.
Secondly, the cost per lead you pay per product is very much relative to the product value. For example, an advertiser using PPC to drive sales of its new luxury car will pay more for every click to their website than someone advertising a pair of running trainers. That is because the end sale value of a luxury car is much higher than a pair of shoes. The car advertiser is therefore more likely to bid more aggressively in the market and pay a premium cost per click – because it is worth more to them. The same goes for all products and in the case of home improvements – in some cases the click cost for a door keyword will be cheaper than a conservatory keyword and as a result the cost per lead is typically cheaper for doors.
A – Well, the answer to that depends very much on what agency you use and what their charging model is. A lot of agencies still use a percentage based pricing model. In other words, the fee they charge to manage your AdWords / Bing accounts for you is calculated as a percentage of your monthly spend with Google & Bing. That means that if, for example, you spend £5,000 per month on your Adwords / Bing click charges and the agency works on a 20% fee basis, then your management fee would be £1,000 per month just for the online spend and will not include any online optimisation work that maybe required on your website.
The justification for this approach is usually along the lines that the more you spend with Google the more complex your AdWords account is likely to be and the more work there will be in managing it for you.
There’s some logic in this argument. However, from the client’s point of view it does mean that the more you spend on AdWords, the more the agency earns.
So some agencies may encourage you to increase your budget so as to increase their earnings also. We always treat it on a case by case budget – so for example if you increase budget by £1k per month we are unlikely to require additional management time. But say for example, you have a complete change of business strategy or move into a new high volume product area and your budget increases by 5-10K per month, then we may recommend increasing your management so that we have enough time to give the account the attention it needs in order to work effectively.
At Motionlab, we have never liked the percentage pricing model or received any commission from Google or Bing on client’s online spends. We’ve always preferred a flat-fee pricing model whereby we quote a monthly fee for managing your AdWords / Bing accounts for you. That way, you know exactly what you are going to be paying each month for our expertise.
Senior Online Marketing Manager
