When you are in business to sell products or services, having the ability to gather and analyze data is a good thing, right? That’s how you pick and choose how and where to best spend money on marketing, or so it would seem. However, what happens when you are on data overload and there is altogether too much to assimilate? When it comes to spending money on paid search strategies, this can lead to serious issues with cost vs. profit. At the point where you have an overabundance of data and you are losing money in your endeavors, it’s time to learn how to analyze that data as it relates solely to paid searches.
The Difference Between Paid and Organic Searches
This is where so many of today’s businesses lack a clear understanding of the difference between what constitutes an organic search from a paid search strategy. After all, they pay for that content to be written, so in their eyes, it’s a paid search strategy. That’s not exactly the same as paid search strategies.
A paid search strategy is typically a Pay-per-Click, PPC, ad in which you pay for every time a person clicks through to and lands on your site’s landing page from that ad. It’s really just that simple, but actually just as complicated when it comes to weeding through a mountain of data. It’s all about what Google and the other leading search engines constitute a landing page so you might just be looking at the wrong data in your analysis!
Not All Landing Pages Are Landing Pages!
When you are trying to analyze search performance on paid strategies, the first thing you need to understand is that Google doesn’t classify all ‘landing pages’ as landing pages. Google only considers clicks through to your commercial site as an authentic click so if your links from PPC ads or email marketing land on a page that doesn’t link through to your site, it isn’t counted as a landing page.
If you want to calculate the real revenue generated from paid searches, then you would need to only calculate those clicks through to landing pages on your site from which that visitor can be converted. That’s a key statistic to be analyzed and it takes a true marketing professional to be able to separate those clicks that can be counted in that sea of data from those that are not meaningful in terms of conversions.
Analysis of Traffic Sources
One of the very first things a marketing professional will do for you is to determine where traffic to your website is being generated. They will go through all that data to assess which visitors arrived there from paid searches and how many landed there from organic traffic. Again, the difference being that paid searches are those that get paid for every time a visitor lands on your site by clicking through on a link you are paying for, link by link.
Then, the marketing pro will run the figures to see which traffic sources generated the most visits to your site, after which they will determine the conversion rate from each of those paid sources. This is vitally important when trying to budget paid searches going forward. Those paid searches that fail to convert will then need to be analyzed. Is it the landing page lacking clear engagement or was the placement of the paid search insufficient? There is much to be determined but if you are overloaded with unrelated data, it will somehow get lost in the shuffle. In other words, the calculations then turn to an analysis of bounce rate. If a visitor clicks off your site as quickly as they arrived, that needs to be analyzed and corrected.
New vs. Returning Visitors in the Equation
When a visitor comes back to your site, even if they weren’t converted on their first visit, you can at least know that there was something there of interest to them. Maybe they weren’t instantly converted but there was something you provided above and beyond other sites they landed on. Having this data on hand is a very important factor in analyzing the efficiency of your paid searches. It also gives you the opportunity to further engage them with the ultimate goal of conversion.
Bounce rates of new, first-time, visitors are also extremely important. If they immediately bounce off your site after you’ve paid for that search ‘click’ then you need to find where the inconsistency lies. Is it that the paid search was posted in the wrong place, on the wrong site? Google ads are great in so far as they are placed appropriately!
Cost vs. Profit
Another set of data that needs to be analyzed is the cost vs. profit calculation. It does you no good to sell 200 items that generate a profit of $5 per unit if you are paying $10 above your cost to post that paid search ad. This means that you would be losing $5 on each and every conversion from that source.
There is a simple formula for calculating profits on PPC strategies. It looks like this:
Cost per click ÷ number of conversions = profit or loss per click.
This is the single most important calculation when devising a budget going forward. If your paid searches are not generating a profit, then you need to switch gears. Determine those paid search ads which are generating a profit and key in on them. However, it will also take understanding why they were effective so that you can understand what not to do in the future.
One More ‘Formula’ to Absorb
What this all boils down to is whether or not you are willing to go with the trial-and-error route. So many small to medium size businesses either underestimate the importance of marketing professionals or are reluctant to set aside a budget for marketing.
If the cost of paying for professional marketing paid search strategies returns higher profits, then it’s well worth budgeting for that expense. In business you know that investments are a key element and so it is with marketing in any form. You have recognized that there is too much data to assimilate, so here is where professional marketing can come to the rescue. Let your marketers crunch the numbers so that you actually start making the profits you envisioned. It really can be a simple as that.