Step-by-Step Paid Search Optimization

Just like everything else in search marketing, paid search can be broken down into a series of steps that you can take, one by one. Paid search might look complicated, and sometimes it is. Every search engine has different program rulesand they change. You will never be able to predict what your competitors will do next, which has a huge impact on your results. By focusing on each step in the process, however, you can make paid search as simple as possible. Here are the high-level steps that every paid search program must take:

  • Set up your paid search program. Every program has certain startup tasks, such as setting up accounts for each paid search program and choosing your bid management software. Although you can revisit these decisions at any time, you do need to make some choices up front because you will not change your mind for every campaign.

  • Choose your targets. For each campaign, you must identify the keywords you are targeting for paid placement, and the products that you are focusing on for shopping search.

  • Attract searcher's clicks. Paid placement campaigns rely heavily on strong copywriting to get searchers to click your ad. Shopping searchers have specific ideas of who they will buy from. We show you how to draw the most clicks from searchers for any paid search campaign.

  • Optimize paid search landing pages. Just as with organic search, you must carefully consider the way your paid search landing pages are designed so that you drive the maximum number of conversions for your search referrals.

  • Measure and adjust your campaign. Remember, search marketing, especially paid search marketing, depends on constant refinement. Learn how to track your success and how to improve your campaigns every day.

Those are a lot of steps, so let's get started with the first one, setting up your paid search marketing program.

Set Up Your Paid Search Program

Setting up your program has three major tasks: deciding your budget, setting up your accounts, and choosing your bid management software. We start with the budget.

Decide Your Budget

We spent some time in Chapter 8 developing a budget, but you might need a more precise method than we showed you there. Unfortunately, it is not all that easy to do. The tools you have at your disposal limit the amount of information you can gather, and what you ultimately spend depends in part upon what your competitors do, which is unpredictable. However, you can make better guesses about your budget.

The first thing to do when setting your budget is to decide how you want to do it. Do you want to build to budget? Or budget to build? In other words, will you add up all your possible costs and ask for that budget (budget to build)? Or are you being handed a budget to do whatever you can afford under the budget (build to budget)? Either way, your biggest challenge will be to properly estimate the costs. As you recall from Chapter 3, there are three major costs in paid search:

  • Creative costs. It costs money to get your information into the search engine. For paid placement, you will develop titles and descriptions for your advertisements for each keyword you buythat can run anywhere from around $15 to more than $50 per ad if you contract with an agency, but might be cheaper if you have the skills to do it in-house. For shopping search, some engines will crawl large sites for free, but most require a trusted feed (as discussed in Chapter 10), whose cost can vary widely depending on the flexibility of your product database and its associated software program.

  • Management costs. You can contract an external vendor to manage your paid placement bidding (and shopping search submissions), and they can provide a free estimate for your costs. If you plan to do it yourself, you need to project the amount of time your central search team will expend. Later in this chapter, we review the free and licensed management toolsyou will want to add those costs into your budget if you decide to buy a tool.

  • Media costs. Most of your budget will go to the search engines in the form of per-click feesthe results of your paid placement bids or the fixed fees for shopping search. We spend the rest of this section estimating those costs.

In Chapter 8, we walked through a relatively simple process for projecting a paid placement budget for Yahoo! By examining your keyword demand in each paid placement engine for each campaign, and by religiously following the technique from Chapter 8, you can take a stab at your media costs for any paid placement engineexcept Google.

Google is especially tricky to project costs for, because of their clever ranking algorithmthe one that shows your ads based on a combination of your bid rate and your clickthrough rate.As discussed earlier, Google's ranking method is a wonderful way to reward search marketers with relevant adsif you design your ad to get a higher clickthrough rate than your competitor's, you will get a higher ranking for the same bid. However, the same cleverness that can give you that edge wreaks havoc with your attempts to budget your Google AdWords campaign.

Here's why. With Yahoo! (and all other paid placement engines except Google), you can take a guess at what your bid must be to get a particular ranking. You can look at the bids from the current bidders for a keyword and estimate that your bid must be in that top range to get a top rankingto be conservative, you might estimate that your bid must be significantly higher than the current #2 bid if you want to rank #2, for example. You are taking a guess because you cannot predict how bidders will change their bids in the future; they might even change their bids based on your bid, because the former #2 bidder wants to regain that spot.

But with Yahoo!, you can at least get a feeling for what your bid must be to get that #2 ranking, for example. With Google, you cannot. Google will show you an "average bid," but it cannot offer any way for you to target your bid to achieve any particular ranking. It cannot because the clickthrough rate is just as important as the bid in determining the ranking. If your ad gets heavy clicking from searchers, it will take a lower bid to rank #2 than if it has a below-average clickthrough rate.

Because you cannot easily project your ranking in Google, you also cannot easily project your clickthrough rate, because you know that your rate in part depends on where you are ranked. (Does your brain hurt yet?) In Yahoo!, you take your guess at your click rate and multiply it by the keyword demand (the number of searches for that keyword) and you can estimate the number of clicks you will get. Multiply the clicks by your bid, and you have a projected cost. In Google, you can only get an average number of clicks based on your average bid, so your projections could be wildly off if you bid higher or lower than average and if your clickthrough rate diverges from the average (higher or lower). (Now do you have a headache?) But there is even more complexity, unfortunately. If Google's ranking formula were as simple-minded as multiplying the click rate by the bid, no new ads would ever be shown, because their initial click rate is zero. So, Google actually has a default clickthrough rate it uses to put new ads into rotation, and waits for a certain number of impressions before applying the ad's actual clickthrough rate to determine its ranking. (There, now you are finally reaching for the Excedrin.)

So what do you do? You have a few options:

  • Give up. You can give up the whole idea of "building to budget." This is not as dumb as it might sound to some of you. It is perfectly valid to "budget to build" instead, by deciding on the investment you would like to make, starting with a small test budget, and testing and testing until you gain experience with the bids and clickthrough rates that you see from Google.

  • Use the averages to estimate. Google will show you your cost per day, if you make the bid shown. If you want to bid more or less than the cost shown, you can guesstimate how that will affect your clicks.

  • Test with Yahoo! first. You might get a better idea of your ad's clickthrough rate if you have already tested it on Yahoo! You will still be guessing at where you will rank and what the keyword demand is, but you might have a better idea of the relevance of your ad. If your ad gets high clickthrough (more than 5 percent), you might guess that an average bid might actually draw more clicks than the average number shown at Google.

Snap Electronics initially chose to use only Yahoo!, and they set a budget for their Yahoo! campaign back in Chapter 8. But Snap eventually wants to use Google, too, so they investigated what a Google budget might be. In Figure 14-3, you can see that the average digital cameras bid costs 85¢, the same price as Yahoo!'s top bid, but the way Google displays paid results makes it tougher to estimate your true costs. Sometimes the rates vary widelythe bid for digital camera (without the s) averages $1.23. Snap can use the cost per day to decide whether its estimated budget should be higher or lower than the averages.

Figure 14-3. Snap's Google bid limits. Google shows both the maximum and average bids your competitors will pay per click for your targeted keywords.

Even if you do all the work to estimate your paid placement costs, you will never be accurate, for several reasons:

  • Bid gaps reduce your actual fees. Every paid placement vendor besides Google has a way of discounting your fees based on bid gapssituations where the bids are separated from each other by more than a penny. For example, if the #1 bidder has a maximum bid of $1, and you, as the #2 bidder, bid 85¢, every click on the #1 ad is charged at 86¢, one penny more than your bid. Similarly, if the #3 bidder has a max bid of 79¢, your per-click charge is 80¢. So, when you estimate your budget based on your max bid, you might be estimating higher amounts than what you will actually pay.

  • Lower conversion reduces your fees. If fewer searchers click your ad than you expected, your fees will be lower (and higher clickthrough has the reverse effect). But Google goes further, as discussed earlier, where its Smart Pricing algorithm reduces per-click fees for keywords that its research shows get lower conversion. So, you might budget more than what Google actually charges you.

  • You cannot predict what other bidders will do. The biggest reason you cannot predict fees with accuracy is that people are unpredictable. You do not know whether raising your bid will cause a competitor to "chase" you with a higher bid or just stand pat with the same bid. You might have budgeted for a maximum bid to get you a #2 ranking, but your competitors must cooperate for that to happen.

No budgeting techniques for paid placement bids are terribly accurate, but most marketers would prefer to have at least a guess at their costs rather than shooting completely in the dark. And if you think estimating your paid placement budget is hard, just try to predict a shopping search budget.

Most shopping search engines are targeted at small retailers who start by plopping down $50 on a credit card to "see how this works." Or large manufacturers that can get some cost guesses by working directly with a sales rep from the engine. No tools exist to predict the number of searches for any category of productthere is no analogue to the Yahoo! Keyword Selector tool, for example. So, although you have much better per-click cost certainty in shopping search as opposed to the bidding style of paid placement, you have no clue how many clicks you will get.

So, the best advice might be to conduct a controlled experiment. As we write this, Froogle is still a beta offering (read: free). You can load your product catalog into Froogle and see how well your products seem to rank and how many clicks you get. Then you might want to branch out to a paid shopping search enginemaybe devote 5 percent to 10 percent of your paid search budget to shopping search, just to see what happens. You will not really be able to plan your budget before you start, but you can take some baby steps before committing yourself with a large investment.

Set Up Your Accounts

Setting up your program can often be one of the simpler steps, but it is very important. As with the other steps, you can always go back and change your setup later, but getting it right upfront can save you some time.

As you have read through this chapter, you have probably made some decisions on which paid search programs make the most sense for your business. If you sell the kinds of products offered in shopping search engines, you might want to sign up and give it a try. If you know from your organic search experience what keywords your visitors are likely to search for, you have all the information you need to test paid placement for your business. You can use the tables presented earlier in this chapter to analyze each vendor that offers paid search and decide which ones seem to be the best candidates to start with, based on cost, market share, or other factors.

It might be tempting to sign up with every vendor out there. Don't. The work that goes into managing a paid search campaign is larger than you think. To be successful, you must focus on your content, your per-click charges, your clickthrough rates, your conversions, and your profitability. You need to do that for every campaign with every vendor, because each one is different. Don't become overwhelmed with work before you even know how it's done. Start small.

If you decide to start with just one vendor, you will probably want to use a paid placement vendor rather than a shopping search engine, because setup is usually simpler. Google and Yahoo! are the two biggest paid placement engines, so pick one of them. Choosing a single vendor also simplifies your decision on bid management and reporting toolsyou can avoid investigating and paying for a third-party tool until your program gets bigger later. (We walk you through all of your bid management choices shortly.)

But how do you choose between Yahoo! and Google? Yahoo! is far simpler to budget for, as you saw earlier. Although all paid search budgets are estimates, it is much easier to estimate for Yahoo! than for Google because you can use keyword demand to estimate the number of impressions. Google's ranking algorithm relies on both your bid and your clickthrough rate, so it is hard to know how often your ad will be shown.

Although it is harder to budget for Google, its ranking algorithm gives you less to manage after the campaign is up and running. Google's algorithm, which ranks listings by bid and clickthrough rate, produces less volatility than algorithms that employ bid alone, so your Google rankings will not jump up and down as erratically as with Yahoo! (meaning you can watch them less). In addition, several bidding tactics you must pay attention to when using Yahoo!gap surfing, bid jamming, and friendly URLare not used with Google, making your bid management efforts far simpler.


We spent time discussing your paid search philosophy earlier in this chapter, but much of paid search marketing is fought in the trenches, using tactics that can drain your budget if ignored. Because Google's ranking algorithm includes clickthrough rate, it is not possible to use these techniques, because you cannot juggle your positions by tuning your bids alonethey depend on your click rates, too. But all the other paid placement engines are ripe for use of these approaches.

Gap surfing is a technique in which you scan the list of paid placement results, looking for significant differences between bids. You then adjust your bid to be just higher than the lower bid in the gap. For example, suppose that you have determined through experience that you receive about the same number of clicks whether your listing is anywhere in the top three Yahoo! paid results. If the #1 result is bidding $1, the #2 result is bidding 50¢, and the #3 result is bidding 32¢, the largest gap is between the first two results, so a gap surfer would bid 51¢ to claim the #2 ranking.

True gap surfing means that you will never be #1 for a query, but most tools have a setting that will bid for the #1 setting if the gaps found are less than an amount you specify. For example, if the #1 result is bidding $1, the #2 result is bidding 99¢, and the #3 results is bidding 96¢, your tool could place you at #3 with a 97¢ bid. If you require a minimum of a nickel gap, however, your tool would place you at #1 with a bid of $1.01.

Gap surfing can be valuable because it can sneak you into the most cost-effective position, but it can also lower your revenue. As you will see later, having the most cost-effective bids is not usually as good as having the most profitable bids. The conversions you would get from the #1 ranking might be far more valuable than saving a few cents on the clicks.

Bid jamming is an offensive technique that does not lower your costs or raise your conversions. What it does is to raise your competitor's costs, which might drain his budget a bit faster. Sometimes you can knock a competitor's ads "off the air" if his budget runs out.

Bid jamming uses some of the same concepts that gap surfing does. A bid jammer specifies a range of ranks (say, #1 to #3, as you saw earlier) that are equally valuable. Once again, the bid management tool looks for the largest gap, but this time it bids just below a competitor's maximum bid, forcing the competitor to pay its highest per-click charges. If the #1 bidder is bidding $1, and the #2 is at 50¢, and the #3 result is bidding 32¢, the largest gap is between the first two results, so a gap surfer would bid 51¢ to claim the #2 ranking, but a bid jammer would bid 99¢ for that same #2 result. That forces the #1 bidder to pay $1 per click instead of 51¢, as before, whereas your 99¢ bid costs you just 51¢ per click until the #2 bidder goes higher.

Friendly URL is a tactic that many marketers employ to stay out of costly bidding wars. If two divisions in your company are bidding on the same keyword, it does not do your company much good to bid against itself. You can ask some bid management tools to bid your keyword just below your sister division and they can set their tool to bid just above. You can use this feature with unfriendly companies as wellif you know from experience that a competitor will bid both of you up to very high levels, you might want to target your bid just below theirs to keep your costs down. (This technique keeps your competitor's costs down, too, where bid jamming has the opposite effect.)

Some people find all these bid games fun; their competitive juices start to flow as they try to outsmart the other players. It might feel like a waste of time to you that is better spent on other, more profitable tasks. Regardless of how you feel, don't let the games take over your strategy. These techniques are tacticsimportant at timesbut not your top priority.

Snap Electronics wanted to start with one paid placement vendor and one shopping search vendor for its digital cameras campaign. They had done all the work to estimate their budget for Yahoo!, so they chose Yahoo! as their paid placement vendor, knowing they could add Google later. Even though it was free, they decided not to make the effort to sign up with the Internet Yellow Pages services, because each one would drain some of their time and they thought that relatively few people would find their company that way. They ran into their first surprise when they went to sign up for shopping search, as shown in Figure 14-4. MySimon was no longer accepting new merchants selling digital cameras.

Figure 14-4. Shopping search overload. At times, so many merchants want to sell a product that shopping search engines stop accepting newcomers.

Having struck out with a smaller player, Snap decided to go with one of the top-tier players, choosing Shopzilla. If you are working with an external search marketing vendor, perhaps they can set up your shopping search account for you, but Snap wanted to do it themselves without paying the vendor's hourly rate.

When Snap went through the sign-up process at Shopzilla, they were pleasantly surprised to see that they could merely enter their product list into a Web form, as shown in Figure 14-5, because Snap had fewer than 30 models of digital cameras. Although they would have to figure out trusted feeds or other update mechanisms later, this certainly made it easy to get started.

Figure 14-5. Signing up for shopping search. Some shopping engines, such as Shopzilla, allow product data to be entered as paid placement ads are.

Setting up paid placement accounts can sometimes be a bit more complex than shopping search account setup. For example, the way you set up an Yahoo! account varies based on your situation:

  • You are working with an external search marketing vendor. As discussed in Chapter 8, you can hire a vendor to perform all sorts of search marketing tasks. If you did so, as Snap Electronics did, you can leave the setup work to them. They help you develop and manage the program from start to finish. Their experienced staff has the tracking tools and the relationships with the paid placement vendors to drive the maximum return from your paid search investment.

  • Your click fee budget is more than $10,000 per month. If you plan to spend a substantial amount with Yahoo! each month, a sales representative will be assigned to work with you. Remember, the $10,000 figure is what you spend with Yahoo!, not your overall paid search budget.

  • You have a smaller budget, but are willing to pay for assistance. If you are spending less than $10,000 a month with Yahoo!, but you want help setting up your account, Yahoo! charges $200 to do so. Yahoo!'s Fast Track program not only helps you with account setup, but also in designing the ads for your first campaign, so it can be very worthwhile.

  • You want to do it yourself for free. If you are willing to do the heavy lifting, there is no setup fee. If you know what you are doing, and you can get by with just online support from Yahoo!, this is the way to keep your costs down. $200 can buy a lot of clicks.

If you are setting up your Yahoo! account yourself, rather then having a search marketing vendor do it for you, you will be presented with the page shown in Figure 14-6.

Figure 14-6. Selecting a Yahoo! program. Yahoo! has various options for you to get started with its paid placement advertising.

Reproduced with permission of Yahoo! Inc. © 2005 by Yahoo! Inc. YAHOO! and the YAHOO! logo are trademarks of Yahoo! Inc.

Signing up for a Google account is not much different from Yahoo!'s process. Google accounts are self-service (similar to Yahoo!'s free program), but they cost $5 to sign up.

For any paid placement account, you provide a credit card number and decide how much money to place into your account (as little as $50) and you are on your way. When a searcher clicks your ad for a keyword, the amount you bid for that click is deducted from your account. You can have the account automatically replenish from your credit card, you can have a set amount taken from your credit card each month, or you can be notified when your account dips below a certain point (so that you can manually add more funds).

As you set up your account, you are asked to specify the geographic locations for the where your ads should run, as Figure 14-7 shows. The default country for both Yahoo! and Google is the United States, but you can specify any other country where they currently show their ads (from their own sites or from the sites of the syndication partners). Think carefully before you decide what to doif you do not do business in all of these countries, you do not want your adsrunning there. Similarly, if you do not intend to translate your ads and landing pages to local languages (to tie into your country Web site), you will not drive any conversions.

Figure 14-7. Selecting Yahoo! countries. Yahoo! offers U.S. targeting by default, but allows selection of other countries during the account setup process.

Reproduced with permission of Yahoo! Inc. (c) 2005 by Yahoo! Inc. YAHOO! and the YAHOO! logo are trademarks of Yahoo! Inc.

You can further select location down to city and zip code if you want to refine your targeting using the geographic targeting capabilities discussed earlier in the chapter. We discuss this technique more later.

Select Your Bid Management Tool

Now that you have set up your paid placement and shopping search accounts, it is time to choose the software you will use to manage your campaigns, which is called a bid management tool. Bid management tools automatically adjust your paid placement bids and aggregate click and conversion data. A good bid management tool can spell the difference between a successful campaign and a failure.

A few bid management tools are distributed as software you install on your own computer, but most are offered as services from Web sites. Which specific tool you choose depends on what search engines you have selected:

  • Shopping search engines only. This situation's easy. If you are only using shopping search engines, you do no bidding and need no tool to manage bidding. Most bid management tools also monitor your trusted feeds and your shopping search reporting.

  • Just one paid placement engine or a small paid search budget. If you use just Google, or just Yahoo!, for example, you can use the tool they each provide for free with your paid placement fees. (If you use the paid placement vendor's free tool, it will monitor only the bids placed with that vendor.) Also, if your budget is less than $10,000 per month, it might not make sense to pay the fees for a high-end bid management tool.

  • Any other combination. If you use more than one search engine or you have a large paid search budget, you will probably want to use a third-party bid management tool that can monitor bids across search engines and provide enhanced tracking and adjustment of bids. If you choose a third-party vendor, you must be sure to pick one that is authorized by the paid placement vendors you are working with. Double-check before you buy.

If you are working with a search marketing vendor, they might handle the tracking and reporting for you, so you might not need to choose a tool yourself. Twenty-five percent of search marketers choose that route. Some search marketers prefer to be more hands-on, however, even when delegating the paid search campaigns to a vendor. If you want to use the tool to see how your campaigns are doing, you might want to provide guidance to your search marketing vendor about the features you want.

Even if you did not decide to work with an external search marketing vendor for your overall campaign, you might find that you would like to work with one to handle your paid search program to reduce the work for you. Here are a few that are especially noteworthy, although there are many other good choices:

  • Did-it ( The co-founder of Did-it, Kevin Lee, is one of the pioneers in paid placement search marketing. He's built a full-service paid search management offering based on customizable technology that uses proven strategies and metrics to optimize your campaigns.

  • MarketLeap ( MarketLeap, with its parent company Digital Impact, is one of the leaders in organic search marketing and have the resources to handle any size campaign in paid search.

  • Performics ( Acquired by DoubleClick in 2004, the main advantage of Performics is its capability to integrate reporting with tags used by DoubleClick for banner advertising. Performics is one of a few Yahoo! Strategic Partners, signifying skill in successfully managing Yahoo! campaigns.

  • The Search Works ( BidBuddy offers full-service paid search management and is currently the only tool approved to work with all leading European paid placement vendors.

For those on smaller budgets, or those who would prefer to manage their campaigns themselves, bid management tools that do not require a full-service relationship with a search marketing vendor are available. However, bid management tools are no one-size-fits-all proposition. What you need depends on your circumstances. Here is a checklist of questions you should answer before researching the right bid management tool for your program:

  • How much time are we willing to invest in this project? Full-service vendors do all the work for you, high-end tools automate most of the work, and inexpensive tools leave a lot of manual work for you.

  • How many keywords will I need to manage? Most bid management tools are priced based on the number of keywords that must be monitored. The more keywords, the higher the price.

  • How many times per day will I need to monitor and update my bids? Some tools can update only a few times per day, or they require higher-priced versions for more frequent updates.

  • How high is my paid search budget? As you might expect, the lower-end tools often lack the functions needed for large paid search budgets$100,000 a month or more. Better tools can handle high volumes of click and conversion data while providing strong analysis functions. Don't skimp on your tool when it can mean so much more in revenue and savings.

  • How detailed must my reporting be? If you want to calculate your statistics by keyword, by engine, by time of day, and by other very detailed breakdowns, choose a tool with the strongest reporting capabilities. If you are serious about search marketing, and have a large budget, you will need the detailed reporting to give yourself the information that keeps your efficiency high. We discuss reporting on paid search in Chapter 15, "Make Search Marketing Operational."

To make decisions on the precise features you are looking for in your bid management tool, you need to understand some of the most-used tactics in paid search marketing, such as gap surfing, bid jamming, friendly URL, and dayparting. If you plan to use any of these tactics, select a tool that supports that tactic.


In your relentless drive to become more efficient in the paid placement marketplace, your business might benefit from analyzing the timing of your conversions. Some businesses have obvious timing characteristicsthe toy industry sells a huge portion of its inventory before Christmas, for example. But such seasonal shifts do not always matter in search marketing unless conversion rates change, too.

Here's why. If all that happens during the Christmas shopping season is that more searchers are looking for toys, but they click through and buy at the same rate, your per-click bids should be the same all year round. If conversion rates are higher at Christmas, however, those clicks are worth more than the rest of the year. If you have analyzed your business and found that Christmas shoppers convert at a higher rate, you can raise your bids (and lower them the rest of the year) to increase your sales with the same search marketing budget. If your competitors bid the same year-round, they might be bidding a bit too low at Christmas and a bit too high at other times.

Your analysis might uncover patterns much more granular than seasonal swings. Suppose that Snap Electronics found that their digital camera conversion rate is much higher on weekends than on weekdays. Perhaps their customers are more likely to spend the time to research the model they want and make a purchase decision in the comfort of their home when they have some free time, rather than while they are busy at work. If true, the clicks Snap gets on the weekends are more valuable than those on weekdays, and thus worth higher bids. Snap could drive more revenue by raising their bids on weekends to reflect the true value of those clicks, and lowering them on weekdays. That way, they will land higher in the rankings at the times their customers are most likely to convert.

But why stop there? Dayparting is a technique that enables you to set your bids based on time of day. What if Snap analyzed its conversions and found that, during weekdays, conversions dipped under 1 percent during working hours (except for a three-hour window for U.S. lunchtimes) and peaked at 3.5 percent just after 8 p.m. U.S. Eastern time? Wouldn't it make sense to tune the bids by time of day to reflect the value of the clicks? Bid management tools that support dayparting do just that, automatically adjusting your bids through the day based on rules you provide. You might even find times you should "go dark" by shutting off your bids completely.

You should notice that even during periods of low conversion, if your conversion rate is high, it might still be very profitable. Snap might find that early morning hours, although delivering low sales compared to other times of day, has a high conversion rate. Although conversions are not very high, clicks are also low, so the low fees with high conversions make it a very profitable time period.

It is typical for conversion rates to fluctuate for every business, but you want to know, "Is there a pattern?" Without a repeating pattern, timing techniques do not work. After all, you need to know what will happen, not what has happened.

All this analysis can be a lot of work, but it pays off. Many times, the pattern crosses your whole product line; as the market gets more efficient, however, you might need to analyze product by product or even keyword by keyword to keep finding the edge you need. If you keep looking, however, you will find it.

Table 14-4 shows some standalone tools that do not require a full-service commitment from a consulting vendor. (Some of these tools are offered by vendors that will operate them in full-service mode if desired.) We have included the Google and Yahoo! tools in the table to help you compare.

Table 14-4. Bid Management Tools (Many vendors provide software and services that help automate paid placement bidding and reporting for you.)





Price per month

Gap Surf

Bid Jam


Bid Rules

Atlas One Point










Basic only

$129 one-time

Dynamic Bid Maximizer




Basic only







Basic only









Yahoo! (formerly Overture)




Basic only






Basic only





Basic only


[1] Yahoo! version is priced and packaged separately from version supporting all other search engines.

[2] Version supporting U.S. search engines is priced and packaged separately from version supporting European search engines.

Each tool listed in the table supports a different number of paid placement search engines and provides varying features for its automated bidding functions. Gap surfing, bid jamming, dayparting, and automated bid rules are some of the most-requested functions for these tools, so we highlighted which tools offer them. Atlas One Point and Keyword Max offer the most automation of any of the tools, with objective bidding optimization based on some metrics we explain later in the chapter, such as cost per action (CPA), profit margin (PM), return on advertising spending (ROAS), and return on investment (ROI). The other tools offer only basic rules that do not use objective analysis.

Due to agreements with Yahoo!, several tools are offered as Yahoo! versions and separately priced versions for managing all of the other PPC programs. This adds to the tool's cost, obviously, but worse yet is its impact on ease of use. You cannot integrate all of your bid adjustments and tracking in one place, causing extra work for your team.

The pricing shown in the table is the lowest offered for any version of the tool, but might run considerably higher for large paid search programs. Some packages limit the number of users, some the number of keywords, others the number of bid adjustments per day. Regardless, the lowest-priced version of each tool usually has some limitations.

Each of these tools can raise your efficiency while reducing your workload, but they cannot eliminate human monitoring. For example, they might lower your bid to the minimum amount if it gets few conversions, but it will not drop the keyword completely, which might be the best thing to do with a real loser. Regardless, the higher your paid placement budget, and the more competitive your keywords, the more you will need a strong bid management tool.

Well, there you have it. You have learned all the tasks necessary to set up your paid search program. Now it's on to step two, where we crank up our first paid search campaign by deciding our target paid placement keywords and shopping search products.

Choose Your Targets

After setting up your paid search program, your next step is to choose the targets for your first campaign. For paid placement, this means selecting your keywords, whereas for shopping search it entails choosing the products you want to offer.

The shopping search decision is simpler, so we discuss that before moving on to the complexity of paid placement. To start with, shopping search engines are limited to a fairly small set of products, so you can only offer the subset of your product line that corresponds to the product categories handled by each shopping search engine.

If your site does sell some of the products offered by shopping search engines, you need to determine whether the per-click fee charged will allow your sales to be profitable. In general, shopping search engines have focused on products whose price tags are high enough that the per-click fees are worth the cost, even with a rather low conversion rate. However, you should have some confidence that your site can convert the referrals sent from shopping search engines before you sign up. If you are struggling to convert visitors now, getting more visitors who you have to pay for will not helpyou need to correct your conversion travails first.

The last step is one we covered in Chapter 10getting the data to the shopping search engine. Some shopping search engines crawl your site for free, but you must develop a trusted feed for most of them. That can cost some money that eats into your profitability, but it is typically a one-time hit. Sending the data each day has a rather low operational cost after you have automated the process.

Most merchants should start by sending some of their best-selling products to shopping search engines to see whether they can compete on price, shipping speed, and reliability. Will customers click through to your site above the rest? Will customers convert after they click through? Start testing some of your strongest products to see how you do, and then go from there. Later in this chapter, we provide tips on attracting the shopping searcher's click.

Paid placement is a much more complicated game. Because it is based on search queries, it is not restricted to any subset of your products or servicesyou can sell anything that searchers can type. Paid placement keyword planning requires four steps:

  • Select good paid placement keywords. In Chapter 11, we helped you identify the best keywords for your target market, and we don't rehash all of that advice here, but we do want to emphasize a few points important to paid search.

  • Organize your keywords. Paid placement engines enable you to group your keywords to make them easier to manage and to measure. We show you how to think about organizing yours.

  • Decide your match type for each keyword. You need to decide how the paid placement engine should match every keyword you bid on against the searchers' queries. You will see what your choices are and how to decide in every case.

  • Decide geographic targeting for each keyword. You might want to pinpoint which searchers should see your ad based on their physical location. Learn how.

  • Select your bidding strategy. Search marketers use many strategies for choosing the bids for their keywords. Some of them make sense, and some of them don't. Read on to avoid the rookie mistakes.

  • Make your bids. After you know your strategy, it is relatively simple to make your actual bids, but there are still a few pitfalls to avoid.

Let's start by discussing a few tips specific to choosing paid placement keywords.

Select Good Paid Placement Keywords

You might recall from Chapter 11 that natural limits exist when planning for organic keywordsyou cannot put landing pages in place for an unlimited number of organic keywords without ruining your site. With paid placement, you can target as many words as you want. But should you? Probably not.

Just as organic search has a natural limit, paid placement does, too. You will eventually get to the point that more keywords do not bring you more conversionsthey are not worth their costs. They might not be worth the per-click costs, or perhaps it just costs too many people to manage them. So although most businesses find that they can target more paid placement keywords than they target for organic search, they need to prioritize even those paid ones.

If you are just starting out, it makes sense to concentrate on the keywords that might bring the highest returns. Definitely start out with transactional queries, especially those with your own brand names in them. Add informational queries that you believe will convert. (If you have done a good job tracking your conversions for organic keywords, you have an excellent head start.)

One of the biggest mistakes for paid search rookies is to chase keyword demand. Just because a keyword gets high demand does not mean it will convert for you. Remember the lesson of "too hot" keywords. As challenging as those overheated words are for organic, with paid search you are paying for every one of those nonconverting clicks.

Paid placement also has some advantages for search marketers who want to increase brand awareness. You can buy keywords that hit your target market for brand awareness and design relevant landing pages. For example, if you have a famous spokesperson, buy her name. Now, we know that searchers are not actually looking for your company, but if you put up a "fan-zine" site about her that happens to have a bunch of ads about your product, you might be pleased with the brand awareness you can raise at a very low cost. For example, Adidas could buy the names of the tennis players who wear their shoes. If you sponsor a golf tournament, buy golf words before the start of the tournamentyou not only get brand awareness, you also get viewers for the event. The Web site for Castrol motor oil ( has a page about its spokesman, soccer star David Beckham, as shown in Figure 14-8, so Castrol might consider adding additional content and purchasing his name as a keyword.

Figure 14-8. Buying brand awareness. Castrol's Web site contains information on a celebrity spokesperson whose name draws many search clicks.

Remember that your search for keywords will pay off handsomely. Your friendly search engine rep will happily give you a starter list of words to buy for your industry, but don't you think your competitors get the same list? Those words are bound to be somewhat overpriced because they are the only ones being bought by any of your competitors that are too lazy to do the hard research work. This is where your iteration philosophy comes in. Continually expand your keywords to find new ones that convert at an acceptable rate. Find that keyword your competitors have not discovered yet.


When people think about trademarks and search, they always think about their competitors first. What would you do if your competitor bid on your trademark? Fortunately, it does not happen all that often. If it does, you can probably get it stopped easily (as we explain below). The more interesting cases, however, are not your competitorsthey are your partners.

The most common instance of other companies bidding on your trademark stems from your own distribution channels. Your affiliates bid for the names of your products that they sell. So do your retailers and resellers. And you are probably okay with that. Sure it's a little annoying that your distributors might outbid you and have a higher rank for your product. Yes, it's not the greatest when a searcher buys from the more expensive affiliate channel than direct from you. (It is more expensive because you have to pay the affiliate for the sale.) But after all, that is just good marketing, and that is why you have distributorsso they can sell your product.

Unfortunately, it is not always such a positive story. Sometimes your partners can be your worst enemy in paid placement. Suppose we told you that your affiliates were sending searchers for your trademark to a landing page that showed not just your product, but also several cut-price knockoffs from your competition? Or used versions of your product? Now how do you feel? Your affiliates might be taking searchers predisposed to buying your product and parading them in front of other companies' products, too. To them, it is just a way to pump up their salesthey do not particularly care whose product they sell. But to you, it is a variation on the old bait-and-switch scam.

As long as your partners feature your products on the page, it is unlikely that you can win a suit against them for trademark infringement. However, you have a few other remedies available to you. First, they are your partners. You can set ground rules for how they sell your product. You can insist in the affiliate agreement that affiliates put no other products on their landing pages except your (new) offerings. Some marketers are banning affiliates from bidding on trademarked names at all, ensuring that you get the traffic for your trademark keywords.

In many situations, you can also take your case to the search engines. Both Google and Yahoo! have trademark policies that put you in the driver's seat for your own trademarks. Yahoo! has rules allowing the use of trademarked names in paid placement keywords only for sales of that trademarked product, comparative advertising (a gray area where you might need to argue), or commentary about that trademark. Google's current policy allows the trademark owner to provide Google with either a blacklist of companies who are banned from buying that trademarked term, or a "whitelist" of the only companies that may. Trademark owners must initiate any actions to protect their trademarks, which they may do regardless of whether they have any advertising relationship with the search engines. Despite these policies, trademark handling is controversial and is increasingly being played out in court. As with so many things in search marketing, use the resources in Chapter 16 to stay abreast of this fast-changing topic.

Despite these protections, you must remember that some conflicts over trademarks are inherent in the trademark law itself. Trademarks are issued within particular industries, so do not be surprised if several companies have trademarked the exact same product name, albeit in different contexts. So if you work for Sun Microsystems and you are annoyed about sharing your trademark with dozens of newspapers named "Sun," you will just have to get over it. It's their trademark, too.

Organize Your Keywords

Even if you are a habitually sloppy type, you need to think about how to organize your paid placement keywords. How you group your keywords will simplify the management of your paid search program and enable you to measure performance you could never track any other way.

Both Yahoo! and Google provide ways of organizing your keywords. It would be no fun at all if they did it the same way, so we explain their approachesthey are similar. Both engines have the concept of an account, as we explained when you set up your account earlier in this chapter. Even small accounts are too large to be manageable without logical subdivision, however, so both Google and Yahoo! give you ways to slice and dice your keyword lists.

Yahoo! enables you to divide your keywords into categories, which you can use to store keywords that are somehow related to each other. It is completely up to you which keywords you put together in categories, but several ideas predominate:

  • Division of labor. If you have several people or several organizations managing your keywords, it can make sense to ensure that they store their keywords in separate categories. (Very large organizations sometimes have several Yahoo! accounts.)

  • Division of market. You might have some keywords directed at business customers and others at consumers. You might want to separate keyword by the country they are directed at.

  • Division of bidding. If you are employing different bidding strategies or tactics with different groups of keywords, you might decide to organize them into separate categories. For example, if one of your competitor employs bid jamming on several prominent keywords, you might want to put them in a separate category so that you can use a friendly URL or other technique that avoids a bidding war for those keywords.

  • Division of product line. Snap will probably place the digital camera keywords into a different category than the home theater keywords.

  • Division of reporting. Because you can roll up your measurements by category, you might want to isolate keywords from each other if you are testing something. For example, you might separate traditional paid search keywords from contextual keywords in Yahoo! so that you can test the contextual advertising effectiveness.

  • Division of message. Frequently, it can make sense for all of the keywords in a category to share the same advertising message. So all of the Snap keywords for a certain product might have the same (or very similar) ad and the same landing page, whereas those for other products would not.

You can see that there are many reasons to separate keywords into categories, but luckily many of them overlap. You can decide to have categories for each individual product within a country that share the same message, for example, and you are happy to have the reporting divided on that basis, too.

Google gives you the equivalent of categories, too, but refers to them as ad groups. Ad groups contain the individual keywords and the ads associated with them, just as Yahoo!'s categories do. But Google goes Yahoo! one better, by enabling you to collect multiple ad groups into campaigns. Google campaigns give you a higher-level organization that can make reporting much simpler. If you placed each related product within a country into an ad group, you could decide to do your reporting by country (by creating a Google campaign with all of the ad groups for that country) or by product (using a campaign that collected all of that product's ad groups). Google campaigns enable you to have very specific ad groups to manage your keywords within broader campaigns used for reporting.

Google recommends placing keywords into ad groups that share the same messages, or two to four variations of the same message. You will want to place synonyms, for example, in the same ad group because they might share the same ads and landing pages.

However you decide to divide your keywords, take advantage of what Google and Yahoo! offer you; it will simplify your reporting and your management. Next we look at another choice you make for your keywords: Which of the searchers' queries should they match?

Decide a Match Type for Each Keyword

As we continue to look at how to tell the paid placement engines which keywords you want in your program, you need to specify how the keywords you choose ought to match the words that the searchers use. At first this might seem odd to you. After all, search engines decide which organic pages match searcher queries all by themselves, so why do they need your help for paid search?

Paid placement differs markedly from organic search in that the search engines do not look at the landing pages to decide which ones are the best matches. They look at the bids for the keywords (and in Google's case, the searcher click rate). That's why they need your help. Besides, you want to help them, because you will increase your conversions and lower your costs.

The way search engines get your help is through match types. The most inclusive match typethe one that matches the most searcher queriesuses different names on Google (broad match), and Yahoo! (advanced match), but works almost the same way. If Snap Electronics bids on the keyword digital camera using broad/advanced match, any searcher query that contains all of those words can trigger Snap's ad. Word variants also match, such as any phrase that includes the words digital cameras. So, the queries "reviews for digital cameras" and "camera for digital photography" would both match Snap's keyword purchase for digital camera. The broad and advanced match types provide the most matches for your keyword, increasing your impressions and your referrals (as well as your fees).

Google and Yahoo! differ on a couple of points. Broad match is the default for Googlethe one you get if you do not select anything when you purchase a keywordbut advanced match is not Yahoo!'s default. In addition, Google's broad match also matches synonyms, whereas Yahoo!'s advanced match does not.

More restrictive than broad match is Google's phrase match, which matches any query that contains the keyword in order with no word variants. So, using phrase match, the queries "digital camera accessories" and "digital camera sale" both match digital camera, but "new digital cameras" and "digital slr camera" do not. Yahoo! does not offer anything equivalent to Google's phrase match.

One more restrictive match type remains, again with different names from Yahoo! (standard match) and Google (exact match). The most restrictive match type, Google exact match finds only the exact words as they are typed, so if Snap purchases digital camera with standard/exact match, no other queries will match. Yahoo!'s standard match is slightly less restrictive, also matching word variants and misspellings. Standard match is Yahoo!'s default, and it always shows standard matches before advanced matches in its ranking. Using this match type drives fewer referrals, but might give you higher conversion rates at lower cost.

The final match type is called negative match by both Google and Yahoo!, and it is very important. Negative match enables you to specify words that, if found in a searcher's query, would prevent your ad from being shown. If Snap Electronics wanted to use a broad/advanced match type for digital camera but found they were getting too many clicks that do not convert for digital video camera, they could add a negative match for the keyword video to eliminate those queries while retaining more inclusive matching for all other queries. Similarly, many occurrences of digital camera might be the phrase digital camera accessories. Do you want to negate accessories because you want a lower bid for that phrase and a higher bid for digital camera? Do your homework on what searchers enter and use negative keywords to target your keywords as tightly as possible.

Rather than getting bogged down in all the names, we refer to expanded match (advanced and broad) and restrictive match (exact and standard). More importantly, when do you use them?

Expanded match works best for very specific keywords, such as product numbers or unique product names ("snapshot slr" or "onetouch autofocus"), where virtually any query containing those words has a reasonable chance of converting. More common words can be good candidates for expanded match if their meanings always match your scope ("snap electronics") or if their meanings are unambiguous ("honda" or "ipod" or "cancun vacation"). Longer phrases can also be good candidates if you want to capture all variationssnapshot digital camera matches "buy a snapshot digital camera" and "snapshot accessories for digital cameras."

But expanded match does not work in all situations. Restrictive match is far better when your keywords have ambiguous meaningsthey can mean more than one thing. Single words and acronyms are especially susceptible:

  • Dallas (the city or the TV show?)

  • Ivory (soap or some jewelry?)

  • MP3 (a download or a player?)

  • China (the country or a dinner setting?)

  • Ford (a car or a person's name?)

For these ambiguous terms, you must use longer keywords (Ford Taurus or MP3 player) or add negative keywords to reduce ambiguity (Ford Motor can use Ford Gerald).

One of the best strategies for match types is to start most keywords with expanded match, using your metrics to gradually identify which keyword variations have the highest conversions. When you do, you can buy those keywords using restrictive match (possibly with higher bids because they are worth more) and eliminate the original expanded keywords. An alternative is to add negative match keywords to your expanded match keywords to eliminate the low-conversion variations.

Regardless of what strategy you employ for match types, keep an eye on the search engines for changes to their match typesYahoo! (then called Overture) completely revamped theirs as recently as 2004. The resources listed in Chapter 16 will help you stay informed.

Decide Geographic Targeting for Each Keyword

As discussed previously in this chapter, the major paid placement vendors enable you to target certain geographic locations of the searchers who should see your ad. If you do not take advantage of geographic targeting, your ad will be shown to searchers in the country or countries that you selected when you set up your account.

Geographic targeting might sound a lot like the local search concept we discussed earlier, but it is actually a completely separate way of using standard paid placement advertising to restrict your ads geographicallyshowing them only to searchers within the your area. With geographic targeting, a furniture store, for example, that delivers within 25 miles of its location can purchase the keyword furniture but ask Google or Yahoo! to show that ad only on computers within the delivery zone. Local search, on the other hand, expects the searcher to enter the location as part of the query.

Search engines can restrict their results to the searcher's geography through a technique called a reverse IP lookupthey compare the IP address of the searcher's computer against a table that notes that address's geographic location. The location is usually accurate, but not always. When accurate, searchers located within 25 miles of that furniture store will see the ad when they look for "furniture" but others would not.

Both Google and Yahoo! enable advertisers to specify the state, city, or even the zip code of searchers who should see an ad. With Google, you can go further, even targeting by longitude and latitude coordinates, as Figure 14-9 shows. Because geographic targeting is a relatively new idea in paid search, the various paid placement engines provide different capabilities, and they are still evolving. Use the resources in Chapter 16 to keep up with the latest changes.

Figure 14-9. Geographic targeting for paid placement. Search marketers can target by searcher location, even by longitude and latitude with Google.

Select Your Bidding Strategy

As with so many other parts of search marketing, you need a strategy for something as complex as paid placement bidding. Some of the concepts covered here can also be useful for deciding whether shopping search per-click fees are affordable for your product. (Shopping search engines are also beginning to offer premium services that show more information in your ad in exchange for higher per-click charges, so you need to decide whether those premium fees are worth it.) But most of what we present here is exclusive to paid placement.

And paid placement is all about bidding, which at first blush seems simple enough. You don't need much smarts to able to submit a bid, or even to "win" by being placed at the #1 position. However, that is not really winningwinning is driving conversions that cost less than they are worth. That kind of winning demands a bidding strategy.

Rookie paid search marketers typically have no bidding strategy, or at least they do not know they have one. But the old saying "even no decision is a decision" applies here. If you do not make an explicit choice about your bidding strategy, you are basing your decisions on something, but you are just not articulating what it is.

Most "strategy-free" search marketers run through a series of strategies, moving on to the next one each time they get burned by their current one. Table 14-5 shows a range of philosophiesthe ones at the top of the table tend to fixate on high rankings, traffic, and other measures of success, regardless of budget. In fact, two-thirds of all sites measure themselves based on nothing but pure traffic. The strategies at the bottom of the table tend to focus on budget constraints and efficiency rather than effectiveness. Most paid search marketers will benefit from one of the middle paths.

Table 14-5. Paid Placement Bidding Strategies (Some go all out to win the wrong game, whereas others pinch penniesyou should aim for the "sweet spot" in the middle.)


Goal for Paid Search

Pros and Cons


Top dogs

#1 ranking

#1 rankings do not guarantee conversions, or even clicks.


Traffic reporters

Highest traffic

Better than focusing on rankings, but if the conversion rate is too low, the traffic might be unprofitable.

Maximize costs


Most conversions

An obvious goal, but if the conversions are not profitable, they are not terribly valuable.


Highest return on advertising spending or highest return on investment

A useful goal, but it does not tell you if the return (revenue) is profitable.


Highest profit margin

A good goal, but your total profit could be higher at a lower profit margin.


Highest profit or highest lifetime value

The best goal if you are not constrained by a budget.

The sweet spot


Highest profit within budget

For most search marketers, the optimal goal, but optimizing total profit might be more valuable.


Lowest cost per action

Useful for building support for raiding budgets from other groups, but does not maximize profit.

Minimize costs

Efficiency experts

Highest clickthrough rate or the highest conversion rate

Useful for building support for a higher budget, but does not maximize profit.

Bottom feeders

Bargain keywords that have very low costs per click

You can uncover good value, but you will overlook high-performing keywords that cost more.


Stay within budget

No focus on any measures of success means you cannot tell whether it is working.

Newbie search marketers often choose a goal at the top or bottom of the table, without a great deal of thought. Sometimes these choices can be disastroustwo marketers both pursuing the "top dog" approach can burn through their budgets in a few days. Most of the time, poor choices are not so awfulmarketers who look for bargain keywords at low prices hurt their company's return on their marketing program, but it is not a tragedy.

To be fair, those pursuing top rankings do have a reasonsyndication. Paid placement ads are syndicated to partner sites, as you saw in Chapter 2. AOL, for example, shows Google's paid placement ads on the AOL search results page. However, AOL does not show all of the adsthey show just the top three or four. So, those that are constantly jockeying for the top positions do have their reasons; but if the top spot costs more than it is worth, it is not helping them.

A little thinking will lead you away from approaches at the extremesthe top or the bottom of Table 14-5. It is rarely as critical as top dogs think to be #1 in the paid placement rankings as opposed to #3. Likewise, skinflints that stay within their budgets without tracking any return on that investment cannot succeed at anything. Over time, successful marketers move to the middle, which some experts call objective biddingusing metrics to drive your bids. So what metrics are there?

Lifetime value is one way of quantifying what each new customer is worth. Direct mailers have used this metric for years to decide how much marketing investment to make in a customerthey do that by deciding what a new customer is worth, not just for the first purchase but for the lifetime of purchases from that customer. If your company can calculate the lifetime value for your customers, you can take the most long-term view for your search marketing.

Most companies are not so forward-looking, however. The next-best way of calculating the value of each conversion is its profit. If your company can calculate the profit on each conversion, a strategy of maximizing profit within your budget will probably be best. The problem with maximizing profit, however, is that it ignores the reality of a budget. For some companies, as long as you maximize profit, they will promise you the required cash flow to keep spending. This is good business, but it is a relatively rare approach.

More typically, your paid placement program will have some kind of budget constraint, and your job will be to maximize your returns within that budget. As you might expect, the best place to start is probably to maximize your profit within your budget. Some companies track profit marginthe percentage of profit per dollar of revenue. But not every company can track profit, either.

Most companies track success based on metrics built around sales revenue or advertising budgets (or both), rather than profit. Because your company's goal is to maximize profit, operating based on revenue and budgets is not necessarily wise. If your company already has a standard way by which it measures all marketing spending, however, you are best advised to use that same method for paid placement. By doing so, you allow paid search to be compared to other forms of marketing, which typically shows why search is such a good investment.

Because none of these other techniques maximize profit, you always need to be careful in placing too much faith in them. Still, they are frequently much easier to calculatemany of the bid management tools we showed earlier can calculate them automatically and even adjust your bids accordingly. So before we show you these magical formulas that enable you to place your paid placement campaign on autopilot, we once again warn you not to be seduced by them. If you can figure lifetime value or the profit on each conversion, that is great. Unfortunately, many search marketers cannot calculate these measures, so they need other approaches:

  • Cost per action (CPA). If you cannot maximize profit, you might settle for minimizing costs. For companies selling a single product, minimizing the costs per action (Web conversion) might work out just as well as maximizing profit, but there are dangers. Remember that your ultimate goal is to have the highest amount of profitnot the lowest cost for each item sold. You might minimize cost per action with low paid placement bidding that generates far fewer sales than you could profitably make. A related concept is cost per order (CPO), which is just a more specific case of cost per action that refers only to the action of purchase. Cost per action can be applied to any Web conversion, not just purchases. CPA is calculated as the number of actions divided by the advertising costs (the paid placement fees), so 20 conversions that cost $20 in click fees yield a CPA of $1.

  • Profit margin. Again, maximizing total profit is usually the best, but maximizing profit margin can be useful if you do not inordinately cut into your sales volume. As with cost per action, however, high profit margins on each sale might not be as good as slightly lower margins on much higher sales. Profit margin describes your profit per unit sold, but says nothing about your sales volumelow sales with high profit margins are not typically the optimal case. Profit margin is calculated as profit per unit sold divided by the sales price, so a $10 profit on a $100 item yields a profit margin of 10 percent.

  • Return on advertising spending (ROAS). You can identify underperforming or expensive words by calculating each keyword's ROAS, which examines the revenue you get for those click fees. ROAS is not oriented toward profit, but it does help you optimize the revenue within your budget. ROAS is calculated as the dollars of revenue captured for every dollar of advertising, so $2,000 in revenue from $20 in advertising yields an ROAS of $100.

  • Return on investment (ROI). Often batted around in common usage, ROI is calculated as the percentage of profit returned from your spending, so $200 in profit divided by $20 in advertising spending (paid placement fees) yields an ROI of 1,000 percent. Like ROAS, ROI can identify your worst-performing keywords, so that you can eliminate them or reduce your bids on them. Conversely, if your budget increases, the highest ROI keywords might be the ones you should test to see whether higher bids result in higher profits (even if ROI decreases), because the highest ROI does not always lead to the highest profit.

Table 14-6 shows how different strategies for objective bidding can result in very different outcomes. In each case, a bidder optimizing for one of these metrics can succeed in returning a profit, but a different strategy that optimized none of these metrics returned a higher profit.

Table 14-6. Objective Bidding Strategies (Different bidding strategies for selling the same $100 product can produce different overall profits.)

Metric Optimized

Sales ROAS

Profit per Sale

Paid Search Fees


Profit Margin



Overall Profit










Profit margin



























Overall profit









Understandably, if your company uses one of these metrics to judge the value of all marketing spending, it behooves you to do so, too. A variation on optimizing for a single metric is to use a self-funding strategy, which always ensures that your sales are profitable while possibly allowing you to reach higher sales volumes (and thus higher overall profits). To pursue a self-funding strategy, you start by calculating your allowablethe highest CPA that you will pay for a particular product. After you know your allowable, you can use the conversion rate to determine what your highest per-click bid should be, as shown in Table 14-7.

Table 14-7. Calculating Bids from Allowables (If you know how much each conversion is worth, and you also know your conversion rate, you will know your maximum bid.)


Maximum Profitable Per-Click Fees at Different Conversion Rates




























Using Table 14-7, Snap Electronics was able to pinpoint its optimal bid for its digital camera keywords. For example, Snap decided that it was willing to pay $50 for every sale of a Snap Shot digital camera$50 was Snap's allowable. (In real life, you would have a different allowable for every model of camera, so that you would allow more spending for models that returned higher profits.) Expecting to convert 2 percent of all keyword referrals into sales, Snap's opening maximum bid for digital camera keywords was set to $1.

We keep harping on the point that optimizing your bids for any of these metrics does not maximize your profit, but you can at least experiment with your allowable for each product to increase your profit (if you are able to calculate your profit in the first place, of course). You can increase or decrease your allowable, letting your bid management software adjust your bidding, and you can keep measuring your overall profit until you seem to have an allowable that maximizes profitor gets it as high as you have been able to, at any rate. Economists refer to this as testing the elasticity of your marketstretching your allowable to see when profitability declines. Although not perfect, this strategy improves your overall profits without requiring expensive manual bid management.

Make Your Bids

Finally, let's get to what you have been waiting formaking your bids for your paid placement keywords. If you have adopted an objective bidding strategy and analyzed your numbers, you can either use your bid management software to control your bidding, or you can do it manually. For large campaigns or for competitive keywords, you need to rely on automated bid management to succeed.

The minimum bid that you can place on a keyword ranges from 1¢ to 10¢, depending on the search engine, and every bid must be at least 1¢ higher than the bid below it. The preceding section showed how you can use your allowable and your conversion rate to calculate your maximum bid. Except it is not so simple.

The maximum bid we calculated is just a starting point. Until you start buying keywords and you track your conversions, you do not know whether your conversion rate really is 2 percent. And even if you do average a 2 percent conversion rate across all of your keywords, some will undoubtedly convert at higher rates than others.

Snap Electronics struggled with this problem at the start of its paid search campaign for digital cameras. They wanted to start with the most popular keyword, digital camera, so they could drive the most conversions to the site from the start. They knew that they could bid $1 for that keyword, and they remembered when they did the budget exercise back in Chapter 8 that the top spot went for just 85¢ per click. Unfortunately, a few months had passed while getting their program approvednow it was Christmas season. Dozens of new competitors were bidding up this overheated keyword. Figure 14-10 shows the top Yahoo! bid has escalated to $2.50 per click! Snap would have to get an impossible 5 percent conversion rate to make a profit, according to its calculations from Table 14-7. Snap reluctantly decided to move on to less-popular keywords.

Figure 14-10. Making your bid. Yahoo!, like all paid placement engines, provides a simple way for you to make your maximum bid for any keyword.

Reproduced with permission of Yahoo! Inc. © 2005 by Yahoo! Inc. YAHOO! and the YAHOO! logo are trademarks of Yahoo! Inc.

Because Snap cameras get great reviews, Snap decided on the keyword digital camera reviews. Snap was excited to see the keyword had just a 35¢ bid for the #1 spot, although they knew it would drive far less traffic than digital camera. Snap quickly entered a maximum bid of $1 and took the top spot, knowing that they would never pay more than a penny higher than the #2 bidder. Unfortunately, a few days' worth of data revealed that the conversion rate for that informational keyword was distressingly low, less than 0.5 percentit was not worth what they were paying. Snap was forced to temporarily withdraw the bid and to focus on other keywords that would convert at higher rates. Fortunately, they found that their branded keywords, such as snap digital camera and snapshot camera converted at more than 2 percent and their competition for those keywords was decidedly lessSnap took the top spots for less than 25¢ each, providing very strong returns.

Snap was smart to start their paid placement campaign by testing with a very small part of their budget. As soon as they got some results, they iterated their bids to go after new keywords that paid off. They will continue to do so as they gain experience.

Besides setting your maximum bids, you can also set budget maximums (either on a weekly or a monthly basis), so that you do not spend more than you should. If Snap Electronics had followed through on buying a popular keyword, such as digital camera, it would have drained its monthly budget in just a few days. Instead, Snap could set a daily maximum spending rate to spread out its budget throughout the month. The search engines accomplish this magic by rotating Snap's ad among other ads, so that even if Snap had the #1 bid, their ad would not be shown to each searcher with a matching query. The ad would be shown just enough to keep spending under the "cap" for the day.

Sounds great, right? It can be, when used properly, but spreading out your budget by letting the search engine randomly show your ad is no way to maximize your conversions. You would be better off taking other actions to stay within your budget:

  • Target keywords with less demand but a higher conversion rate instead of the popular keyword.

  • Use dayparting so that the clicks you receive for the popular keyword come at the times you get the highest conversion rate.

  • Lower your bid for the keyword so that although you get fewer clicks, you pay less for each one.

Daily and monthly caps do have one good usethey protect you from sudden shifts that could be disastrous to your budget. Suppose that you were running the search marketing for Hilton Hotels in France. What do you think happened to your paid search budget the day that celebrity Paris Hilton burst upon the scene with a naughty video? If you had the top bid for the keyword paris hilton, you might have gotten a lot of erroneous clicks to drain your budget before you figured out what was going on. A daily cap could stop the bleeding.

Caps can also save you from yourself. Paid placement requires precision in keyword selection, bidding, and ad copy. Do it long enough and you are bound to make a mistake that drains your budget without any conversions. Caps can stop a run on the bank.

In Google, you can set caps by campaignYahoo! has caps only for your whole accountso you can put lower performers in their own Google campaign and turn them on and off depending on how the rest of your campaigns are spending your budget.

But don't use caps to stay within budget when you could be making your spending more efficient. It's the lazy way to keep from blowing the budget, but it hurts your return. No random ad placement by search engines can drive as many conversions as your active management based on metrics will. Use caps as a firewall against disasters, not as an operational strategy.

Attract Searchers' Clicks

Take a deep breath! You're getting there, but you still have a little more to learn. It is not enough to set up your program and bid on the right keywords. Just as a direct-mail piece needs the right words to get you to open the envelope, you need to get searchers to click your listings. Effective copywriting is crucial for driving clickthrough rates for your paid placement listing, but for shopping search it is a different game. We look at both, starting with paid placement copywriting.

Optimize Your Paid Placement Copy

Nineteenth-century American humorist Henry Wheeler Shaw once said, "Money will buy you a pretty good dog, but it won't buy the wag of his tail." And so it is with paid placement, where your per-click fees can buy impressions for your ad, but only your copy will get the clicks you need from searchers.

You recall from Chapter 11 how difficult it can sometimes be to craft pages that contain the search terms (so that both the search engines and the searchers find what they are looking for). With paid placement, you will have no such difficultyyou can lead searchers to whatever pages you want with your paid ads. Well, almost.

Paid placement engines do have editorial guidelines designed to protect their business. Each search engine has somewhat different rules, but they are very similar:

  • Don't circumvent the click. Search engines get paid only when searchers click, so they are understandably displeased with ads that show phone numbers or e-mail addresses that allow the searcher to buy from you without clicking.

  • Don't hype it up. Excessive capitalization and showy punctuation (especially exclamation marks and question marks) are frequently rejected. Use of impossible-to-prove superlatives (best, most, greatest, cheapest, and so on) are also a quick ticket to a blocked ad.

  • Don't hide your identity. Be clear about who you are. If you are an affiliate, for example, don't try to pass yourself off as the manufacturer.

Both Google and Yahoo! publish extensive tips about how to follow their guidelines and how to make your ads as successful as possible. There are three critical parts to paid placement ads, as illustrated in Figure 14-11:

  • Title. The first line of the ad must catch the searcher's eye or you will get very low clickthrough.

  • Description. Your benefits and call to action go here. If you hooked them with the title, this is where you get them to click.

  • Display URL. Not the URL that searchers will click through to, it is a shortened version that usually is just the domain of the company ( so that searchers know where they are going when they click.

Figure 14-11. Anatomy of a paid placement ad. All paid placement ads have the same three components, as this diagram from Google demonstrates.

Source: The Maximum Effect p. 26

Google's ads are shorter than Yahoo!'s, which makes them a bit more challenging to write, but some of Yahoo!'s syndication partners truncate the ads, so you ought to put your best stuff up front. The key advice for creating good titles and descriptions are the same for any paid placement ad:

  • Use the keywords. Searchers are fixated on finding the words they just typed. They scan the search results page looking for themads with keywords attract nearly 50 percent more clicks. Sometimes, the keyword itself is so long that it does not fit in the title (and it would badly clutter up the description), such as snapshot SLR x900 digital camera reviews. In that case, strategically shorten the keyword, perhaps to snapshot x900 reviews. If you use the most important words in the searcher's query, your click rate should be strong.

  • Sell factual benefits. Why should searchers click your ad? What do your customers want? Do you have a lower price? Free shipping? Quick delivery? Are you a reliable supplier? Do you have a key benefit for the product itself? Can you quantify that benefit? Try to say something factual that your competitors cannot. If you are the manufacturer, make sure you explain you are not an affiliatethat might improve your click rate. Small businesses using local search need to emphasize their locationuse the name of the locality (Central New Jersey) and also use imagery words, such as good neighbor, that a national brand cannot always get away with. Fact-based ads get 50 percent more clicks than "sales-y" ones. Use full sentences to increase the fact-based effect, rather than breathless phrases that reek of hype. Unless you offer a compelling factual benefit to searchers, they will not click through to become customers.

  • Attract attention. Although the editorial guidelines restrict your use of capitalization, exclamation points, and hyped-up copy, you should try to use the strongest words you can within those limits. You cannot use greatest but you can use great. Test your copy with different words that attract attentionsave and discount are always attention-getters, but if you can find exciting words to describe your benefits while remaining factual (and not breathless), that approach is very successful. And do not hide your well-known brand namesrecognizable brands cause searcher clicks, so highlight yours.

  • Call the searcher to action. Make it abundantly clear what you want them to do. Not "click here," but rather, use words that speak to the searcher's task. If you are selling something, use "buy." "Download this case study." "Get a free quote instantly." If you appeal to the searcher's intent (remember Chapter 4, "How Searchers Work"), you will attract the searcher's click.

  • Create urgency. Your call to action must be clear and must impel the searcher to click now. "Order today to receive before Christmas." "Only 50 remaining." "All orders placed in May receive this free gift." "Discounted 30 percent through Saturday." You get the idea.

After you have decided on your wording, it's time to actually place your ad. It can save time to use the same copy for an entire Yahoo! category or Google ad groupthat is why you collected them together in the first place. You can then edit each keyword individually to fine-tune the copy, as shown in Figure 14-12.

Figure 14-12. Editing titles and descriptions. Yahoo! shows exactly how your ad will look when presented in Yahoo! and the other syndication sites.

Reproduced with permission of Yahoo! Inc.c. © 2005 by Yahoo! Inc. YAHOO! and the YAHOO! logo are trademarks of Yahoo! Inc.


We have emphasized all the ways you can increase the clickthrough rate on your ad, but sometimes you have a different problemyou get the clicks but not the conversions you expected. Sometimes that is a problem with your landing page, or other pages on your site, but it can also be a sign that your ad is not properly qualifying your searchers.

Just as important as getting the right people to click is dissuading the wrong people from clicking. Write your ads so they attract the searchers who will actually convert. If you attract unqualified visitors, you will drain your budget with low conversion rates. Snap Electronics found that their ad for digital cameras keywords needed to emphasize Snap's exclusiveness and its quality. These words sufficiently positioned the camera away from bargain hunters who clicked and then blanched at the price. By dissuading those unqualified searchers, Snap lowered its per-click fees and raised its conversion rate.

Qualifying customers is important, but it has its risks, too. If the clickthrough rate for your ad drops too low, Google will stop showing it (because its ranking algorithm considers both click rate and bid). The other paid placement engines will also stop showing it because they flag any ad that drops below a certain clickthrough rate.

Sometimes the best way to qualify your customers is to change the way you buy keywords. If the click rates for Snap Electronics dropped too low, they could change their keyword strategy so that they purchased keywords that fit their product image. Instead of trying to target digital camera, Snap could add negative keywords (such as cheap, discount, or bargain, to eliminate the wrong searchers). Or Snap could go after more specific keywords, such as best digital camera or 8 megapixel camera. Making your keywords more specific lowers your per-click fees and raises your conversion rates without lowering your clickthrough rates.

We have focused on titles and descriptions, but the last part of a paid placement ad, the display URL, is also important. Display URLs tell the searcher where their click leads them. If you have a well-known brand or Web site, make sure that the display URL plays it up.

Manage Your Paid Placement Ads

We have continually counseled you to go after as many keywords as you can profitably afford, and we have told you to place keywords in every ad, and to test variations against each other. How can you reduce the labor for all this work?

Let's start with inserting keywords into hundreds or thousands of ads. You have probably set up Google Ad Groups or Yahoo! categories for keywords that are similar in meaning. That's great, because those keywords can share the same ads, reducing your copywriting work. But it causes a new problem, because you want the keyword the searcher entered to appear in each ad. If you have used the same copy for each ad, how do the keywords get inserted?

With Google, you can use a clever tool called Dynamic Keyword Insertion (DKI). When you define your titles or descriptions, you can use curly braces to indicate the place where you want the keyword inserted into your copy. Snap Electronics has two dozen models that they placed in a single ad group so they could share the same copy for their ad across all models. But they wanted the model name in the title, so they coded their title as "Buy { Keyword: SnapShot Cameras} direct"which inserts the searcher's keyword dynamically. For example, if the searcher entered "snapshot slr," the title of the ad would read "Buy snapshot slr direct." By controlling the match type of the ad group, Snap ensured that only phrases with SnapShot were part of this ad group. Sometimes, however, the keyword entered by the searchers are too long to fit in the title, such as "snap snapshot slr x900." In that case, the default text after the "Keyword:" in the braces would be inserted instead, creating a title of "Buy SnapShot Cameras direct."

Google's DKI can insert keywords in the title or the description, enabling you to raise your click rate without much extra work. Yahoo! and other paid placement engines do not offer any comparable tool, but they usually accept ad content submitted using spreadsheets, so you can use macros in your favorite spreadsheet to insert your own keywords into standard ad copy. You will have to code your macro to count the number of characters to ensure you do not exceed the length restrictions for the engine you are feeding (substituting default text in that case). It is not as elegant as Google's capability, but can be equally effective. Whatever it takes, make sure that you get the searcher's keywords into every ad possible. It dramatically raises your clickthrough rate.

However, it is not the only way to raise your click rate. You can also test multiple versions of ad copy for the same keyword to see which one draws more conversions. As you might expect, this can be labor-intensive, too. So-called "A/B testing" (because you test version A against version B) can be automated by many bid management tools. Google offers a feature called auto-optimization that enables you to rotate up to six different versions of ad copy, with Google eventually settling on the one with the highest click rate automatically. Some advertisers prefer to test their ad copy themselves, because they want to conduct more extensive sampling than Google does or because they want to select the winning version based on conversion rate rather than clickthrough rate.

Regardless of how you manage your ad copy, finding ways to raise your clickthrough rates with the least possible effort is a winning strategy. You can also work on your shopping search listings to attract more clicks, as you will see next.

Fine-Tune Your Shopping Search Data

Optimizing your data in a shopping search engine is the key to attracting clicks from searchers. Figure 14-13 shows why shoppers use shopping search enginesyou need to satisfy those needs to persuade them to click your listing.

Figure 14-13. Shopping search uses. Shoppers like shopping search engines for many different reasons.

Source: ForeSee Results (December 2002)

To attract clicks on shopping search engines, you must concentrate on three major factors:

  • Metadata. As discussed in Chapter 10, preparing your trusted feed properly ensures that your product listings will be found. (Some shopping search engines will also crawl your site or allow you to enter your listings.) If your product list does not contain complete and correct metadata, your products will not be listed for all of the searches that they should be.

  • Price. Some shopping search engines rank results on price, so having the lowest price gets you to the top of the list. (PriceGrabber,, and Shopzilla rank by price.) As you might expect, having a low price attracts clicks regardless of whether the search engine ranks by price or not.

  • Merchant rating. Yahoo! Shopping and can show listings with the highest merchant ratings at the top. As with price, your merchant rating is shown in all search engines, and high ones persuade more clicks than lower ones.

So, pay attention to your data to ensure that your listing is found, and pay attention to the ranking factors to be placed at the top of the list. Ranking at the top is importantone leading shopping search engine reports that 50 percent of all shopper clicks go to the top five listed merchants. When first starting out in shopping search, you might need to discount your price to attract shoppers until you boost your merchant rating. Some shopping search engines allow you to pay higher per-click fees to become a "featured" merchantNexTag always ranks by per-click bids, just like a paid placement engineso that is another way to be listed first in the search results.


Your merchant rating is one of the most important parts of your shopping search listing. Some shopping search engines rank the merchant results for a product by merchant rating (whereas other rank by price), but all display your rating with your listing. Searchers use merchant ratings as a quick check on your reputation before deciding whom to buy from. reports that highly rated merchants are 30 percent more likely to receive clicks than others.

Merchant ratings are calculated from your reviews by shoppers, so it is a popularity contest. How can you run with the popular crowd? Focus on the important things to get the reviews you need:

  • Correct content. When an item is out of stock, remove it from your listing as quickly as possible to avoid frustrating customers with back orders. Fix any errors in metadata that would cause your product to be found for the wrong searches or would otherwise mislead searchers about the product.

  • Quality goods. Make absolutely sure that your products do everything you claim, and that they are not damaged. If customers believe you have snookered them with a knock-off or a refurbished model when they thought they were buying a bona fide new item, your rating will suffer. So if you do sell knock-offs or used goods, be very clear about that in your description to avoid bad reviews later. Don't just mention ithit them over the head with it so there is no confusion.

  • Quick shipping. Customers want it, and they want it now. If it takes you a couple of days to get it off your loading dock, expect some impatient folks to nail you with a bad review. Be explicit about how long it will take so that expectations are not higher than what you can (literally) deliver. Use e-mail throughout the process to show the progress of the shipment.

  • Excellent service. Things will sometimes go wrong. When they do, correct them immediately to make an unhappy customer happy again. It is strange but true that customers who were upset and had their problem fixed often rate you higher than those that had no problem at all. If customers post a bad review that contains specific complaints, answer those complaints online with a specific offer to fix the problem. (Sometimes those complaints are fakes from your competitors trying to drive down your rating, so answering them gives them less impact.)

Speaking of fake complaints, that is one of the things that merchants may not do to their competition. Similarly, merchants may not "encourage" anyone to offer a positive review of their service by crafting the words, providing financial incentives, or contacting them by e-mail or phone. Or by having employees and other biased parties post reviews. If the shopping search engines believe manipulation is occurring with merchant ratings, they change the ratings to compensate.

You don't need to resort to trickery to maintain high merchant ratings. Stick to the basics and your merchant rating will soar. That will do more to drive your conversions than anything else you can do.

Optimize Paid Search Landing Pages

We covered organic search landing pages in detail in Chapter 12, and many of those tips apply to paid search landing pages, too, except that organic pages must appeal to search engines to be found in the first place. Paid search landing pages need appeal only to the searcheryou can optimize paid search landing pages to drive your visitor to a conversion.

For paid placement, a few editorial guidelines are insisted upon by paid placement engines:

  • Include the keywords. Although you need not optimize your page the way organic landing pages require, the editorial department of every paid placement engine will inspect your landing page to make sure it is relevant to the keyword purchased. Do make it obvious that your searcher has landed in the right place for the query entered.

  • Stay on topic. If you buy the keyword racing cars and try to sell automobile batteries, the paid placement engines will not approve your ad. Only pages relevant to the keyword topic will be accepted.

  • Reinforce your offer. In addition to mentioning the keyword, you must ensure that anything you have called out in the copy be prominently shown on the landing page.

  • Drop pop-ups. Visitors hate pop-up or pop-under advertising, so paid placement engines do not allow them. We recommend you dump them from your whole site, but you must at least eliminate them from your landing pages.

  • Enable the "back" button. Some pages disable the browser's "back" button, so that the visitor cannot easily return to the search page. If you want to annoy your visitors, it is hard to top this practice, and paid placement engines will not let you get away with it.

These guidelines (and the rules we discussed earlier for the ads themselves) are not very hard to follow, but the search engines are quite serious about them. Catherine Seda, in her book Search Engine Advertising, reports that Yahoo! editors reject as many as 30 percent of all ads submitted to them, many for relevancy. Because Google's ranking algorithm rewards higher clickthrough, it does not need to spend as much time policing ads and landing pages for relevancy, although it rejects many ads, too.

As with organic search landing pages, you must make it simple for visitors to convert. If you reinforce what searchers are looking for (their search keywords) and why they clicked your pages (your ad copy), you will likely get a good conversion rate. Remember that you might have several pages between your landing page and your conversion page, so make sure that the entire path is designed with conversion in mind. For shopping search, the path is usually much shorteryour shopping search landing page is typically the "buy" page for that product on your site.

Whether using paid placement or shopping search, your landing pages (and your entire conversion path) requires careful design and, above all, testing. Just as you test everything else about paid search, test your landing pages, too. Test the amount of copy on the page, the size of the product images, the kind of language used, the links to background information, and more. To test, you need to measure your conversions, which we discuss in Chapter 15.


Click fraud is the elephant in the living room that the paid search industry does not like to talk about. But click fraud is very real, and you need to understand the issue and keep abreast of the latest news to protect your search marketing budget. Click fraud, in essence, drains your search marketing budget with clicks that are not intended to ever convertclicks designed just to collect your per-click fee. It might be hard to stomach, but some experts claim that as many as 20 percent of all paid search clicks are fraudulent. Let's examine how click fraud occurs.

Whenever your paid placement or shopping search listing is clicked, you must pay your click fee, but you get nothing for that fee unless the visitor buys something from you. So, someone who wants to drain your budget could repeatedly click your listing without buying anything. But who would take the trouble to do that?

Competitors and hucksters, that's who. Your competitors might want to exhaust your paid search budget while their listings remain (to scoop up the customers you are missing out on). Hucksters are even more motivatedthey can pocket a cut of your fees by accepting the paid placement ads on their site and then fabricating the clicks. No one believes that Google or Yahoo! or any of the other paid search vendors are instigating fraudulent clicks on their ads, but many suspect that their syndicators are. Any site that accepts paid placement (especially contextual ads) on their site could just start randomly clicking those ads to ring the cash register.

Your competitors might be engaging in "drive-by" click fraudrogue employees clicking away at your listings from an overstimulated sense of competition (and a lack of ethics). The real problem stems from professional hucksters using this deviant technique to siphon your cash for themselves. Some use automated programs that click listings in random ways while disguising their locations, whereas others go so far as to hire networks of workers, sometimes in Third World countries, who click away all day.

It is unclear whether click fraud is illegal or merely unethical, but the paid search vendors are scrambling to control it, lest they lose the confidence of search marketers and imperil the whole industry. The major vendors have massive fraud squads to crack down on problem affiliates, but their efforts to date have proven no match for their fraudulent foes.

How can you protect yourself? Experts will tell you to monitor your reports for strange activity patterns, which you should; but if 20 percent of all clicks are fraudulent, that advice does not help much. Sure, you can spot a listing that suddenly gets a three-fold increase in clicks in a day, but the folks perpetrating this fraud are craftier than that. To combat the problem, some new companies claim to help you detect click fraud, such as PPC Audit (, whereas Web metrics vendors are scrambling to add click fraud detection features to their existing tracking tools, such as Coremetrics ( and Urchin (, which is being acquired by Google. Also keep in mind that larger paid search vendors tend to have the strongest fraud detection programs, so the small vendors you located on probably carry higher risk.

As long as click fraud remains at its current level, it is merely an unpleasant cost of doing business not unlike insurance fraud or shoplifting. It drives up everyone's prices, but if your paid search campaign is making money for your business, click fraud is no reason to shy away.

Measure and Adjust Your Campaigns

Hey, you have a campaign up and running and your bid management tool is set up, so now you can just wait for the money to roll in, right? Well, not exactly. If you recall, your strategy is to iterate, so it's time to check out how you are doing and then make changes to improve. Bid management tools are very helpful, but they cannot substitute for your good judgment.

You must monitor new campaigns quite closely, because you are learning a lot. Over time, each campaign requires less monitoring, although nothing stays static forever. In Chapter 15, we talk about how to keep campaigns on track after the initial adjustment period, but now let's focus on how to track your campaigns as they come out of the gate.

Start out by tracking your campaign according to your objectives. If you are tracking profit, see whether it is meeting your projections. If all you can measure is your clickthrough rate, well, at least check that. And watch your bid rates for paid placement. If competitive bids are rising and your position is falling, it's time for deeper analysis. Measure as granularly as you can. Track your paid placement results by keyword within search engine within time of day, if possible. Examine your shopping search conversions by product within search engine. Notice which targets are performing and which are not, according to the metrics you have chosen.

When your paid placement keyword ads or your shopping search listings are not being clicked, take action:

  • Test new copy. Your best way to attract clicks is with copy that demands searchers pay attention. If your paid placement ad or your shopping search listing seems to solve their problem, they will be compelled to click.

  • Test higher bids. It is possible that accepting a higher cost per action might result in higher paid placement rankings. That increased exposure can sometimes dramatically raise click rates, providing stronger overall profits even though the profit per unit is lower.

  • Improve your merchant rating. Shoppers are swayed by merchants they think they should trust. Make sure that you seem more trustworthy than your competition.

  • Look for ways they do perform. Do they get an acceptable click rate at a certain time of day? Day of the week? Time of year? On a particular search engine? With a particular match type? With free shipping? For a discounted price? For searchers from a certain location? If you can find conditions of good performance, you can limit your purchases to those conditions.

  • Try new keywords. Can you add negative keywords to restrict when your paid placement ads are shown? Can you add new terms to your keyword to achieve the same effect? Your keyword might be too broad or just plain wrong for your target market. Expand your horizons to get lower per-click fees and possibly higher conversion rates.

Note that Google will disable any ad not delivering at least a 0.5 percent clickthrough, so it pays to scrutinize results regularly to optimize. (In the case of broad- and phrase-matched keyword variations, the clickthrough threshold might be higher.) Other paid placement engines might not be so stringent, so you might want to experiment with other paid placement engines if your ads are constantly disabled by Google.

What if you are getting clicks, but not enough conversions? Again, look at when those paid placement keywords or shopping search products do perform well. If you catch them performing under certain conditions, dayparting and other restrictions on your keywords might be appropriate. Limiting your product catalog or restricting it to certain shopping search engines might make sense. As above, you might also want to experiment with new keywordsespecially more specific keywords that might better target your audience. If those measures do not work, try some other ideas:

  • Reduce your bids. Perhaps your conversion rate would be acceptable if the bid costs were lower. You can try reducing your bids to find out if the loss of sales results in a better return on (a smaller) investment.

  • Check your landing pages. Did the URL change? Or did the ad copy change and the landing page does not reflect the ad copy as well as it used to? Is your offer competitive with your competitors? You might be able to use your Web metrics system to see whether visitors are abandoning your site on the landing page or abandoning deeper within your site.

  • Check the rest of your conversion path. Are other related keywords slipping as well? Have any changes been made to the site in the conversion path? Again, your metrics facility might reveal where visitors stop their conversion process.

Oh, and one more thing. You should do everything listed above when your targets are performing, too. That is how you follow your strategy of being more efficient. It is far more likely that you will double your conversions by improving your already strong targets than by buttressing your weak ones. And getting more impact out of your winners is not any harder than fixing your losersin fact, it is often easier. If you make your winners truly efficient, you will do well to spend more money on them and drop the targets that are borderline performers.

Snap Electronics had a lot to learn when they began purchasing paid placement keywords. You recall that back in Chapter 7, "Measure Your Search Marketing Success," Snap wanted to purchase the keyword digital camera, but earlier in this chapter they found themselves priced out of the market. Reluctantly, they decided to experiment with the keyword digital camera reviews instead.

Based on their allowable of $50, Snap needed to average a conversion rate of about 2 percent to justify a bid of around $1, but we saw that the top bid was only 35¢. Snap started by trying to top the current #1 bidder, knowing they would need to approach a 1 percent conversion rate if the price went up.

Well, the price did go up, because the previous high bidder topped 70¢, jockeying back and forth with Snap as the average per-click fees for Snap's campaign hovered in the low 70s. But within a few days, Snap saw that its clickthrough rate was way too lowless than 1 percentso the conversion rate was minuscule, far less than the required 1.5 percent. Snap was forced to temporarily abandon this keyword to diagnose the problem.

Clearly the first problem was the low click rate. Snap took a close look at its ad copy (shown as "Ad A" in Table 14-8) and decided changes were needed. Snap quickly revised the ad copy to "Ad B" to try to boost its click rate. The results were dramatic, as clickthrough jumped to 5 percent, but the conversion rate was still less than 1 percent, much less 1.5 percent. Clearly, unqualified searchers were now clicking and then abandoning, so Snap set out to change the copy again, to what is shown as "Ad C," in an attempt to attract only those with a propensity to buy. It worked. Although click rate went down, conversion rate went up, but not quite to the magical 1.5 percent they needed.

Table 14-8. Snap's Shifting Ad Copy (Paid placement campaigns require great tinkering at first, especially with the words in your paid placement ad.)



Clickthrough Rate

Conversion Rate


Digital Camera Reviews Confused about what to buy? Find the best camera for you.




Digital Camera Reviews Don't know what to buy? Find your next camera and save 30%.




SnapShot Digital Camera Reviews Research Snapshot cameras and save 30% on yours.



What now? At this point, they examined their metrics, and found that many of their clicks were for queries such as "cheap digital camera reviews," "bargain digital camera reviews," and "discount digital camera reviews." They also found that some of the keywords contained the names of competitors ("nikon digital camera reviews) that drew few clicks and next-to-no conversions. Digital video cameras was a keyword that brought many clicks from hurried searchers, but near-zero conversions. By ferreting out a list of additional words that correlated with a lower conversion rate, Snap was able to add negative terms and increased their conversion rate to more than 1.7 percent. Not satisfied yet, they began to look at dayparting to see whether their conversion rates have any pattern to them. And the beat goes on.

    Search Engine Marketing, Inc. Driving Search Traffic to Your Company's Web Site
    Search Engine Marketing, Inc.: Driving Search Traffic to Your Companys Web Site (2nd Edition)
    ISBN: 0136068685
    EAN: 2147483647
    Year: 2005
    Pages: 138

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