Myriad Ways to Drive ROI via Paid Search

As reports of April's retail sales attest, consumers are continuing to keep a firm grip on their pocketbooks. In this ultracompetitive environment where every dollar is fought for, customer acquisition takes on added importance. Paid search often serves as the battlefield for access to these elusive consumers.

In a session at the Annual Conference for Catalog & Multichannel Merchants earlier this month in New Orleans, Kevin Lee, chairman/CEO of the search engine marketing firm Didit, and Amy Wong, e-commerce marketing manager at the women's apparel retailer New York & Co., presented several ways to help companies optimize their search marketing dollars across all channels.

3 Keys to Paid Search Success
Lee began his session by giving his three keys to paid search success:

1. seek audiences, not clicks — and be willing to pay for them;
2. engage targeted searchers; and
3. be ready for the future.

Search clicks provide more high-quality traffic and better quality scores, Lee said, but you have to figure out when to fight for that top position, as well as subsequent clicks. “Conserve your budget for when times matter most,” he said. “You're in an auction with your competitors, whether they're bidding rationally or irrationally.”

Then use all the data and strategy at your disposal to determine the best clicks to go after. Lee advised following the 80/20 rule: 20 percent of your search clicks drive 80 percent of your business. “Target beyond keywords,” Lee stressed, instead focusing on audiences.

Ask yourself the following questions to get a better understanding of your audience members, he said:

• Who are they?
• What do they respond to?
• Are there audience members you don't want?
• Can you rescue a poorly performing segment?

Know the customers that your search campaigns are after, including higher spenders (average order value) and lifetime value (short-term sales vs. long-term relationships). For B-to-B companies, predict lead quality by asking questions that'll help you predict good leads vs. bad leads — for example, company size.

Target Practice
Lee listed several techniques to help retailers target the clicks they want. These included:

* Geotargeting. Particularly effective for national campaigns, this technique allows you to predictably model the geographies most likely to bring the best business. Look at your conversion rates and raise your bids in your most profitable regions, Lee said.

* Dayparting. Segment your audience and optimize your campaign based on the times of day when search customers are most responsive, based on conversion rate and AOV, Lee said. For B-to-B companies, the day of the week is very important. For example, might you consider turning off your campaigns on the weekends?

* Demographic targeting. Target your bidding to the demographics most likely to bring the best business. Factors to consider include age, gender, employment status and others.

And then there's what Lee refers to as the “power segment.” This “perfect storm” of customers indexes high on all of your key segments — AOV, LTV and conversion rate. You can predict the value of this click before you buy it, Lee said.

Engagement Techniques
Once you know what customers to go after, the next step is determining how to engage them. Here are some tips Lee and Wong recommended:

• use different offers for different segments, both in paid search and your landing page;
• test “quality” offers vs. “price” offers to see which ones perform best;
• track post-click behaviors — for B-to-B companies, this could be phone calls, visits to your lead form or "contact us" pages, or e-mail newsletter sign-ups;
• don't leave your campaigns at default so you're able to react when something changes in your ecosystem that affects your keywords (e.g., out of stock for a particular product); and
• use data-driven click modeling. Your campaign should be some combination of predictive and reactive, Lee said.

What Lies Ahead
Be ready for the future, Lee said. There are several variables to keep on your radar in the world of paid search. Consider the following:

• Retargeting. It's rare to have a conversion rate of 5 percent, Lee noted, meaning that 95-plus percent don't buy. Set up a cookie on those 95 percent; then buy keywords and display advertising to target those consumers, he said. “You have a window to resell these people.” For New York & Co., Wong notes this window is generally seven days.
• Mobile advancements. Look for ways to incorporate mobile into your campaigns.
• Keyword-targeted rich media, such as YouTube and other video ads.
• Real-time search.
• And what a possible merger of Microsoft and Yahoo would mean for search.