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Comments
This was a fascinating article but I’d like to understand more about the methodology. I do agree with the point that just comparing total spend to total sales doesn’t give you the real picture. But I’m a little confused about how to break out PPC spend incrementally like they describe. How do you decide where to draw the lines when looking at total PPC spend? Wouldn’t the individual campaigns, and unique daily searches, upset your ability to graph increments of total spend? Are the incremental lines drawn rough along something like campaign lines or am I missing something?
"gee... not really a surprise, PPC is for when you can’t get #1-#5 on organic."Did you actually read the article?I’m glad when searchengineland (or any major blog) puts up a quantitative post.
@<font color="#186318">TripleAught:</font> "How do you decide where to draw the lines when looking at total PPC spend?"Not easy. As the article says "Determining the shape of the curve is not trivial." I think you would have to experiment at different ad spends, and the methodology assumes that at each spend you are getting the most bang for your buck you can (the law of diminishing returns assumes you are maximizing you efficiency at any budget you set).And as the article says, then you have to worry about latency (visitors buying on their second or third visit) and seasonality. So it is not easy and as a practical matter most advertisers will not plot their entire curve. But you may be able to plot part of it, near your typical ad spend. And even if you can’t, the article reminds you to keep the concept of incremental and average efficiencies in mind as an aid to decision-making.
spur- You’re right on the mark. If you’re confident you’re getting the most bang for your buck at any spend level (ie: buying the most efficient clicks first) the only way to truly understand where you are on the curve is through testing. In order to spend more, you have to loosen your efficiency targets. Comparing the return gained from the next $5k or $10k in spend to your returns on the last $5k or $10k spent gives you an idea where you are on the curve.
I agree with spur. I wish there were more quantitative posts and articles out there like this one. It would help me rely less on intuition and more on scientific study.I just started reading "Scientific Advertising" by Claude C Hopkins and it’s been a real eye opener.Also, PPC is NOT only for "for when you can’t get #1-#5 on organic". Studies have shown that the appearance of a brand in both PPC and organic results on the same SERP leads to greater click-thru rates.
@spur -- Thanks for pointing out the most obvious method. :) I totally overlooked that thinking they were pulling that information out of existing data. Yes, I can see that even with changing your overall spend it would still be extremely difficult to get this kind of data. Worth considering though, I’ll have to think about how I can apply this to my work.