It has been a while since I have tweeted, networked on LinkedIn, made updates on Facebook or, even, written a blog post. It is this last point that perturbs me most, because as I have said before, blogging every three months more closely resembles a newsletter, than it does a blog. I should either eat my hat or start writing.

No Absolutes in PPC

Sometimes I am asked questions that go something like this:

-       If we double our monthly PPC budget what percentage impact will that have on conversions?

-       With our current PPC spend what should our performance be and what should our conversion rate be?

Though paid search is heralded for its measurability, one element it does not share with traditional media is its predictability.

Let’s take for example running a full-page ad in a monthly magazine.

The cost is fixed; the reach (number of people reached by single is issue), circulation (number of distributed copies of a magazine) and coverage (percentage of a population group reached by a magazine) are just a handful of magazine metrics that are widely known and shared by the magazines themselves.

Based on historic performance or industry averages, your company will also have a good idea of the return to expect from the magazine advertisement. There are few variable metrics – if you increase budget, ceteris paribus, you can calculate the expected return on investment.

Unpredictable PPC

When launching a new PPC campaign, where little historic data is available it is more difficult to predict the impact of budget increases or provide a forecast of performance.

There are more variable factors in PPC that are in your control, but that also makes the performance outcome more variable. The paid search bidding model also changes the landscape because sudden moves by competitors can also disrupt forecast predictions.

When setting goals and internal benchmarks for your paid search strategy it is important to set your goals based on the relative past performance of your account. Benchmarking against best-in-class numbers may be out of reach for your PPC account in the short term and focusing on absolute numbers will distract from the positive gains you are making.

If you are posting a 1% conversion rate, it may be unrealistic to aim for 5% in the short term (because you read somewhere that this is a good number towards which to aim). Instead, what you should be looking for is a positive trend, this may be slight month-over-month (MoM) but if you are focusing on driving performance then year-over-year (YoY) metrics should show a positive trending improvement.

Your best measure of success in your PPC account is your own YoY data rather than focusing on the 800-pound gorilla in your industry that may have 10 times your budget, can outbid you and dominates the top positions for your keyword basket.

The point is, there is no magic formula to determine how much return a specific budget should yield. It is about how much the budget could yield and this in itself is an iterative process. In PPC, it’s not about good or bad, it’s about better or worse. So if you moved your conversion rate from 0.8% to 1%, you are doing better, which is good.

If you are looking for benchmarks and are willing to spend a little bit of money, start with some quality reports from MarketingSherpa.