<< by on August 11th, 2008
Is there such a thing as driving in good traffic? If you asked a random stranger on the street they would undoubtedly say “NO!” without a moments hesitation. That is, unless they worked in SEM, in which case they would say “Absolutely”.
The very first thing I do at work in the morning is check to see how many KPIs we managed to achieve the previous day for our client, a well known automotive company. Some days we drive more KPIs than others, but we always use these numbers to strategize on where we can allocate money in our budget to increase their ROI. What exactly is a KPI? It stands for Key Performance Indicator and has several characteristics, including:
Typically, KPIs are actions searchers can perform on a website (for an automotive company’s website an example would be clicking on a “request a quote” link) that funnel them farther into the buying cycle. In some cases, they are not classified as actual conversions but they are great at showing us where to optimize in order to get more conversions. The best part about KPIs is that we are able to track them using analytics packages such as Omniture, Web Trends and even the search engines ad serving platforms themselves.
If your goal is to drive highly relevant traffic that is most likely to convert into a sale then optimizing your campaigns for KPIs is the way to go. Two of the most most important metrics, regardless of industry, that can be calculated through analystics are Cost Per KPI and KPI Per Click. We use these metrics at the campaign, ad group, and keyword levels, but for this post I am going to use the keyword level for my examples.
Cost Per KPI is very important because we need to know how much we spend on each keyword in order to have a searcher perform an action that shows interest in our product. If we have a Cost Per KPI of $4.00 for one keyword and $0.75 for another, we will obviously focus more of our attention on the $0.75 keyword because it drives more interest. In addition, we will also consider lowering our bids on the $4.00 keywords so we can spend more money on better performing keywords with lower Cost Per KPIs.
Analyzing KPI per Click is also a good strategy because it allows us to see which keywords are driving the most KPIs each time a searcher visits the website. It is a good indicator of a high performing keyword in that we can assume a keyword that gets 4 KPIs Per Click is almost certain to have a great Cost Per KPI. A keyword that gets 0.2 KPIs Per Click tells us that we may be wasting money and should lower our bids.
The two examples above of how to use KPIs to optimize your campaigns for driving better performing traffic are only the tip of the iceburg. Each company tracks different KPIs depending on their business’ goals and should use all of them congruently to drive the best actions. And for your information, if you were to stop me on the street and ask if there was such a thing as good traffic, I would pause for a moment, thank my lucky stars I only have a five minute commute into work, and say “Absolutely”.