SMX Advanced Seattle 2011: Human Vs. Machine: What's The Best Way To Manage Paid Search?


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View R2integrated VP, Digital Marketing Eric Jones's presentation given at SMX Advanced Seattle 2011, as he answers the question: Human vs. Machine: What’s The Best Way To Manage Paid Search?

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SMX Advanced Seattle 2011: Human Vs. Machine: What's The Best Way To Manage Paid Search?

  1. 1. SMX Advanced: Man vs. Machine<br />
  2. 2. HUMAN vs. MACHINE: What’s the Best Way to Manage Paid Search<br />R2integrated:<br /><ul><li>80+ person digital marketing and technology agency
  3. 3. 2010 - Top 100 Marketing and Advertising Agencies by Inc. Magazine
  4. 4. 10 Google Analytics certified strategist
  5. 5. 4 Google Adwords certified strategist
  6. 6. Team of dedicated Organic and Paid Search strategist
  7. 7. Manage in excess of $2.1 Million in search media annually spread across 18 different clients
  8. 8. Ranging in size from $1,500 - $65,000 per month
  9. 9. Does not use any automated software to manage any client PPC accounts</li></li></ul><li>HUMAN vs. MACHINE: What’s the Best Way to Manage Paid Search<br />According to Econsultancy’s freshly published “State of Search Marketing Report 2011,” Internet marketers are poised to make 2011 a big year for paid search.<br />Based on the projections contained in the report, search engine marketing spend will balloon some 16% this year, hitting an estimated $19.3 billion before the close of 2011.<br />
  10. 10. HUMAN vs. MACHINE: What’s the Best Way to Manage Paid Search<br />Man and Machines effectiveness in managing/optimizing PPC accounts as it relates to budget<br />Machine<br />Human Management<br />Machine<br />$75,000+ a month<br />$0 - $1,000 a month<br /><ul><li> Small number of keywords with limited daily budgets
  11. 11. Unskilled PPC individual where the machine drives strategy
  12. 12. Agency trying to create cost effectiveness out of multiple small accounts
  13. 13. Large number of keywords where pennies per keyword yield cost optimization
  14. 14. Creates efficiency where 1 highly skilled PPC strategist can drive strategy
  15. 15. Cost effective based on allocating 2.5-5%+ of the budget to fixed automation cost</li></li></ul><li>HUMAN vs. MACHINE: What’s the Best Way to Manage Paid Search<br />Limitations in using Machines to manage PPC:<br /><ul><li>The Machine is only as good as the person using it.
  16. 16. Machine is only optimal when given a set of parameters – derived from man – which could start out flawed
  17. 17. Machines true effectiveness, based on an algorithm methodology, will come only when no human interaction is present</li></li></ul><li>HUMAN vs. MACHINE: What’s the Best Way to Manage Paid Search<br />If Watson were managing PPC accounts – I might change my mind!<br />The computer's techniques for unraveling Jeopardy! clues sounded just like mine. That machine zeroes in on key words in a clue, then combs its memory (in Watson's case, a 15-terabyte data bank of human knowledge) for clusters of associations with those words. It rigorously checks the top hits against all the contextual information it can muster: the category name; the kind of answer being sought; the time, place, and gender hinted at in the clue; and so on. And when it feels "sure" enough, it decides to buzz. This is all an instant, intuitive process for a human Jeopardy! player, but I felt convinced that under the hood my brain was doing more or less the same thing.<br />-Ken Jennings<br />
  18. 18. An actual example:<br /><ul><li> Average monthly budget $20,000
  19. 19. Roughly 1,750 keywords
  20. 20. Average purchase - $15.00
  21. 21. Estimated cost per conversion for profitability $3.00 - $3.50 per purchase</li></ul>Month #1 Data<br />
  22. 22. Parameters for success:<br /><ul><li> 90-days to achieve optimization
  23. 23. Estimate a 15% reduction in Avg. CPC monthly
  24. 24. Increase conversion rate by 25% monthly
  25. 25. Should achieve $3.00 - $3.50 average cost per conversion
  26. 26. Assumes a 5% automation fee</li></ul>90-day Optimization<br />Results:<br /><ul><li> Reduced CPC by 62.83% in 90-days
  27. 27. Reduced cost per conversion down to $3.12
  28. 28. Grew revenue by 28 – 32% month over month and 66.90% from month 1 – month 4</li></li></ul><li>Actual Results:<br /><ul><li> Reduction in Average CPC by only 23.87%
  29. 29. Reduced cost per conversion down to $1.99
  30. 30. Increased revenue in month 1 by 62.95% and overall monthly revenue from month 1 – month 4 by 73.09%</li></ul>90-day Optimization<br />
  31. 31. A comparison<br /><ul><li>Machine optimization was considered successful by the parameters we had set
  32. 32. Revenue grew in both cases and profitability was achieved ($3 cost/$15 order)
  33. 33. Machine was able to optimize the CPC down lower than we were
  34. 34. Machine optimization loss of revenue = $128,973.27
  35. 35. 42.48% increase in conversions by the Human management
  36. 36. 28.91% reduction in cost per conversion</li></ul>Comparison<br />