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

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?

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

    • SMX Advanced: Man vs. Machine
    • HUMAN vs. MACHINE: What’s the Best Way to Manage Paid Search
      R2integrated:
      • 80+ person digital marketing and technology agency
      • 2010 - Top 100 Marketing and Advertising Agencies by Inc. Magazine
      • 10 Google Analytics certified strategist
      • 4 Google Adwords certified strategist
      • Team of dedicated Organic and Paid Search strategist
      • Manage in excess of $2.1 Million in search media annually spread across 18 different clients
      • Ranging in size from $1,500 - $65,000 per month
      • Does not use any automated software to manage any client PPC accounts
    • HUMAN vs. MACHINE: What’s the Best Way to Manage Paid Search
      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.
      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.
    • HUMAN vs. MACHINE: What’s the Best Way to Manage Paid Search
      Man and Machines effectiveness in managing/optimizing PPC accounts as it relates to budget
      Machine
      Human Management
      Machine
      $75,000+ a month
      $0 - $1,000 a month
      • Small number of keywords with limited daily budgets
      • Unskilled PPC individual where the machine drives strategy
      • Agency trying to create cost effectiveness out of multiple small accounts
      • Large number of keywords where pennies per keyword yield cost optimization
      • Creates efficiency where 1 highly skilled PPC strategist can drive strategy
      • Cost effective based on allocating 2.5-5%+ of the budget to fixed automation cost
    • HUMAN vs. MACHINE: What’s the Best Way to Manage Paid Search
      Limitations in using Machines to manage PPC:
      • The Machine is only as good as the person using it.
      • Machine is only optimal when given a set of parameters – derived from man – which could start out flawed
      • Machines true effectiveness, based on an algorithm methodology, will come only when no human interaction is present
    • HUMAN vs. MACHINE: What’s the Best Way to Manage Paid Search
      If Watson were managing PPC accounts – I might change my mind!
      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.
      -Ken Jennings
    • An actual example:
      • Average monthly budget $20,000
      • Roughly 1,750 keywords
      • Average purchase - $15.00
      • Estimated cost per conversion for profitability $3.00 - $3.50 per purchase
      Month #1 Data
    • Parameters for success:
      • 90-days to achieve optimization
      • Estimate a 15% reduction in Avg. CPC monthly
      • Increase conversion rate by 25% monthly
      • Should achieve $3.00 - $3.50 average cost per conversion
      • Assumes a 5% automation fee
      90-day Optimization
      Results:
      • Reduced CPC by 62.83% in 90-days
      • Reduced cost per conversion down to $3.12
      • Grew revenue by 28 – 32% month over month and 66.90% from month 1 – month 4
    • Actual Results:
      • Reduction in Average CPC by only 23.87%
      • Reduced cost per conversion down to $1.99
      • Increased revenue in month 1 by 62.95% and overall monthly revenue from month 1 – month 4 by 73.09%
      90-day Optimization
    • A comparison
      • Machine optimization was considered successful by the parameters we had set
      • Revenue grew in both cases and profitability was achieved ($3 cost/$15 order)
      • Machine was able to optimize the CPC down lower than we were
      • Machine optimization loss of revenue = $128,973.27
      • 42.48% increase in conversions by the Human management
      • 28.91% reduction in cost per conversion
      Comparison
    • DIGITAL MARKETING: SIMPLY BETTER RENTALS
      Thank you