@OptiMineInc, #SMX, #14D
Assessing Keyword
Bidding Complexity
Presented by Rob Cooley, CTO, OptiMine Software
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
OptiMine Background
2
• New standard for digital advertising m...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
• Bid optimization will make or break paid search ROI
• Using ...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
Goal: Optimizing paid search financial performance
• Four-part...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
• Current performance
• Program size
• Conversion coverage
• B...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
• Goal
– Financial-based or order-based
• Where you are today
...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
• Proper bid optimization can increase financial results:
– By...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
• Keyword-level conversion tracking (e.g., Google Adwords)
• G...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
• Keyword count with impressions
– How many keywords receive i...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
Program Size Metrics
10
Complexity Rating
Metric Low Moderate ...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
• Coverage - Percentage of conversions driven by top 100
conve...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
Complexity Rating
Metric Low Moderate High
% of Conversions fr...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
• Average position
• Seasonality - Ratio of highest-cost month...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
• If every keyword has roughly the same value per click, then
...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
Keyword Match Type Conv. Rate Conv. Rate Conv. Rate
Jewelry Br...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
Complexity Rating
Metric Low Moderate High
Value per Click Var...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
Bidding Complexity
17
Complexity Rating
Topic Metric Low Moder...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
Step 1: Determine complexity level for each metric
• Low = 0
•...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
Category Metric Value Score Weighted Score
Size Keywords 1844 ...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
Example 2: Medium Complexity
20
Category Metric Value Score We...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
Example 3: High Complexity
21
Category Metric Value Score Weig...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
• Assessment categories
– Current performance
– Program size
–...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
Bidding Complexity Metric Summary
23
Category Metric Report Fo...
Copyright © 2013 OptiMine Software
@OptiMineInc, #SMX, #14D
OptiMine Software
Web: OptiMine.com
Twitter: @OptiMineInc
Face...
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Assessing Keyword Bidding Complexity by Rob Cooley

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From SMX East 2013 - Keeping your Edge Sharp: Revisiting Paid Search Fundamentals - Assessing Keyword Bidding Complexity by Rob Cooley #SMX #14D

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Assessing Keyword Bidding Complexity by Rob Cooley

  1. 1. @OptiMineInc, #SMX, #14D Assessing Keyword Bidding Complexity Presented by Rob Cooley, CTO, OptiMine Software
  2. 2. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D OptiMine Background 2 • New standard for digital advertising measurement and optimization • Paid search and display advertising channels • Conduct complexity assessments for every prospective customer – Process refined through hundreds of assessments
  3. 3. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D • Bid optimization will make or break paid search ROI • Using the appropriate optimization technique is critical to maximizing ROI • Understanding keyword bidding complexity will determine the best optimization method • Program and market dynamics require periodic assessment of bidding complexity to remain competitive Why Keyword Bidding Complexity Matters 3
  4. 4. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D Goal: Optimizing paid search financial performance • Four-part framework for assessing complexity • Step-by-step guide through the assessment process • Everything you need to complete the assessment • Determine if there is room for improvement through bid optimization What You’re Going to See 4
  5. 5. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D • Current performance • Program size • Conversion coverage • Bid optimization potential Complexity Assessment Categories 5
  6. 6. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D • Goal – Financial-based or order-based • Where you are today – How far above or below the goal • 12-month trend – Direction and slope Understanding Current Performance is Critical 6
  7. 7. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D • Proper bid optimization can increase financial results: – By 50% or more - 40% of the time – Between 25-50% - 40% of the time – Less than 25% - 20% of the time • For example, assuming 25% increase: – Current revenue $1,000/day; typical expected increase of $250/day • ROAS held constant; cost increases by same percentage – Current cost per order is $100; typical expected reduction to $75 CPO Range of Expected Improvement 7
  8. 8. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D • Keyword-level conversion tracking (e.g., Google Adwords) • Google or Bing Keyword Performance for last 90 days – Include average position, impressions, CPC, cost, clicks, and conversion events • If conversion tracking outside of Google or Bing, pull keyword report from your tracking tool using metrics listed above Performance Reports Needed 8
  9. 9. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D • Keyword count with impressions – How many keywords receive impressions • Daily conversions – How many conversion events – You define conversion (e.g., orders, bookings, leads, etc.) Program Size 9 567 23852 835663 18 68 3,125 1 100 10000 1000000 Account1 Account2 Account3 Keywords Conversions
  10. 10. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D Program Size Metrics 10 Complexity Rating Metric Low Moderate High Keyword Count with Impressions <5000 5000 - 50,000 >50,000 Daily Conversions <20 20 - 100 >100
  11. 11. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D • Coverage - Percentage of conversions driven by top 100 converting keywords • Regular Converters - Percentage of cost coming from keywords with 1+ conversions per month Conversion Coverage 11 1 0.70 0.04 0.26 0.60 0.86 0 0.5 1 1.5 15k Keywords 2k Keywords 733k Keywords Top 100 Coverage Monthly Converter Coverage
  12. 12. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D Complexity Rating Metric Low Moderate High % of Conversions from Top 100 Converting Keywords >75% 50% - 75% <50% % of Cost for Keywords with At Least 1 Conversion per Month <33% 33% - 66% >66% Conversion Coverage Metrics 12
  13. 13. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D • Average position • Seasonality - Ratio of highest-cost month to average month from last 12 months • Value per click (VPC) variability Optimization Potential 13 1.2 2.3 4.6 1.07 1.8 3.5 0 1 2 3 4 5 Account1 Account2 Account3 Position Seasonal Ratio
  14. 14. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D • If every keyword has roughly the same value per click, then determining the right cost per click (aka bid) is fairly simple • How to calculate – Download a keyword-level performance report that includes conversion rate and load into Excel – Filter out keywords that have no conversions – Calculate the average and standard deviation for the conversion rate column – Divide the standard deviation by the average Value Per Click (VPC) Variability 14
  15. 15. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D Keyword Match Type Conv. Rate Conv. Rate Conv. Rate Jewelry Broad 1.3% 1.3% 0.2% TUNGSTEN RINGS Phrase 1.1% 5.4% 28.3% gold hoop earrings Phrase 1.3% 0.5% 0.6% cz jewelry Broad 3.6% 1.1% 0.3% red coral jewelry Broad 3.2% 2.2% 0.5% amethyst necklace Broad 2.9% 0.4% 1.1% diamond rings Broad 1.8% 6.8% 1.3% jewelry Exact 0.9% 0.8% 0.5% white gold earrings Broad 2.6% 0.2% 0.3% men's diamond bands Broad 2.3% 7.8% 0.4% Average 2.1% 2.7% 3.4% Standard Deviation 1.0% 2.9% 8.8% Variability 0.45 1.1 2.6 VPC Variability Examples 15
  16. 16. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D Complexity Rating Metric Low Moderate High Value per Click Variability <1.0 1.0 - 2.0 >2.0 Average Position Higher than 2.0 2.0 to 3.0 3.1 or lower Ratio of Highest-Cost Month to Average Month <125% 125% - 200% >200% Optimization Potential Metrics 16
  17. 17. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D Bidding Complexity 17 Complexity Rating Topic Metric Low Moderate High Weight Program Size Keyword Count with Impressions <5000 5000 - 50,000 >50,000 1 Daily Conversions <20 20 - 100 >100 3 Conversion Coverage % of Conversions from Top 100 Converting Keywords >75% 50% - 75% <50% 2 % of Cost for Keywords with At Least 1 Conversion per Month <33% 33% - 66% >66% 2 Optimization Potential Value per Click Variability <1.0 1.0 - 2.0 >2.0 3 Average Position Higher than 2.0 2.0 to 3.0 3.1 or lower 3 Seasonality <125% 125% - 200% >200% 1
  18. 18. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D Step 1: Determine complexity level for each metric • Low = 0 • Moderate = 1 • High = 2 Step 2: Multiply metric complexity by weight Step 3: Add weighted scores to determine overall complexity Finding Your Complexity Rating 18
  19. 19. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D Category Metric Value Score Weighted Score Size Keywords 1844 0 0 Conversions 2 0 0 Conversion Coverage Top 100 90% 0 0 Monthly Converter 30% 0 0 Optimization Potential Position 2.2 1 3 Seasonality 3.5 2 2 VPC Variability 0.9 0 0 Total Score 5 Example 1: Low Bidding Complexity 19
  20. 20. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D Example 2: Medium Complexity 20 Category Metric Value Score Weighted Score Size Keywords 22,144 1 1 Conversions 36 1 3 Conversion Coverage Top 100 80% 0 0 Monthly Converter 80% 2 4 Optimization Potential Position 3.3 2 6 Seasonality 1.3 1 1 VPC Variability 1.1 1 3 Total Score 18
  21. 21. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D Example 3: High Complexity 21 Category Metric Value Score Weighted Score Size Keywords 217,952 2 2 Conversions 169 2 6 Conversion Coverage Top 100 40% 2 4 Monthly Converter 60% 1 2 Optimization Potential Position 3.5 2 6 Seasonality 4.5 2 2 VPC Variability 2.7 2 6 Total Score 28
  22. 22. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D • Assessment categories – Current performance – Program size – Conversion coverage – Optimization potential • The higher the complexity, the more likely bid optimization will improve performance • Periodic reassessment recommended – Especially after major changes to your paid search program Wrap-Up 22
  23. 23. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D Bidding Complexity Metric Summary 23 Category Metric Report Formula Program Size Keyword Count with Impressions Keyword Descending sort by impressions, find row number with first 0 Daily Conversions Keyword Mouse over conversion column, divide sum shown at bottom by number of days in report Conversion Coverage Top 100 Converting Keywords Keyword Descending sort by conversions, sum conversions for first 100 rows, divide by sum calculated above Cost for Monthly Converters Keyword Keep sort order from above, sum cost for keywords with >1 conversion per month, mouse over cost column to get total cost, divide monthly converter cost by total cost Optimization Potential Average Position Keyword Overall reported average position VPC Variability Keyword Remove keywords with 0 conversions, create new VPC column by dividing conversions by clicks, use average and stdev functions, divide stdev by average Seasonality Campaign Segment by month, display cost in graph, mouse over highest point to get max cost, divide total reported cost by 12 to get average. Divide max by average to get seasonality
  24. 24. Copyright © 2013 OptiMine Software @OptiMineInc, #SMX, #14D OptiMine Software Web: OptiMine.com Twitter: @OptiMineInc Facebook: Facebook/OptiMineInc Phone: 877.598.3282 Thank You 24

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