Introducing The All-Important Quality Score

Throughout this column, the phrase “Quality Score” has popped up on different occasions. Understanding Quality Score is fundamental for successful paid search campaigns, but can be a difficult concept for beginners to understand. So the time has come to cover this topic so you can use Quality Score to your advantage and not fall into its traps.

The early days before Quality Score

In the beginning of paid search, auctions existed in a purely capitalistic marketplace where the advertiser who was willing to pay the most for a keyword was awarded first place, the second highest-paying advertiser’s ads were second, and so forth.

It was an easy system to understand and it made sense. However, the ad space became a bit muddled. Advertisers with deep pockets literally took over the search engine results pages on keywords that weren’t necessarily related to their business. For example, a global soft drink company could start to take over terms such as rock and roll, skateboards, or even Britney Spears. These advertisers mostly weren’t trying to cause chaos—they were just trying to reach their target demographic. But in doing so, the sponsored search results for some keywords could potentially contain no results directly related to what a searcher was looking for.

The engines realized that this could be a problem. Google has long maintained that the best thing for its business is to keep results as relevant as possible—including paid listings. To improve the relevance of paid search ads, Google created the Quality Score. Microsoft and Yahoo soon followed with their own systems to improve relevance of ads.

So what is Quality Score?

Simply put, Quality Score is a numeric grade from one to ten (ten being best) assigned to each of your keyword/ad/landing page combinations. The score is updated frequently, calculated at each time your keyword is searched on to account for changes to your terms and creatives. So what’s the value of a high Quality Score? If your keyword is deemed highly relevant, Google will lower your cost-per-click and rank your ad higher than other competitors even if they’re bidding more for those terms. On the flip side, a keyword with a low Quality Score may mean you have to bid a premium price to even appear on a search result page.

How is Quality Score calculated?

We don’t know exactly what goes into the Quality Score black box but we do know that high click-thru-rates (CTRs) are a big piece of the pie. The engines probably correlate high number of clicks as “virtual votes” by past users for the advertiser and figure a good CTR means a relevant keyword.

Google does offer some insight into how Quality Score is calculated in the AdWords help area:

While we continue to refine our Quality Score formulas for Google and the Search Network, the core components remain more or less the same:

• The historical clickthrough rate (CTR) of the keyword and the matched ad on Google; note that CTR on the Google Network only ever impacts Quality Score on the Google Network — not on Google
• Your account history, which is measured by the CTR of all the ads and keywords in your account
• The historical CTR of the display URLs in the ad group
• The quality of your landing page
• The relevance of the keyword to the ads in its ad group
• The relevance of the keyword and the matched ad to the search query
• Your account’s performance in the geographical region where the ad will be shown
• Other relevance factors

Note that there are slight variations to the Quality Score formula when it affects ad position and first page bid:

• For calculating a keyword-targeted ad’s position, landing page quality is not a factor. Also, when calculating ad position on a Search Network placement, Quality Score considers the CTR on that particular placement in addition to CTR on Google.
• For calculating first page bid, Quality Score doesn’t consider the matched ad or search query, since this estimate appears as a metric in your account and doesn’t vary per search query.

What do you really need to know about Quality Score?

You’ll have plenty of time to test various tactics to improve Quality Score once the campaign starts, so don’t waste too much time worrying about it right now. The one thing you do need to take into account though is to make sure you keep your ad groups tightly focused. Because click-thru-rate is the biggest weighting factor to Quality Score, you’ll want to make sure that your ads are highly relevant to the keywords in each group so that you get the best CTR as possible. In my experience, as long as you’re getting a good percentage of clicks to impressions, the engines will consider your terms relevant enough to gain fairly high scores. After that, there are just a few things to keep in mind such as ensuring that your landing pages are loading at a good speed and you have some of your ad group’s keywords in your ad text. You do those things right and your Quality Score should be just fine.

Overall, my best advice is to not obsess over Quality Score. There are a couple hundred other factors to PPC success that are just as important. The important thing now is to just make sure you understand the concept fully and do some extra research if you feel you still need some clarification.

The premise that ad popularity and a high quality score leads to improved search advertising results may or may not be true….especially for B2B advertisers. I urge business marketers to challenge this assumption and understand the relationship between PPC quality score and ROI-based results.

Quality Score algorithms

In simple terms, ad position is primarily determined by how much an advertiser is willing to pay for each click (i.e. your bid) and the popularity, orclick-through-rate (CTR), associated with your ad. Relevancy also plays a role… and very poor landing pages can lead to penalties.

More information can be found here on Google Quality Score, and Yahoo Quality Index. Details aside, Quality Score causes most advertisers to try and maximize response, or click-through-rate.

Note: Not surprisingly, this methodology also increases the click charges that go into the pockets of search networks!

Tips on PPC targeting

All advertisers should be deploying these PPC best practices to accurately target your audience:

• Select very specific keywords and long tail keyword phrases
• Utilize keyword match-types
• Deploy negative keywords
• Test geo-targeted ads (even for national brands)
• Implement day-parting

This week’s question: ”What have you heard about Quality Score?”

10 Easy Ways to Optimize Your PPC Landing Pages & Increase Conversions

It’s common knowledge that a professional website design can increase conversion rates and sales. A professional website design ensures trust and credibility with your users. But website design and landing pages can play a part not just in SEO, but in PPC too.

Actually, there is an entire procedure to optimize PPC campaigns including writing successful PPC Ad Copy, Optimizing Your AdWords Campaigns Now, back to PPC landing page optimization. The tactics I describe in this post will not only improve your Quality Score which can increase your ad position for a lower cost, but can also help convert more people that come to your website.

Now, I will admit that most of these tips are for lead generation, not all of these tips would apply to an ecommerce website.

1. Call to Action/Buttons – It’s no secret that adding a call –to- action or a button that is large and very noticeable on your PPC landing pages will help increase conversions. Anything that draws attention to a user is more likely to get clicked on. Tell people what you want them to do on your landing page, don’t just assume they’ll know automatically.
   
   
2. Minimal Navigation – The key to successful PPC landing pages is keep the user to from getting too distracted. Remove the top, left or right hand navigation from your main site on your PPC landing pages. Simply have your company logo at the top left of the page with a link to your homepage. That will be enough for people to click on if they need more information before converting.
   
   
3. Important information above the fold – Some people who are searching for a service like yours are sometimes in a hurry. If they enter your landing page and don’t see what they need to do within the first 5 seconds, they’re likely to bail. Be sure that your call to action, button, or form is above the fold. Be sure to check Google analytics to see what resolution size the majority of your users are currently using. This will help your designers make the important information above the fold for most of your users.
   
   
4. Easy-to-scan copy – I’ve worked on clients before that use way too much industry language in their PPC landing pages. You have to think that if an executive is looking for a service they’re likely to ask their assistant, intern or even a receptionist to do research before they engage in anything. While the executive may know all the industry jargon the assistant or intern may not. Also, these people who are searching for many companies are in a hurry, and simply just scan the copy on your landing page and don’t necessarily read through it all the way. So break up your copy into several paragraphs instead of one large paragraph. And I like to use the rule of thumb to put your benefits or advantages of choosing your company in a bullet list or numbered list so it stands out more prominently.
   
   
5. Few images to convey professionalism – Some PPC landing pages I have seen have a lot of well, dorky images that don’t convey any professionalism whatsoever. This can really turn off a potential client and make you look untrustworthy. Have one to 2 images on your PPC landing pages that show professional looking people, smiling as if they have just engaged in yoru services and are incredibly happy. Also having too many images on your PPC landing page will make your load times longer.
   
   
6. Fast loading times – One factor of the Google Adwords Quality Score is the load times of your pages. If it takes more than 10 seconds to fully load your pages that’s way too long. It should take less than 5 seconds. Large flash files, too many images, or animated graphics could hinder your fast load times. Also, if I have to wait for a flash animation to load before I can get information about your services, I’m more than likely not going to stick around or come back.
   
   
7. Dynamic headlines – Using dynamic headlines on your PPC landing pages is a great way to better target what the user is actually typing in the search box. Dynamic headlines are generated by tracking URLs that will insert the specific keyword into the headline. This is like using dynamic keyword insertion in your PPC ads, only it’s for your landing pages. If the page headline is more targeted to what the user typed in the search, they’re much more likely to continue reading and complete an action.
   
   
8. PPC keywords in your landing page copy – Many people think this is only true for SEO, but you still need to include your PPC keywords in the copy of your PPC Landing page. This will not only help improve your Quality Scores, but will also help your users connect better to your copy.
   
   
9. Short contact form – You could potentially be driving away qualified leads by having a contact form that is too long. If your contact form is running below the fold, it’s too long. You should be able to see the ‘submit’ button above the fold. Look at your current forms and only require the information you truly need. If someone sees a very long form, they may think, ‘This is going to take too long to fill out’ and could possibly skip that process altogether.
   
   
10. No Clutter – This is really a no-brainer, but unfortunately too many people make the mistake of dumping too much content on their PPC landing pages. You should have one main goal of your PPC landing page, not 3, 4 or 5. Remove any extra copy that isn’t necessarily useful to the user. Remove any unnecessary images or icons.

If you need any persuasion to make changes to your existing landing pages, just take this for an example: if you were to make changes on your landing pages, and increase your conversion rates by .5%, add that to your current sales and see how much of an increase that is. You would be surprised how much additional revenue .5% would drive.

If you have any additional PPC landing page tips that will help increase conversions that I have not mentioned feel free to add them in the comments section!

PPC Ad Copy Tips - Writing Successful PPC Ad Copy to Boost your CTR

One of the most important factors of a successful PPC campaign is writing successful ad copy. You can spend a good deal of time on other aspects of your campaign but skimp on the ad copy and you might not get the results you're looking for. This two-part article will review several tips for crafting high performing ad copy and methods for testing its effectiveness.

Managing paid advertising on the search engines can be tricky. The little boxes of ads seem innocuous, but many advertisers don't effectively capitalize on SEM (Search Engine Marketing) opportunities. One way to make a big difference in paid search campaigns is with ad copy. Here are several pointers to get your ad copy right!

1. Qualifications and Guarantees: Another way to help your searchers feel a little more comfortable about clicking on your ad is to state any qualifications or guarantees you have. Are you a certified professional? Are you an award winner? Do you offer a money back guarantee? Answering these questions might be enough to get a click.

2. Use of Exclamation Points: When I first tried this experiment, I guess was disappointed to find out that people really do respond to exclamation points!!!!

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3. Dangling Top: Create an ad version where the top description line extends past the bottom description line.

4. Display URL in Title Case : This technique can call out your brand a bit.In cases where your domain actually has some keyword value/keyword association, this Title Case technique can have an even greater impact.

5. Question Mark in Heading - Ask the Question: Another way to set up your headline is to simply ask a question that gets the searcher thinking. You might be surprised if you ask a compelling question and then follow up in your description with some compelling answers. This can also help make your headline stick out especially if your competition is employing the keyword insertion method.

6. Include prices and promotions in title or text copy for store product if we offer study guides at cheapest rates:

7. Use a strong call-to-action: Enroll Now, Buy, Purchase, Call today, Order, Browse, Sign up, and Get a quote - Promotions and sales capture people's attention. If you have a giveaway or a product that's on sale, put that in your ad. If you use this method, be sure that you send them to a page that actually has the promotion or the sale (more on this topic in part two).

8. All Title Case

9. Test multiple ads in each ad group

10. Write Specific Ads for Specific Keywords

Gear ad copy to the specific terms in your paid search accounts. Statistics tell that visitors are more likely to convert to a sale, sign-up or other type of conversion when they see queries they've keyed into the search engines in your actual ad copy.

11. Dynamic Keyword Insertion (Warning: Advanced Topic): DKI is an advanced method that allows you to dynamically insert a keyword from your ad group into your ad copy, if triggered from a search query.

KEY POINT: The most important factor of your PPC ads is the headline or title. More than any other part of the ad, the title can impact the CTR of your ads.

It is impossible to infer a concrete plan of action for the best possible PPC ad copy based on two micro-tests. Ideally, you will implement your own testing and discover the optimal ad copy for your own unique offer. In the following section, we offer the most effective techniques we have learned from several years of PPC ad copy testing.

2. What are the most important practices to keep in mind when optimizing your PPC ad copy? (16 Techniques)

1. The most important element of your PPC ad copy is the heading or title. The more potential customers identify with your heading, the more likely they will be to click your ad. The number of characters allowed in your heading is quite limited, so optimizing the best possible combination of words is of utmost importance.

2. Using relevant keywords in the ad title usually work very well. This technique captures the attention of users by putting their search terms in the most prominent position in the ad.

To match your title keywords to search terms, you will have to set up individual ad groups for important search terms. On Google AdWords, you can use automatic keyword insertion, which will save a tremendous amount of time when setting up campaigns spread over numerous keywords. For example, if you have 1500 keywords and want to put all of them into a single ad group, you can set up your account to automatically insert the search terms into your title (as long as they don't exceed character limitations).

3. If your prices are the lowest or close to the lowest in your industry, placing product prices in the ad title can boost CTR and skyrocket conversions.

4. "Free" add-on offers work well in the ad title. For example, if you offer free shipping, free bonus software, or a free 30-day trial, try mentioning that in the ad title and the primary offer in the body.

5. Make sure the "display URL" is the shortest possible URL. Display URLs are basically free brand exposure for your domain name. Even when no one clicks your ads, you are still receiving exposure. If your site domain iswww.PoonamBhatt.com, do not use http://www.poonambhatt.com/Pay-per-clcik/ as the display URL. Make it as simple, uncomplicated, and memorable as possible.

6. It is best to display URLs without the "www" in front of them rather thanwww.poonambhatt.com. It thus becomes more likely that they will remember your site.

7. When possible, try to quantify your ads. If you have the most or greatest variety of products in your niche and you believe that gives you a competitive advantage, use that in the ad. If the price of your service is relatively low compared to alternatives, advertising the price in the ad copy – or even in the ad title – can be quite effective.

8. Avoid using hype in your ads. This is especially true for those products and services whose potential customers may be inherently skeptical. For more on an honest approach to writing copy.

9. Create a sense of urgency in your ads if it can be done without hype. Rather than using words like "amazing" or "unbelievable," try "limited-time offer" or "available for overnight shipping."

10. Use clear, precise sentences, not just keywords.

11. When space is available, always add a credibility indicator. Examples of these include: 30-day money-back guarantee, 5-star rated merchant, etc.

12. Be aware that CTR is not the only important factor in a highly effective PPC ad. Conversion rate is also very important. The temptation on PPC engines is to use highly specific ad copy to pre-qualify your clicks. This may allow you to pay for less clicks while achieving a higher conversion rate.

However, Google has minimum CTRs that must be maintained for your ads to remain active. The minimum CTR varies by keyword. In addition, a high CTR will also positively influence your ad placement in Google, so sacrificing CTR to increase conversion, while it could save you money, is often quite risky.

13. Create a unique approach that focuses on the opposite or reverse of what your competitors are advertising. As we saw in Test Site A above, a reverse-psychology approach can often outperform the expected approach for some ad types.

14. KEY POINT: You cannot write PPC ads in a vacuum. Testing is essential. Furthermore, you must pay attention to what your competitors are doing in the PPC engines. Study your competition's ad copy to determine how your own marketing voice can be distinctive from that of your competitors.

15. Review our previous PPC-related reports, listed in the "notes" below.

These sixteen techniques should help you develop the best possible ad copy for a variety of PPC campaigns. But again, nothing should replace ongoing testing as your primary means of optimizing your copy.

Optimizing Your AdWords Campaigns

Pay per click advertising is a form of marketing with major benefits. It differs from other methods of marketing in its ability to allow advertisers and marketers to measure and analyze the results of their techniques, to refine and optimize them to increase ROI beyond almost anything possible in the offline marketing world. Google AdWords is currently the prominent pay per click resource available today. Learning some of the ways to optimize your AdWords campaigns can cut costs while keeping conversions up in several ways.

Here are four ways to refine your AdWords campaign to see where money spent is producing the best return and to adjust settings to maximize return on investment.

1. The Segment option. This is one of the newest additions to AdWords. The Segment option is available within your Campaigns, Ad Groups and Keywords tabs. Within each, the options are different, but allow for viewing of your results in specific ways of measurement. This can include breaking into specific units of time, such as weeks or days of the week.

By viewing your data this way you can discover what weeks are most active for a seasonal market, as well as information such as which days of the week are most prone to getting better conversion rates. By knowing this data, you can reduce costs where your conversions are more expensive, increase bids where you are seeing better conversion rates, and in all these ways increase ROI.

2. A-B Split Testing for ads. This can be one of the most effective means of increasing CTR for your ad groups. Have two or three ads active for each ad group. After a number of clicks (ideally at least 20 clicks on each ad), choose the better performing ad. Replace the more poorly performing ad with a different ad copy. Repeat the whole operation to find which advertisement will produce the best CTR or the best conversion rate.

Doing this can often improve your CTR by a factor of 2 or more, and a higher CTR improves Quality Score as well as increasing lead generation. To get an accurate reading for proper A-B split testing, make sure your campaign setting for Ad Delivery->Rotation is set to “Rotate: Show ads more evenly”.

3. Remarketing with the Audiences tab. This is an element of AdWords that works only for the Content Network. When the Audiences tab is enabled, you can create remarketing lists to target specific visitors to your site. By placing code on specific pages within your site, a cookie is put on all users who visit these pages.

Then when they visit other sites with similar targeted themes, a very relevant ad is shown to these users to give them motivation to return to your site to make a purchase or opt-in. This works by reaching out to visitors who had visited your site previously and displayed some kind of interest in that market. Often this remarketing approach can increase conversions by contacting people who have an established interest in your products and reconnecting with them.

4. Changing advertising frequency/rate settings. Advertising can be adjusted in AdWords to not just advertise for certain days and hours of each day, but the amount for CPC can be adjusted to raise or lower bidding rates for certain days and hours. The setting is within each Campaign settings area, under Advanced settings->Schedule and choosing Ad Scheduling, the selecting “Bid Adjustment” inside the scheduling option.

After doing research for performance for specific days within your campaign you can make changes to cut costs and increase ROI nicely. For example, after viewing that you are getting little or no conversions on certain days of the week, you can pause these days with this setting. In the same way, any days that have better conversion rates can have an increased bid amount to maximize CTR for those days. This can all help improve business results for your AdWords campaign.

By knowing about and using these different options within AdWords you can greatly improve your pay per click results. AdWords optimization is a definite way to increase ROI and open additional opportunities to expand your marketing methods. Properly using these techniques can cut costs, increase profits, and help you make the most out of this powerful tool.

PPC Magic: 3 Steps To Turning Hundreds Of Keywords Into Millions

Basically, the long tail approach dictates that we not only use high-search volume, general terms, but also load up our accounts with many, many niche terms—the theory being that these tail terms are cheaper due to less competition and also more relevant so they drive higher engagement with users.

I’ve seen campaigns with a few hundred terms perform very well. I’ve also seen campaigns with millions of terms perform poorly. Remember, we test everything in search engine marketing! So, other than the actual logistics of managing a huge list, there really isn’t any drawback to adding and testing many keywords if you think they even have the slightest chance of providing value to your advertiser. I’m going to go out on a limb here and say that for beginners to PPC, try to limit your lists to 10,000 to 20,000 max.

The key is using modifiers

So, how do we take the hundreds of terms we uncovered during our research and turn them into tens of thousands (and maybe even millions) of long tail terms? The secret is with modifiers. For example, if you’re selling used cars, you may take a core term like used car and add buying modifiers so now you have purchase used car, buy used car, shop for used car, etc. As search marketers looking for tail terms, we may combine our core words with multiple modifier lists. For example, if we matched up every term with the dealer’s car brands, we wouldn’t have just purchase used car, but alsopurchase used Saturn, purchase used Ford, purchase used Toyota etc.

Each advertiser will have their own set of modifiers that make sense. However, some common modifier directions include:

Buying cycle. Used for awareness/interest terms, modifiers such as info onor research could be used. For users further down the funnel, buy, shop, purchase and so on also make sense.

Adjectives. If you’re selling broadband service, then description words likefast, speedy, and quick could be important. For banks, it might be performance words such as high yield or safety-conscious words like insured.

Geographical. Lists of cities, towns, states, DMAs, metro areas, etc. If the advertiser is a U.S. based national brand, you may almost always use states and top DMAs as modifiers. Certainly car insurance Omaha should be treated differently than car insurance New York City. Similar geographical modifiers can be used elsewhere in the world.

Here are three steps to using modifiers to build giant keyword lists.

Step #1 – Identify your core terms. If you’ve been through all of the research ideas in this column, you will have already compiled a pretty comprehensive list of keywords from keyword tools, competitor research, and so on. So, you should be able to look through all of the terms and quickly pull out a high level list of core terms. If you’re an online retailer, maybe those core terms are your main categories. Or, if you’re a service company, you will probably have a handful of terms that are used most when people search for your company.

As an example, I’ll use a clothing retailer based in the western region of the U.S. Here is their core term list. Make sure to include plurals and any very common misspellings in the core list.

• T-shirt
• T-shirts
• Jeans
• Shirt
• Shirts
• Dress
• Dresses

Step #2 – Generate your modifier lists. 5 lists that come to mind for this retailer are:

Sizes: Small, Medium, Large, XL, XXL
Color: Red, Blue, Green, Yellow, Brown, White, Black, Orange
Purchase terms: Buy, Shop, Browse, Purchase, Deal, Cheap, Inexpensive,
Qualifiers: Brand name, Designer, Name Brand, Quality, Chic
Western States: California, Arizona, New Mexico, Nevada, Oregon, Washington, Colorado, Montana

Step #3 – Generate permutations. You can use a permutation tool such as Keyword Lizard or Keyword Combinations to input your various lists. You’re always going to want to use your core terms in combination with modifiers where it makes sense. Here’s a screenshot from the free Keyword Combination tool:

Suddenly, you have tail term lists with designer jeans California, small blue shirt, and inexpensive XL t-shirts. In fact, from your seven core terms and five simple modifier lists, you can easily generate over 200,000 keywords.

Okay, here’s where the magic happens. Check the math: 7 Core Terms X 5 sizes X 8 colors X 7 purchase words X 5 qualifiers X 8 States = 78,400 variations of your core words.

Abracadabra!

Actually, you have more than that. There are keywords that won’t contain every list. So you really add one more modifier per list that is a “blank space”. Once you do that, you get 186,624. Wow! In fact, if you were to add just one more keyword to one of those lists, the total available permutations would be 207,360! You won’t use all of those keywords, especially if you cap them at 3-4 words per keyword phrase. However, chances are you’ll be using many more modifier lists and core terms so the list could grow to millions very easily. Ultimately, you certainly will have plenty of great tail terms to test.

And, if you do it right, you can easily segment the keywords into groups and campaigns. For this example, there could be a “sizes campaign” or a “states campaign.” That way you can address similar words with the most relevant ad text and landing pages. Next week, we’ll dive deeper into campaign and ad group segmentation.

ROAS and Launching Better PPC Campaigns

Return on Ad-Spend, or ROAS, is a metric calculated by dividing the revenue generated from an ad campaign, by the cost of that campaign. It can be applied to any sales situation that has an advertising spend, even a bake sale:

Lets say your mother gave you a pan of brownies to sell at the bake sale, but it costs $50 to get your booth and marketing materials set (we’ll call $50 your ad-spend).

If your brownies manage to produce a total revenue of $50, you’ve broken even, or gotten a full return on your ad-spend.

If you had made the brownies yourself, and they’d cost you $50 to make (we’re talking primo brownies here), then your total investment is actually $100, but ROAS only takes into account ad-spend. So in the same situation you’re still getting a full return on your ad-spend, just not a full return on your investment.

A handy exercise to go through with new clients before you launch a PPC campaign is to calculate the potential ROAS of the keywords you’re targeting.

There are a few unknown, and a few fuzzy variables – we’ll have some tools to help us come up with potential traffic and potential costs, but we’ll have to use some educated guessing to come up with reasonable estimated ranges of conversion rates and click through rates – in truth, the conversion potential of your keywords, through your ads, to your landing pages, for your clients products, are up to you and your marketing team.

Calculating ROAS:

In order to calculate a predicted ROAS in PPC advertising you need to know the revenue that each conversion brings for each product you’re marketing (which could be associated with the keyword, or ad-group level), the potential cost of the campaign, and a half-decent guess at what kind of a conversion rate you might achieve. Once you know what a conversion is worth, all of the info that you need is available in rough form from Yahoo and Google’s keyword tools.

Yahoo give us the estimated number of clicks and cost per click (CPC) for a keyword so we can calculate the expected cost of the campaign per month. Adwords give us approximate search volume along with the estimated CPC, which we can use to determine a rough estimate of traffic at different click-through-rates, and what it will cost us. If we supply a hypothetical conversion rate to calculate conversions, and we know the company’s revenue from each conversion, we have what we need to calculate ROAS. So like I said, it gets fuzzy, but it’s still half-decent for predicted information.

These simple equations are expressed like this:

To further the confusion of the ROAS metric, it is commonly calculated in two *different* ways. One way subtracts the PPC ad-spend from the revenue right in the calculation, the other way does not. Let’s look at each equation and how to interpret the results.

Method one:

With method one revenue of $100 and an ad-spend of $100 would produce a full return on ad spend of %100. So with this method of calculation seeing 100% ROAS simply means you’re breaking even. A 50% ROAS would mean you’re only recouping half of the ad-spend you’ve put out. With this equation in a situation where you have $200 revenue and $100 ad-spend, doubling your ad-spend is expressed as an ROAS of 200%.

Method two:

In this formula the cost is subtracted from the revenue, forming a profit metric that is relative to the ad campaign. Plugging the same numbers into this, $100 ad-spend with $100 cost, break-even comes out to 0% ROAS. With this equation, in a situation with $200 revenue and $100 ad-spend, doubling your ad-spend is expressed as and ROAS of 100%.

Be sure you know which type of ROAS you’re looking at, because obviously the interpretation is different for each.

The basic approach of pre-checking keywords for ROAS can help you launch campaigns that stand a better chance of being profitable quickly, rather than analyzing data after some time (and some money!) has passed. It can let you know going in, all else equal, approximately what costs-per-click should stand a good chance of performing well. The problem is, all else is never equal.

A number of variables affect your ROAS, and tweaking CPC is only one part of a comprehensive management approach. Some argue that ROAS should only be used as a general indicator because it is too broad in scope, and doesn’t take into account the overall costs of sales.

Remember from the bake-sale, if you’ve got extra costs external to ad-spend (like $50 worth of primo brownie ingredients), your ROAS metric is never going to reflect true ROI – only somebody who is familiar with overall costs associated with a product or service can really interpret ROAS calculationsfor that product or service. ROAS is not the same as ROI.

As long as you keep it in perspective of larger ROI influences, ROAS as a guide to see how each variable affects profit margins can be quite interesting to look at. For those account managers that understand both their products and the metric well, there can be a benefit to being able to monitor ROAS at each level of a PPC campaign over time.

SEO: To Outsource Or Develop In-House Resources?

Online marketing is complex, and it seems that the number of factors you need to consider to make sure you have the optimal strategy is only increasing. Therefore, it might be tempting to conclude that SEO, or more broadly, online marketing, is something that needs to be outsourced. There is certainly a strong case to be made for hiring external expertise, but outsourcing your SEO strategy completely does have some disadvantages. On the other hand, bringing people in-house has some advantages, but requires in-house people to stay current with developments in the industry. Today’s column will investigate the pros and cons of each approach, and the case for doing a bit of both.

The outsourcing option

Whether outsourcing is best for you depends on your situation. Here are some of the pros and cons of taking this route:

Pros:

• Expertise. It can be easier (sometimes much easier) to find someone who has the expertise you need now.
• Leverage industry exposure. SEO consulting firms have visibility into many different projects across many different types of sites. This breadth of experience is very difficult to recreate in-house.
• Persuasive power of an external authority. In my last two columns I discussed how important it is to sell management on the benefits of investing in SEO. Management may simply by more willing to believe the advice of a recognized industry authority over their in-house people.

Cons:

• Lack of understanding of the internal company environment. Any external organization, no matter how skilled, is simply not going to understand your company as well as someone who lives and breathes your company culture every day.
• Less committed. SEO consulting firms are likely to have many clients. Losing one client is not desirable, but it is not a disaster either.

The in-house option

Here is a brief look at the pros and cons of hiring your own internal SEO talent:

Pros:

• Internal expertise. Consulting relationships are often designed to be temporary, and once a consultant is gone, so is a lot of the knowledge gained around a search marketing campaign. Of course, employee relationships come to an end too, but usually not as often, or as quickly, so the knowledge is retained by the organization for a longer period of time. If you have more than one internal SEO resources this risk is reduced even further.
• Better positioned to sell internally. Somewhat paradoxically, external authority can be helpful in selling the benefits of SEO, but an employee is in a better position to sell to many different stakeholders within an organization. There are many groups that are impacted by SEO, and they all need to be sold on the process.

Cons:

• Potentially more expensive. You can hire a consultant and engage only a portion of their time, but an employee generally requires full time work and benefits.
• Scarcity of top talent. You may need to train your in-house talent, because many of the top SEO consultants are making a lot of money, and bringing them in-house to work for you could cost you more than you might be willing to pay.
• Learning on the job. A corollary to the prior point is that to keep costs down you may need someone to learn the necessary skills on the job.

The argument for doing both

While there are compelling arguments for both outsourcing and hiring in-house talent, there are also some strong arguments for doing a bit of both. Given the challenges of staying current with developments in SEO and online marketing, consulting with a firm or individual who makes a living doing just that can be a big advantage. The consultant’s ability to work on different sites and with clients who have a wide range of needs can be a pretty compelling advantage.

On the other hand, hiring an in-house SEO position has advantages as well. As outlined above retaining knowledge and expertise, and the ability to sell across multiple departments in the company can be a huge benefit.

Of course, the needs of every organization are different, but SEO and online marketing are must-haves for your organization. For many, the best choice will be to decide on what expertise is essential to have in-house, and make a plan to build it or buy it. Then, supplement that with external expertise to make sure your in-house team can leverage all of the expertise of external SEO professionals.