There’s a new trend driving successful digital advertising campaigns: profit-
Right now, digital marketers are standing at the crossroads between opportunity and challenge. The C-
We’ve been watching this movement from the front row as it’s developed and delivered big strategic advantages. You might not have noticed this new movement, but your search team or vendor probably has. And if you’re willing to empower them to pursue profit-
Best practices and patterns are emerging from this forward-
A shift in mind-
At the highest level, profit-
Sounds great, right? Who doesn’t want more profit?
The chart below shows paid search impressions for two advertisers, but only one is using profit-
Shifting to a profit-
1. Measure beyond the conversion
Want to find opportunities for additional profits? You’ll need a precise understanding of the value of your digital media investment. If marketers overvalue their investment, they can waste money. If they undervalue their investment, they relinquish profit (and placement on the search results page) is relinquished to competitors. Successful profit-
The benefits of better measurement go beyond counting profits. Sharper insights translate to smarter bidding, which in turn leads to smarter investments, more customers and more profits. This means determining things such as the precise values of your various customers, their specific actions along the purchase path, different ad placements and more. What you’re looking for is the total impact all these variables have on your net profit from search.
The good news is this level of measurement has become possible. Your search team is likely already moving in this direction; encourage them to look for new measurement needs and make it a priority to champion their needs. Here are a few questions you might ask your team to get started:
Are we accounting for the offline sales driven by our digital investments?
Are we accounting for the lifetime value of new customers?
Are we accounting for the customers’ journey across screens and media types?
2. Bid for profit, not efficiency
So what’s an effective bidding strategy? If the goal is to maximize profits, the bidding strategy shouldn’t be tied to cost per acquisition (CPA). In fact, focusing on a rigid CPA goal can actually limit the amount of profit you bring in—you’re measuring the efficiency of individual transactions rather than the profit from the total volume of transactions.
Here’s a simpler way to look at it: Would you prefer an $80 CPA or a $90 CPA?
It’s actually a trick question, and the profit-
“We’ll sacrifice unit margin if we can make up for it with the profits from extra conversions. For us, this means more happy drivers and better business results,” says AdHarmonics CEO Seth Birnbaum.
Bidding for profit means empowering your digital teams with the means to drive the best business outcomes. Transition them away from narrowly defined targets, which can stand in the way of their new main objective: profit from search.
3. Capture demand in the moment
Search is different from your other marketing channels because the customer is completely in charge of how and when she wants to interact. That’s why one of the key tenets of profit-
Customers expect brands to be there when they need them, and this reality needs to inform how you control your spend. So profit-
Travel advertiser Airbnb, for example, takes a flexible approach to budgets allowing them to stay tuned into their customers’ needs. According to Maria Hwang, online marketing manager, “We will spend as long as we can make a certain profit. We’re not constrained by budget. Our leadership is focused on the business impact of our search investments and empowers us to find new ways to drive results.”
Capturing demand means reaching every potential consumer in the moments they’re searching. If your search team’s budget is capped or you’re relying on a predetermined schedule for your paid search budget, your brand is almost certainly missing out on opportunities to win customers.
Questions for your team
The shift to a profit-
Are current KPIs inhibiting the team’s ability to maximize profits?
Who should know about and help manage the total profits driven by search marketing? How can this help win more budget?
What technology and staff need to be in place to optimize for profit?
Your search team very likely has the answers to these questions and will be thrilled that you’re asking.
We have a lot more good information on how to take advantage of profit-
Director of Marketing, Performance Ads, Google
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