Online stores need to think very strategically about PPC campaigns prior to launch. In this article, we’ll look at important strategic questions to ask that involve merchandising. The goal of these questions is to put a framework in place upon which keyword research, campaign structure, offers, ads and landing pages can be built.
Question 1: Go Deep or Go Wide?
An e-commerce site can approach PPC either by trying to get a little exposure for a lot of products, or a lot of exposure for a smaller group of products. Unless your business has an unlimited budget, it’s hard to do both.
There are many factors to consider when answering this question. More specifically:
- Do we have products with particularly high margins?
- Do we have products with particularly low margins?
- Do we have products that are especially appealing or unique?
- Are our products generally thought of as commodities?
- Does the sale of one product lead to the sale of other products?
- Are our products purchased once or repeatedly?
The answers to these questions get at a supremely important PPC metric: cost per lead (CPL). You don’t want to build a campaign where a conversion costs $50 and the profitability of a sale is $20. Thus, if your campaign targets, say, 1,000 low-margin items, you’re going to need a very, very low CPL to succeed. On the other hand, if your campaign targets 300 high-margin items, you’re in a better position to generate healthy ROI.
At this point, you don’t need a definitive, granular answer; but you should have a general idea about how many products, and which products, make sense to target.
Question 2: Where Are the Competitive Opportunities?
Another aspect of the ROI equation involves a second crucial PPC metric, cost per click (CPC). The more competitive your target keyword, the more expensive it is to have a winning bid and get your ad to display.
Certain market segments are extremely competitive — office supplies and auto parts, for example. If you are in a competitive niche, bidding on the highest of the high-volume keywords may be cost prohibitive. On the other hand, if your niche is less competitive, your budget goes further and you can target more keywords and/or promote a greater number of products.
If you are in a competitive niche, PPC can still be effective, but a more narrowly targeted approach is called for. For instance, you can promote your more specialized (less competitive) products, or target a particular geographic area, or only display your ads in off-peak hours.
Being in a competitive niche usually leads online stores to a “go deep” strategy; whereas less competitive niches bring a “go wide” strategy back into play.
Question 3: What Is Our Offer?
One of the big traps of PPC is spending so much time on keyword strategy, campaign structure, and even A/B split testing, that companies forget a very basic fact: without a great offer, it’s hard to sell things.
For a solidly built PPC campaign, the offer should never be an afterthought, nor should there only be one offer on the table. Instead, develop three or five or even 10 offers that you think will truly interest someone in making a purchase. You may not deploy all of your offers initially, but you will be able to test them as time goes on, and eventually, identify the offers that produce the most conversions.
Question 4: How Much Can We Budget for Six Months?
Finally, determine how much your company can budget for PPC for six months. Any time frame short of that will not provide enough data for an accurate assessment of campaign ROI.
A lot of companies design great campaigns, but get sticker shock when they see, after a couple of months, that their $2,000 monthly budget is only generating five monthly conversions.
Trends are more important than raw numbers in the initial stages of a PPC campaign. If you have a sound testing methodology in place, and are accurately and completely tracking results, CPL and CPC should go down, and overall lead generation should go up.
Exercising patience and managing expectations are key components of setting up your PPC campaign for success. That’s why a healthy discussion of budgets should take place early in the process, and not after money has already been invested in keyword research, technical setup and creative deliverables.
Brad Shorr is the B2B Marketing Director of Straight North LLC, an Internet marketing firm that helps online retailers build/optimize their paid search campaigns. Check out the rest of his work on Google Plus