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October 18, 2010

Letting Go of Traditional Marketing concepts for Better PPC Management

By Karl Ribas

With many companies struggling in this unsettling economy of ours, the thought of saving a buck has become more appetizing to small-business owners than the idea of actually making one.

With that, one way small-businesses choose to control costs is by bringing the management of their online marketing campaigns, otherwise managed by 3rd party professionals, in-house. More times than not, when such an occurrence happens, these new marketing responsibilities fall into the laps of the traditional marketing team - those individuals responsible for the Company's offline marketing strategies.

Some of you may ask, what's the big deal? A marketing professional is a marketing professional, are they not? Wrong! While the idea of bringing online marketing initiatives in-house is acceptable, especially if it means saving money, the idea that a traditional marketing specialist is the same as an Internet marketing specialist is dead wrong.

First and foremost, a traditional marketer and an Internet marketer are accustomed to very different marketing channels, and thus they are equipped with a unique set of skills and tools for helping them to accomplish their objectives. Very rarely will the skill-sets transfer from offline-to-online, and vise verse. In fact, Pay Per Click advertising (PPC) happens to be one of those occasions where traditional marketers, without proper training, seem to always struggle.

Following are three examples that outline just how different Pay Per Click is compared to traditional marketing channels, and why letting go of traditional marketing concepts will lead to better PPC management.

Click-Costs and Positioning are NOT Set in Stone
Without a doubt, the most difficult concept for a traditional marketer to grasp when managing Pay Per Click advertising is the auction.

Traditional marketers, when purchasing ad-space within newspapers and magazines or 30-second commercials on television and radio stations, deal with people, and those people set the pricing and positioning for their ad buys. With regards to Pay Per Click, no such people or fixed pricing/positioning models exist. Instead, Google, Bing, Yahoo!, and all other PPC networks support an auction based system.

For example, Google uses an ad auction in accordance with a proprietary algorithm to determine the appropriate click-fee and position for each advertiser. Their algorithm considers a long-list of variables including, but not limited to, account and campaign settings, keyword selection and match-types, maximum bid, and quality score - a metric used to calculate a relevancy value by reviewing keyword selection, ad-copy, landing page, and other unknown variables.

Google uses a complicated algorithm along with its supporting technology and their ad-auction. Therefore it has a constant pulse on its ad-marketplace and can charge and position advertisers accordingly throughout every second of every day. Click fees and positioning can and will fluctuate from second-to-second, search-to-search. Traditional marketers seem to struggle with PPC marketing because costs and positions are not metrics that they can control.

An Increase in Spend Does NOT Guarantee an Increase in Ad-Placement
Traditional marketing is all about marketing to the masses and hoping that the target audience not only receives the message, but becomes so inspired that they step forward and take action - learn, buy, participate, etc.

Campaign managers understand that in order to increase revenue they must first increase their ad's exposure. This results in an increase in advertising spend. Such examples include advertising on the front half of a magazine as opposed to the back, or airing a TV commercial during prime-time hours as opposed to during the mid-afternoon. The model is simplified in that the better an ad's placement, the more exposure it receives, and therefore the better chance of success it has.

On the other hand, Pay Per Click works quite a bit differently. It is true that advertisers can gain more exposure (impressions and clicks) by simply being the top sponsored listing for their chosen keywords. However, advertisers can't simply buy better ad-placement like they can with traditional marketing channels, and this is a concept that troubles traditional marketers.

Google, as an example, removes the idea of bidding for position altogether. They promote a system that allows advertisers, big and small, to compete on the basis of relevancy and not their wallets. Therefore, in order to increase revenue PPC marketers must first increase their campaign's relevancy. By doing so, it may or may not result in an increase in advertising spend. Such examples for increasing a campaign's relevancy include fine tuning ad-copy, promotions, landing pages, and keyword selection.

Relevance Exists on a Much Grander Level
Marketing without relevancy is a waste of time, money, and effort... something both traditional and Internet marketers understand very well. However, one of the biggest differences between traditional marketing channels and Pay Per Click marketing is the level of relevancy that each is capable of achieving. For traditional marketers, relevancy means running Ford Truck and Papa Johns pizza commercials every Sunday during the football season. For PPC marketers, relevancy means so much more than that.

The very core of search marketing promises relevancy - the idea of listing relevant websites in accordance with what is being searched. The PPC model supports this. PPC allows advertisers to participate in a one-one-one marketing channel where it is the end-user that solicits advertising, and not the other way around. This often becomes an issue for traditional marketers that are new to managing PPC campaigns. Proper Pay Per Click management means displaying ads that target only those individuals interested in learning more about a company's products and services, and not the masses.

Comments

This is spot on: "The very core of search marketing promises relevancy - the idea of listing relevant websites in accordance with what is being searched."

Not only does Google try and show relevant Organic results, they want to show relevant Paid results as well. Most traditional marketers don't understand why a better, more relevant ad gets to pay less than another untargeted, irrelevant ad for the same amount of clicks (or even more!). It's in everyone's best interest for the ads to be relevant.

It's all about conversions. You're definitely right about being relevant. Better marketing results with increased emphasis on relevant, targeted messaging that encourages a specific conversion step. Increased pay-per-click may result in increased impressions, but does not necessarily improve conversions.

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