24th Feb 2017
How paid digital is viewed
Maybe I’m biased, but I think paid digital (PPC) is the unsung hero of many digital campaigns. Too often, pay-per-click is judged on direct ROI, with little consideration to its impact on other channels and overall online performance. This needs to change.
At the top level, paid is a transparent digital tool which is easily analysed. This is also one of its biggest flaws. It means that pay-per-click is often one of the first tools dismissed by businesses and often the first in the firing line when it comes to reducing spend within digital campaigns. But paid digital is a fundamental cog in a very large digital machine and only when it is fully understood is it given the credit it deserves.
But what credit does paid digital deserve?
Paid is a campaign grower and channel enabler. It is often one, or sometimes many parts of a purchase funnel, receiving no credit if the final conversion comes from another channel. In some cases, campaigns go on for months and can include an almost infinite number of variables. By using last-click attribution (with the emphasis on last), paid is judged against its lowest possible outcome – not measuring other positive effects. Yes, paid digital should be an accountable digital channel, but we must account for all of its value, even if that value is indirect.
Paid digital plugs the gaps and wins new audiences
PPC can be a touch point within many conversions. The reason it appears so frequently, is that paid has one very strong advantage over other channels: we can bid on generic/non-branded terms and generate new audiences which otherwise may have been lost to competitors. Paid enables us to appear on the search engine results page (SERP) for search terms/keywords which are too difficult to rank for organically, and/or appear for queries we are currently unaware are relevant to the website/brand. We are buying traffic that would have otherwise have been missed and then, in many cases, giving the entire value to the medium/channel with the final click/direct interaction. In doing so we are missing the importance and value paid has played in this entire cycle.
The obstacles making paid value difficult to define
Most KPI metrics used in paid digital (CPA, ROI, ROAS or profit margin) are based on ‘direct’ input and ‘direct’ output. The issue here is that if campaigns are not hitting or surpassing these targets, budget is often restricted or keywords paused without consideration of whether they have been fundamental in providing new visitors to the site (otherwise lost to competition) and/or were the pivotal interaction with the brand/site leading to a high-value sale or lead. By reporting last-click conversions and not taking the time to review account performance at a more granular level, we don’t fully credit any channel.
Why we need to look deeper
Here is a hypothetical example of performance where we aren’t giving credit and potentially underselling the benefits of activity. An agency bids on several keywords around a specific teacher training course title which typically see a return on advertising spend (ROAS) of £0.35. This means that for every £1 spent, they get £0.35 back. They are losing money.
Without looking deeper, many would consider this a failure. However, knowing we are in position five or six for these terms organically (therefore nine to ten overall on the SERP after the paid ads) and that, of the visits these terms provide, 67% are new users, paid is clearly providing value that is lost and credited to whatever the final conversion medium is.
To give you an indication to how involved paid can be within a campaign. In this hypothetical scenario, paid directly generates 14% of revenue. However, 77% of all revenue came from conversions with multiple touch points, paid making up 15% of these. Paid provided 14% of overall direct revenue but also appeared in 15% of all assisted conversions in which it wasn’t the final interaction. To put a value to this, paid contributed £8k of direct revenue, and was involved in £8k worth in assisted conversions.
Agencies and businesses rarely look past direct/last-click revenue/leads, but in reviewing audience type, multi-channel funnels, assisted conversions, conversion paths and click attribution, you will find greater value in paid – and doing this must be part of any holistic, digital campaign.
I’m not saying we give PPC all the credit in the conversions they assist, but by looking at how many touch points, or at what point paid appeared in the funnel, we can try and give it a theoretical value, or simply ‘appreciate’ its value to the overall campaign.
For example, we could apply a linear value to assist and spread the final revenue value evenly across all channels/interactions or weight it more heavily towards the first interaction. We have found for one of our clients, of the touch points in which paid appeared, 16% had paid as the initial touch point. Does that give it a stronger value? Quite possibly.
Whichever way you look at it, paid digital/PPC/pay-per-click, and especially the generic terms we bid on, are not only direct contributors to a campaign, but are also new audience builders and conversion enablers. If we look deep enough, ‘unprofitable’ keywords with a ROAS of £0.35 have much more value than is traditionally reported and, the truth is, these keywords and activity quite possibly provide a positive ROI or ROAS.
Darren Barr, Paid Digital Manager