The decision whether to insource or outsource paid search can be daunting, regardless of whether you’re thinking about starting to advertise on paid search or have been advertising on paid search for years.
For small businesses without large marketing budgets, this decision becomes even more complicated. Small business often suffer from a lack of marketing budget to hire an outsourced paid search agency or, as a result of being burned by outsourcing in the past, lean towards insourcing their paid search marketing going forward.
For everyone else, the following article assumes that the budget exists to either properly insource or properly outsource your paid search efforts.
Insourcing Paid Search
If your company is going to insource, you absolutely need to hire someone who lives and breathes paid search marketing. And I don’t mean that you should hire someone who worked for a paid search agency for a couple years and only learned how to use a single, specific third-party paid search software.
You need someone who tirelessly reads and consumes industry paid search blogs, white papers, and research, and then gives back to the paid search community with guest articles, guest blog posts, and participates in SEM conference discussion panels.
This person needs to have the mentality that everything they read is a hypothesis — meaning that they should be willing and able to test every assumption to determine if that assumption holds for your specific business.
When this person hears someone within their business organization say something like “Obtaining a quality score of 10 is impossible for non-branded keywords” they internally cringe and then set out to disprove that theory, either by showing existing data refuting the claim or by designing experiments to confirm the validity of that claim.
This person should also view themselves as a scientist, someone who uses the scientific method to test inputs (campaign hierarchy, ad text, keyword mix, etc.) to the Google Paid Search Algorithm (a.k.a. Black Box) and determine the how those inputs affect the outputs (Quality Score, Ad Rank, CPC, ROAS, ROI, etc.)
Are you getting the impression that this person will not be cheap? That’s right, this kind of paid search experience and capability will certainly warrant a premium in the marketplace and only those corporations with the commitment to excel in their efforts to maximize their Paid Search ROI will have the determination and marketing budget to hire someone of this caliber.
Now, assuming that you’ve found your paid search champion, here are the advantages to insourcing paid search:
Insourcing Paid Search Advantages
Total control of the process — You know your business better than anyone else and can skip the process of having to explain how your business works to a paid search vendor.
More change agility — Outsourced paid search vendors service anywhere from a handful to a few hundred clients with each “paid search manager.” By insourcing, you do not have to wait for your vendor to implement your changes.
Internal education — Your paid search champion can conduct conference calls or webinars for internal consumption to educate the business stakeholders as to the capability and limitations of paid search as an advertising medium.
Internal mediation — siloed business units within a large corporation will often “compete” for the same keywords, driving costs up and ROI down. Your paid search champion can objectively evaluate the situations and determine the course of action that will maximize profit for the corporation, rather than for a specific business unit.
Outsourcing Paid Search
If your company is going to outsource, you need to make sure that the company that you hire has a paid search champion on their staff at a minimum, or ideally, working directly on your account.
How do you determine if potential paid search agencies have that paid search champion? Ask to meet with the person who will be directly managing your account in person prior to signing on the dotted line. In this meeting, ask that person the following questions:
Outsourcing Paid Search Questions
“Given that it’s impossible to obtain a Quality Score of 10 for non-branded keywords, what quality score can we expect to see for non-branded keywords?”— If they say anything other than refute your underlying assumption, your ROI will not be maximized by working with this firm.
“We don’t want to advertise on branded keywords since they are a waste of advertising dollars, so how do you plan on capturing clicks of users who use our brand name as part of their search phrase?”— The proper response to this one should be that you should first test whether branded keywords are indeed a waste of advertising dollars. This test has an added benefit of generating the data for the “long-tail” phrases that contain your branded terms for later use in branded phrase or exact match ad groups.
“We’ve heard that remarketing is an effective tool for paid search. What are your thoughts on remarketing?”— This is more of an open-ended question that a) checks to make sure they understand what remarketing is and b) allows you to evaluate their communication skills. Ideally, they should be able to explain in several sentences what remarketing is and why you should use it. You definitely don’t want to get a single word or single sentence answer on this one.
“We typically achieve variable ROIs using other marketing channels such as w% for television ads, x% for radio ads, y% for email list rentals, z% for 3rd party newsletter features, etc. What ROI can we expect to achieve with your paid search services?”— The answer here should not be a set percentage, nor should it be based on any of the percentages that you gave in your question since the specific ROI for a paid search account varies from business to business based on a number of factors, including landing page conversion effectiveness, website speed performance, paid search budget, conversion goal (i.e. online purchase vs. online lead generation), etc.
“Given that it’s impossible to target demographics for Google Search and Search Partners, how do you propose to limit our ads to only those potential customers that we want to click on our ads?”— A good answer here is that the ad copy can be written in such a way as to encourage your target demographic to click on your ad while discouraging others from clicking on your ad. A better answer is that it is not impossible to target Google Search and Search Partners based on certain demographics such as annual household income, number of children per household, or maximum education level — subscribe to my newsletter to be notified about a future article on how to do this.
Outsourcing Paid Search Advantages
Less risk — It takes a lot of time, effort, and money to hire a paid search champion. If you’re not sure whether paid search will be a long-term marketing channel, outsourcing is a good way to test the waters until you’re sure that you want to commit long-term and bring the process in-house.
Lower cost — Most paid search agencies charge a fixed percentage of your paid search spend, with some minimum monthly charge to account for very small accounts.
Less exposure to “meeting paralysis” — Let’s face it, some internal corporate meetings are simply a waste of resources where an email would have sufficed. Just make sure you don’t eat up your agency’s time by requesting too many “status update meetings” which simply detract from the time they will spend working on your account.
Should you Insource or Outsource your Paid Search?
The answer is that it depends on your budget and commitment to paid search.
Insourcing requires more budget and commitment to find the right talent to maximize your ROAS and ROI.
Outsourcing is a lower risk, lower cost alternative, but can be ineffective if you hire the wrong agency.
Q: Have you ever wondered: “I spend a lot of effort on long tail keywords, but why don’t I see more long tail conversions?”
The long tail keywords primarily assist your branded conversions.
Long tail keywords are the cheapest and most cost efficient way advertise — cheapest due to reduced competition and most cost efficient if used in conjunction with landing pages tailored for the specificity of the keywords.
A mature, properly managed ppc account has many negative and long tail keywords. The “head” and “shoulder” terms typically comprise 20% of the overall number of keywords and the long tail the remaining 80%. However, from a clicks and conversions standpoint, those numbers are often flipped, with the long tail keywords generating a much smaller number of conversions proportionately than you may expect.
To understand this situation, you must first understand how paid search relates to the customer purchase cycle.
PPC Advertising Customer Purchase Cycle
One of the great aspects of paid search advertising is it’s ability to influence the three stages of the customer purchase cycle, from Awareness to Purchase, via the use of display ads, search network, branded, and non-branded keywords.
Non-branded keywords, especially those terms that are generic or only tangentially related to the product or service offered, tend to be the first interaction in the chain of interactions that lead to a purchase. Example: “fun things to do”
Conversely, branded keywords tend to be the last interaction just prior to purchase, after the potential customer has researched the product, compared alternatives, and has become comfortable with the brand. Example: “samsung”
If every customer could be perfectly tracked from first interaction to last, you would see that long tail keywords provide “assisted conversions” while branded keywords tend to get the majority of the final interaction “conversions.” This situation would allow us to exactly quantify the affect the long tail keywords have on revenue and leads. Unfortunately, it is difficult to properly track the customer from first click to last given today’s multi-device, multi-location world.
It’s a multi-device, multi-location world out there…
Google recently published a study titled “The New Multi-screen World: Understanding Cross-Platform Consumer Behavior.” This study highlights that 90% of consumers use multiple devices (screens) to perform tasks, both simultaneously and sequentially.
The practical application of these findings as related to paid search are:
Work + Home — Consumers may start the search for a product on one device at work (i.e. long tail, generic keyword like “smartphone for business people”), then finish at home using a different device (using a branded term like “samsung smartphone”). In this scenario, the generic keyword “smartphone for business people” will show a click, but no conversion, while the branded keyword “samsung smartphone” will show both a click and conversion. Note: the generic long tail keyword “smartphone for business people” won’t even show an assisted conversion since multiple devices were used.
Paid + Organic, Multi-device — Consumers may begin their search via a paid search click for “board games” on a mobile phone, but may finish later on their tablet via a organic search click via the keyword “monopoly”. In this scenario, the paid search keyword “board games” gets a click, but no conversion while the organic term “monopoly” will show both a click and a conversion. Note: Again, there is no assisted conversion for the paid search term since multiple devices were used.
Google’s Adwords Team is working on it
If users are logged into their Google account at work and at home, Google *should* be able to consolidate data points acquired across multiple devices and networks into a single transaction stream.
Even if Google is able to pull off this data consolidation, there is no guarantee that your customers will be logged into their Google account on their work computer, home computer, cell, and tablet at all times.
Where are all the long tail conversions?
The long tail keywords primarily assist your branded conversions.
If prospective customers don’t find your website in the early part of their purchase decision process, your product/service will not be in their final consideration set. Put another way, if not for the long tail keywords, the branded keywords may not have captured the conversion at all.
Would you try mounting an expensive digital SLR camera on a tripod with only two legs extended?
Like an expensive, but broken camera, your paid search advertising dollars can be equally useless if not supported by the three PPC Pillars: Keyword Optimization, Ad Copy, and Landing Page.
Keyword optimization involves selecting the right keywords and budget to generate the highest Return on Ad Spend ( ROAS ) and, ultimately, Return on Investment ( ROI ).
For example: Imagine that you have two potential investments, one with a guaranteed return of 50% and the other with a guaranteed return of 100%, but you only have enough money to invest in one or the other — Which investment would you choose?
What seems like a no-brainer investment decision often goes overlooked when it comes to paid search keyword optimization.
Given that most companies’ paid search accounts are budget constrained (i.e. there is more potential impressions/clicks than you have allocated to your paid search marketing budget), careful consideration should be given to exactly which keywords should be allocated to “unconstrained” campaigns and which keywords should be allocated to campaigns that always hit their daily budget limit.
When making these budget allocation decisions, be aware that all keywords are not created equal:
Branded keywords tend to show a disproportionately high number of clicks and conversions, while generic long-tail keywords tend to show a disproportionately low number of clicks and conversions. (Why? See
[Link to other article] ).
Some keywords may be generating traffic to high-margin products while others may be generating traffic to lower margin products.
Consider the difference between, “Awareness”, “Consideration” and “Purchase” customer purchase cycle keywords and budget accordingly.
“First impressions are the most lasting.”
You have only 140 characters to make your first impression on your potential customer — will your company be presented as professional, high-value, and expensive (Luxury Brand) or utilitarian, low-value, inexpensive (Commodity Brand)?
Your Ad Copy presents a unique opportunity to both entice and discourage prospective “clickers.”
Entice prospects that resemble your company’s target demographic by clearly conveying:
Value proposition — “Reduces cost by x%”, or “Increases revenue by x%”
Competitive differentiation — “Outsells competition 2 to 1”, or “Market leader”
Time-limited promotions — “Limited time offer”, or “Sale ends July 31st”
Social proof — “Voted best software in 2013”, or “50,000+ likes”
Pre-qualify others who are unlikely to buy your product/service (i.e. waste your advertising dollars) by including:
Product price range — “Starting at $5,000” for high-priced products, or “As Low As $10” for low-priced products
Age limits — “Must be 21 to enter”, or “Must be 65 to qualify”
Purchasing power — “Credit approval required”, or “Requires annual purchase agreement”
Other techniques both entice and discourage at the same time:
Frame the target demographic — “Great for new moms”, “Best selling teen product”, or “Enterprise Software”
Purchase requirements — “Offer only valid for new customers”
If paid search traffic is the fuel, then the landing page is the revenue engine itself.
Funding a paid search campaign without first spending adequate time crafting the messaging and optimizing the conversion potential of the landing page is like paying for a local TV commercial advertising the opening of a new restaurant six months before the building construction is complete.
Each landing page should have a single, clearly defined goal which will vary according to the specificity of the keyword used to land the potential customer on that page:
To generate a sale — online or phone order
To generate a lead — online form or phone call
To capture an email address — newsletter
To encourage a click — affiliate link
Try to avoid the temptation to identify your landing page goal as “branding”, which is typically the catch-all for “I’m not sure what the goal of this page should be.”
Regardless of the goal of the landing page, some key landing page components are:
And of course, the landing page messaging must match closely with the ad copy itself — wasting advertising dollars on product specific keywords that land the prospect on with a product category page or the homepage is never a good idea.
Where to go from here
As with all online marketing initiatives, the key to successful PPC is to test — test keyword budget mix, test different ad copy, and test landing page changes.
While you may or may not have blindly believed other panic inducing terms, such as “Y2K” and “12/21/12”, it is wise to test whether your branded keywords are profitable before you turn them off.
The goal of this test is to determine the quantity and value of lost branded keyword clicks, conversions, and revenue when branded paid search ads are not presented to prospective customers.
Paid Search Branded Keyword A/B Test steps
1. Determine equivalent test populations
The first step is to segment your branded paid search audience into two reasonably equivalent populations in terms of absolute number of conversions over time. There are several ways to accomplish this segmentation:
Geolocation — Within a specific country, are there two equivalent sets of states, metro areas, or cities that produce equivalent conversions?
NOTE: When dealing with accounts that are limited to a single metro area, you may be tempted to split between “city name” and “zip codes within that city.” This method tends to skew the data since Google location specificity is inconsistent and probably tied to how the user connects to the internet (i.e. via a static IP at work, a dynamic IP at home, a mobile network, etc.) It is still possible to segment this way, it just takes more test phases to eliminate location/connection type bias.
Dayparting — Are there two equivalent sets of hours that produce equivalent conversions?
2. Create two new Adwords Campaigns
Next, create two new Adwords campaigns which will cater to each of your equivalent test populations and name them “Brand Test A” and “Brand Test B”. This step is critical to ensure that existing campaign historical data does not artificially skew the results.
Each campaign should be identical in terms of ad groups, keywords, ads, ad scheduling, etc. — the only difference is the population served.
When setting these test populations, make sure that you also add the negatives to each campaign as well. For example, if “Brand Test A” advertises to cities 1, 2, and 3, you will need to add negative locations of cities 4, 5, and 6 to this campaign as well to prevent possible cross-contamination of the data.
3. Establish “Baseline” metrics for the branded keyword test
Upon completion of setup, pause your original branded keyword campaign and run both new campaigns until you have at least 100 conversions for each campaign. This step ensures that the new campaigns are “up to speed” in terms of ad approval and impression share.
4. Run Phase 1 of the branded keyword test
Pause all keywords for “Brand Test A” (not the campaign itself). Run this phase of the test until you have at least 100 conversions for “Brand Test B”.
5. Run Phase 2 of the branded keyword test
Now enable all keywords for “Brand Test A” and pause all keywords for “Brand Test B” (not the campaign itself). Run this phase of the test until you have at least 100 conversions for “Brand Test A”.
6. Analyze the branded keyword test results
The Key Performance Indicators (KPI) for this branded keyword test are:
Overall Website Revenue
Natural Search Revenue
Paid Search Revenue
Since we created two new Adwords campaigns for our test, it is easy to view the results in Google Analytics by creating the following custom segments:
Now, using the “Ecommerce Overview” report in Google Analytics:
Plot the two test campaign segments, “Brand Test A” and “Brand Test B” for the entire testing period
Plot the “Brand Test A & B”, “Google Organic”, “Google Paid Search”, and “All Visits” for the entire testing period
Every business situation is different, and the analysis of the test results will vary from industry to industry and company to company. The most important question to answer is:
Is it profitable to advertise on branded keywords?
To answer this most important question, the following questions must be answered first:
How much revenue was lost during test phases 2 and 3 compared to the baseline phase for Paid Search, Natural Search, and Overall Website visitors?
How many advertising dollars did you save by not advertising on branded keywords in test phases 2 and 3?
Given your business’ profit margin ( NI / Gross Revenue ), what profit would your business have made from that lost revenue ( lost profit = lost revenue * profit margin )?
If your company’s advertising dollars saved is greater than the lost profit, does the lifetime customer value of the lost customers outweigh the difference?
What are the results of your branded keywords test?
If you found this article helpful, please comment below with your results (keeping your company name confidential of course).
Helpful information to include would be industry, pretest branded keyword spend per month, revenue lost during test, and ultimately, whether your company decided to continue advertising on branded keywords or not.
eBay recently commissioned a study that declared an end to branded keyword advertising.
The study shows that when turning Google Branded keywords off, eBay’s total click volume from Google only dropped by 3%.
At first glance, the conclusion that paid search spend is a waste of advertising dollars.
The problem with percentages is that they can be misleading when viewed out of context — given that eBay’s paid search volume as a percentage of their total search volume (organic + paid) is 6.2%, the 3% drop in overall search volume means that nearly 50% of eBay’s branded paid search traffic was lost!
Where did the other 50% of eBay’s Paid Search potential visitors go?
Since eBay owns the entire first page of natural search results for most search terms including the “eBay” term (i.e. ebay motors, eBay apparel, etc.), it is logical to assume that any prospects that didn’t click on a competitor’s paid search ad did one of the following:
Clicked on an eBay natural search listing — 50% of the brand keyword prospects clicked on a natural search listing rather than the now missing paid search ad.
Paid search competitors — Paid Search is a great mechanism for peeling away competitor’s prospects via special offers. In the absence of an eBay ad and presented with a “sale” ad from a competitor, some prospects may have decided to click on the competitor’s ad instead of eBay’s natural search results.
Abandoned the search or modified the search to a search term excluding the word “eBay.” — Only Google has this data for sure, but this action seems counter-intuitive.
Nothing. In the absence of a paid search ad, there’s nothing to click. Given the proliferation of “paid search spy” software out there, it is safe to assume that some of those clicks are by “bots” which are simply recording paid search data (i.e. landing page URL, landing page keyword density, etc.)
Did eBay make the right call by turning off branded keywords?
Consider that eBay has:
Relatively low profit margins –> Net Income / Net Revenue = 18.5%
Low branded Return on Ad Spend ( ROAS ) –> ( Revenue from branded / branded spend ) -1 = 18%
Negative ROI for branded paid search –> ( branded Net Income – branded spend ) / branded spend = -78%
It doesn’t make sense for eBay to advertise on their branded terms.
In fact, by not advertising on branded terms, eBay nets +$12M in annual profit while freeing up $18M in cash flow.
Should your company turn off branded paid search keywords?
Whoever coined the term “Google Tax” certainly did the company a disservice — advertising on branded keywords (or any other keyword) is either profitable or not depending on your company’s product/service, profit margins, paid search account management effectiveness and natural search (SEO) proficiency.
It may make sense for your company to turn off branded keywords if most of the following are true:
Your company owns the first page of natural search results completely or you have at least the top three or four natural search listings.
Your company’s brand keywords are not plagued by competitors’ ads with offers to entice your prospects away.
Your company has relatively low profit margins (i.e. resellers, affiliates, marketplaces, commodity product manufacturers)
Your top-most natural search result (usually your home page) conversion rate is equal to or exceeds the conversion rate of your branded paid search landing page.
Your branded paid search ad simply dumps the visitor to your company home page and does not utilize any additional paid search site links.