It is important to know the value of a lead when managing a Pay-Per-Click (PPC) campaign. It is one of the first things we ask a new client during the discovery process and I am surprised that more often than not, they do not know the answer. They have a good idea of the value, usually based on the average order value and their average conversion rate. But too few companies actually run the hard data and crunch the numbers to determine what they should be willing to pay for a lead.
When I first got into the business field I had a manager who was very big on tracking the value of everything you did. If you have a main goal and know the value of that goal, everything you do during the process to achieve that goal can be given a value. For example, if you are in sales and you average $100,000 in revenue per month, you can literally place a value on every call you make during the month (even the calls that do not go well). For the sake of keeping the math simple, let’s say you average 50 sales calls a day (given a normal 5 day work week and 4 week month) and you generate $100,000 in sales from 100 orders, which gives you an average order value of $1000. During the month you make 1000 sales calls, some calls go really well and you make a sale while others are terrible and you get hung up on within 15 seconds. But you are in sales and positivity breeds positivity and the value of every call you made that month is $100. That was how my first manager wanted us to track our productivity, don’t get too high from the good calls or too low from the bad ones. At the end of the month, every call you make is worth $100 if you work hard and work smart. Of course over time, you want to grow your sales and increase your close ratio but, those are topics for another time.
This same line of thinking should be applied to tracking success online for both e-commerce and lead generation sites. Track and analyze the process of how you get potential customers in your sales funnel. Keep track of how many leads you need to attain a customer. Additionally, keep track of how much your average customer is worth in terms of increased revenue. Once you know how many leads you need to get to convert a new customer and you know how much that new customer is worth to your business, you can identify how much each lead is worth (both the good ones that turn into a customer and the bad ones that fall out of the sales cycle). It is just like my example earlier, but on a business level versus a personal level. Plug in the appropriate numbers and you can calculate the value of a lead to your business. Now this is a simplified example, but it is the foundation of determining the value of a lead. Once you identify that value, you should be managing (and more importantly) optimizing your PPC campaign to achieve a lower cost per conversion than the determined lead value. The greater “the spread” between your cost per conversion and your lead value, the better your return on investment (ROI).
Almost every industry experiences seasonal cycles. Understanding seasonality in your industry can help you fine tune your online advertising. Using tools like, Google Trends and Google Insights for Search can help you see trends and allow you to take advantage of an increase in market demand. Historical data should be used when determining your seasonal cycle. It is a good idea to look at several cycles in your season to make sure that there are not any economic indicators that have influenced the trending.
Online advertising is the ideal medium for seasonal advertising because the results are virtually instantaneous and the messaging is easily adaptable. Once you determine your peak periods of interest, you can allocate a larger budget to times when demand is higher and use specific ad messaging for your peak season. For example, summer tends to be the season when people are more interested in travel. By spending more on advertising and being more visible during those peak times, you can take advantage of a high demand season. Understanding off season can also allow you to change your messaging to offer off season discounts, as well as help save money in times that do not convert as well.
For most online retailers, the holiday season is the peak season. But when should you start to conceptualize your advertising strategy for the holidays? Many marketers realize the need to advertise during the holiday season but may not recognize there are other times of year when demand is high as well. Understanding your industry’s seasonal cycle can help businesses to advertise at the right time with the right message. Remember, it is never too early to start thinking of your seasonal advertising.
By now, we are all aware of the recent launch of MSN’s Bing. For a while it seemed as though you couldn’t turn on a TV or radio station without hearing the advertisements for this new ‘decision based engine.’ However after a month of data, the initial results are in, and they don’t look promising. With only a .4% lift in search volume for the month of June, Bing’s popularity seems to have cooled already. The same report indicated a poor month for Yahoo as well.
So it seems quite logical that we are now hearing new talks of a search deal between Yahoo and Microsoft. Critics are split, some stating that a deal is imminent and others realizing that we have been in this position a few times before. So what does the future hold for these two websites and how will this deal effect advertisers spending their dollars in these engines? Only time will tell, but one thing is for sure, a deal between these two conglomerates could be the best way to join forces and confront Google head on.