Diagnosing A Paid Search Strategy

Paid Search strategies can vary widely. There is a different blend of direct response and branding that each company employs. How much does a company value educating new customers as opposed to getting sales from each click? How often are they testing new keywords to reach different and new target segments? How much are they willing to spend for the sale? What is the target ROAS and how willing are they to deviate from it?

These questions can be answered by looking at the amount of money a company invests at the different levels of Return On Ad Spend (or CPA). If you compare time periods you can see how paid search strategies change.

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In this example you can see that a focus on direct response was increased year over year as that sweet spot of ROAS from 1 to 4 was much more heavily invested in – budget was spread much less evenly across higher ROAS levels. There is always a balance between profit and volume the more evenly the cost is spread out the more evenly the company values both metrics

in 2012 there seems to be more experimentation going on as the amount invested that got 0 return was higher.  Interestingly, in 2013 as the amount of money invested on the > 21 ROAS was much higher. Maybe there were a few pet keywords that even though got low return were important from a branding or competitive perspective. Or impression share on those high ROAS keywords was tapped out and additional budget was given to the wrong keywords.

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