The 80/20 Rule Applied To PPC

The 80/20 rule, also knows as the Pareto Principle, means that roughly 80% of the effects come from 20% of the causes. Applied to search engine marketing, it means that roughly 80% of your revenue comes from 20% of your keywords.
A lot has been said on monetizing the long tail of search which I think is very valid. Spending the time on developing a long tail strategy can reap many benefits but it still doesn’t negate the fact that the “head” still makes most of the money. So if you had limited time and you want to see the biggest impacts the fastest, you should look at that juicy 20%, and optimize it first. Take the time to dive into Google Analytics with those high yielding campaigns, run bid experiments on keywords and try to do every little thing to optimize these campaigns first since they will give the most back.

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Identifying the 20%
Export a campaign report and then sort high to low by conversions. Do a little division in the cells next to clicks, impressions, cost and conversions to see the percent of the total each campaign contributes.

Analysis
In my example you can see that Campaign 1 contributes 33.8 % of total conversions for the account yet it has the lowest click through rate and it’s low impression share is almost all due to rank. There is some low hanging fruit to be had with this campaign by adding negative keywords, improving adtext and adjusting bids.
If you didn’t think to start working on the 20%, or most important first, you might be tempted to start working on Campaign 14 which has the highest cost/conversion. You may not realize that even though it is performing badly, it’s only contributing .4% of total spend. All the effort on that campaign would yield little help to the account as a whole.

The moral is work smarter not harder.

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