How to set goals for Paid Search

Setting Goals and questioning your Paid Search Performance

Data Analysis & Understanding - Looking Back

A key part of setting any goals for future campaigns is to look back and fully understand all the core KPIs for each digital marketing channel. Paid search is no different, in fact, there is usually so much data available for Paid Search the challenge is finding the data you really need to look at. During this blog post I'll show some of the core questions you should ask as part of this process so you can actively implement in your business.

The key is to keep it simple, use data you trust don"€™t over analyse, commit and get going.

Strategic PPC Questions

These questions are very top level, defining a basic understanding of the overall performance of Paid Search. Work with your marketing team / agency or directly with your analytics package to answer these 4 straightforward questions.

1. What did paid search achieve last fiscal year?
2. What budget was required for what ROI?
3. How does this compare to my other marketing channels?
4. How much time & effort is required in terms of a budget (if agency managed) or physical man hours (if managed in-house).

In my experience, It's key that you understand the answers to the above ,as well as the influencing factors as it helps set the scene & the questions for taking paid search forwards.

Other questions you may want to ask:

1. Which keywords worked well?
2. Which landing pages or CTA"€™s that worked better or worse?
3. Are there obvious seasonal changes in performance?

Looking forwards

To easily set goals & plan forwards with paid search, it is key the above is well understood and questioned. Having these answers along side your future business objectives is key to the next stage. You should never just look back to plan going forwards. Before we can set goals we have to also take into account:

1. Business direction - new products / verticals, launching in new countries / regions etc.
2. The marketing opportunity - Things like impression share from your previous years work will help understand this

From this point onwards we are looking at two scenarios.

Scenario 1 - What COULD I get...

Considering your business plan & the market research, ask what does the marketplace research say you should receive with regards to traffic to the website. If you believe you can dominate number one spot in paid assume about 3-6% of the impressions will come turn into visits (test to find the precise number for your keyphrase. Personally I would always knock this number down to 2.5%, always best to pessimistic when number crunching like this.

[Editor: You can use Dan Barker's gap analysis approach for SEO to see how you can model this].

Once you arrive at a rough traffic number using your average conversion rates & cost per clicks from your previous campaigns you should quickly be able to say:

1. How much the traffic will cost?
2. How many orders the traffic will generate?
3. Overlay your average order value to give you a revenue number?
4. Apply your margin rates and subtract the overall cost to give you the total profit generated from the spend?

Scenario 2 - What do I NEED...

Based on the objectives set by the business you should be able to use data again to plot where the sales to hit your targets are likely to come from. This will mean a % of sales are going to made through PPC. Backtracking from the number of orders required you will be able to work out the traffic need to get the order and then the impressions. From all these metrics you can arrive at a media cost and therefore an ROI.

Each scenario has its good and bad points but will largely depend on your business and how they approach things, I would imagine by now you will already know which one to employ at your business.

For both scenarios you should be able to complete the table below and have an accurate ROI at the end of it.