B2C Marketing Analytics for Beginners

Paid Search Analytics

Online search is an essential way that users find a site or product that they’re interested in. Thus, paid search is a critical part of the marketing strategy for many organizations. This lesson will give an overview of the paid search channel and the most useful metrics to measure its performance.

Introduction to Paid Search

As we’ve mentioned, search is generally a lower-funnel channel. This is because if a user is actively searching for something related to your business, they are likely already in the consideration stage. So you expect higher conversion rates than from those coming from awareness campaigns or from passive channels.

While you can advertise on most search engines, Google is by far the industry leader and, thus, this course will focus primarily on Adwords, Google’s advertising platform. However, most concepts are applicable across search engines.

Advertising on search engines works by targeting the terms users search for, referred to as keywords. A search query is what the user searched for, while the keywords are the terms you’re targeting. When a search query matches one or more of your keywords, your ad is eligible to be displayed. Whether it’s shown and in what position it’s shown is determined by the search engine’s algorithm. More details on Google’s Ad Rank algorithm here, but generally it takes into account your bid (how much you’re willing to spend), your ad and landing page quality and the relevance to the searcher.

Paid Search Metrics

While there are many ways to measure the performance of your paid ads, the most critical ones fit under two categories: relevance and impact. The next lesson will go over how to find these metrics through Adwords and Google Analytics, but in this lesson we’ll give an overview of the metrics.

Relevance Metrics

As in organic search, relevance is still very important in paid search. You want to make sure that your ad is shown to the right audience. Since audience in search is determined by what users are searching for, relevancy metrics should be measured at the keyword level.

Quality Score

Most search engines provide a metric to summarizes their perception of quality. In Google and Bing, this is known as the quality score and it considers these dimensions:

  • Expected click-through rate
  • Ad relevance
  • Landing page experience

As you can see, these are very similar to the dimensions that go into organic search results as well. Much that you do for SEO will also help your paid search performance.

Click-through rate

Click-through rate (rate of ad impressions that were clicked) is important for two main reasons:

  • It feeds into your quality score (which, in turn, feeds into the algorithm to determine the rank of your ad)
  • It’s a measure of relevance of your ad to the users

Conversion rate

While click-through rate speaks to the relevance of your ad to a searcher, the conversion rate (rate of traffic on your site that converts) speaks to the relevance of your landing page and your product to the searcher. If an ad gets a lot of clicks, but those clicks don’t convert, it could indicate a potential mismatch between what you’re advertising (or who you’re advertising to) and what your site offers.

Note that conversion rate is also an impact metric, since it describes tangible business value on your site. But when speaking to impact, you’re generally aggregating at the ad or campaign level, and not the individual keyword level like you would for relevance metrics.

Impact Metrics

Impact metrics refer to the metrics of actions that happen on your site, after the user has seen the marketing message. These address the question: what is the real impact the marketing had on your business? These metrics include traffic, conversions, conversion rate, revenue, ROI, etc… which are the same as in the other channels we’ve discussed.

Paid Search vs Organic Search

One concern with paid search is whether it cannibalizes from organic search. That is, if you have good SEO, is the paid click “stealing” from the free click you’d get on organic search results?

Unfortunately there aren’t any straightforward ways to figure this out. The search engines themselves make it difficult to figure this out since they’re incentivized to get you to spend money on paid search.

If you have high enough traffic you can try different experiments. For example:

  • Campfire Analytics tested scaling back paid ads on certain keywords and carefully measuring the impact to SEO
  • Blue Fountain Media recommends selecting two time periods of equal length – in one keeping paid ads on, on the other turning them off and measuring the impact to SEO.

You can also select specific markets to test these approaches in and to compare against. While not perfect, these types of experiments might give you a sense of the magnitude of cannibalization.

Conclusion

This lesson gave an overview of the paid search channel and the primary metrics used to evaluate its performance. The next lesson will show you how to track these metrics through Adwords and Google Analytics.