The Cut & Run Strategyby Kent Lewis on March 3, 2009Economy
In this time of financial folly, it is important that we focus on not spending money on strategies that don’t work. In terms of government stimulus, throwing money at car companies with an outdated view of the world will likely have a lower return than financing the next breakthrough in automotive technology.
Chrysler and GM have poor business models. By sustaining these companies, America is only prolonging an ineffectual business strategy. Rather, taxpayers should cut and run, leaving the behemoths to sort out their next line of attack in the bankruptcy courts.
Similarly, when running a paid search campaign, marketers should stop throwing money at areas that do not lead to a return on ad spend. Whether or not the targeted search term is relevant or a keyword that upper management deems necessary to “rank in the top three results,” a marketer’s job is to sell the product or service at a higher price than it costs the company to produce.
Whether you are a Boston bakery geo-targeting “bakery” or Apple targeting “cellular phone” internationally, do not buy keywords or placements that lose money. Determining which keywords lose money can be tricky, but once you have a process for identifying return on spend, cut the fat and eliminate the areas that lose money.
PPC Account Setup
Aaron Wall recently wrote a post recommending companies initially target long-tail keywords for SEO. Aaron argued that by targeting less competitive keywords, marketers would see a greater return because they would spend less time/money to drive qualified organic traffic. The same concept holds true when setting up a PPC account.
When initially creating a PPC campaign, targeting less competitive keywords will allow you to establish an account history far less expensively than targeting hyper-competitive keywords. Take the oft-exampled Mesothelioma:
Building an ad history targeting “mesothelioma” (approx. $20 per click) can be extremely costly. Rather, consider targeting “shortness of breath” ($1.50) or even “asbestos inhalation” ($4), and build your ad history at 8-20% of the cost.
By refining your ad text and establishing a high clickthrough rate on cheaper keywords, you will have a heads up when transitioning to targeting competitive keywords (more on this in a later post).
Sales are down. Consumer confidence is down. Targeting keywords/placements that make sense in your head but don’t make sense financially is costly. Cutting relevant campaigns may seem counterintuitive, but paying for keywords or image ads that don’t make your company money makes even less sense.
Related posts: Why Your Display Advertising Isn’t Working