At this time of year, the pressure is on to “be ready” for the upcoming hot season, and to “work with increased budgets.” Various cheerleaders and naysayers in your company (and especially, our friends at the search engines) may be pushing you and pulling you every which way, trying to find justifications in current profitability indicators to provide fuel for arguments to turn up (or down) the heat.

When weighing various experiments and priorities, it’s important not to plan from false foundations. Due to the complexity of this medium, sometimes the apparent numbers don’t equate too well to the real numbers, which at the end of the day are your company’s financials. Some tendencies and tricks of the PPC trade typically make a campaign look better than it really is. Others may be interpreted too modestly despite their far-reaching effects. Let’s look at three of each.

Numbers really worse than they look

1. Brand terms smuggled in everywhere. Have you seen this trick? Company management had a stern talk with the previous account manager: brand terms are driving far too high a proportion of the spend. Get to work on those non-brand terms! That’s a no-brainer. But sometimes, the manager gets to work on labeling a variety of the ad groups with plausible-sounding names, conveniently forgetting to mention that they’ve sprinkled brand terms into those ad groups, too. Or broad match is mapping to brand terms rampantly, or Conversion Optimizer is turned on and is mapping to brand terms. Expunge the brand terms from all but the designated Brand groups, to get a true measure of ROI!
2. Remarketing and last click attribution. Remarketing works, but let’s not bid it through the roof. It’s merely claiming credit for actions taken based on your total investment in that user’s awareness and interest level.
3. Back-of-the-envelope margins. “Your campaign is so highly profitable, based on our assessment of the wrong average order size and incorrect profit margins,” says the person who doesn’t work for your company. Assuming you have better numbers, don’t be bullied into changing your bid stance.

Numbers really better than they look

1. Phone sales under-credited. It doesn’t apply to every business, but how are you measuring phone conversions, and have you been discounting their impact? It’s become something of a cliché to say “install phone tracking,” but it’s also worth mentioning that phone-intensive businesses often have spotty attribution via PPC. Putting aside full-scale phone tracking solutions for the moment, even just configuring Google’s mobile click-to-call to track phone calls of a certain length can wake you up to a rapidly growing channel – mobile – that you should be ratcheting up, not down. This under-crediting may be much less common, for now, for online-only sales, although we do have to be mindful of device-switching that hinders measurement. The trend towards larger phones gives us a better and better chance of seeing comparable performance in the mobile channel for online pure plays, even where checkout can be cumbersome.
2. Lifetime Value: are you discounting it? Another cliché, but lifetime value can be truly through the roof in some instances… it really depends on what you and your investors know about your business. I say “investors,” because the “land-grab mentality” truly applies to startups. We’ve worked for those that did indeed “fail fast,” and others who spent heavily and successfully to reach critical mass, word-of-mouth, funding milestones, and a permanent position at “top of mind” in a category. Remember way back when Jeff Bezos used to talk about his fervent “land grab” mentality at Amazon? Inside of every startup, there is a little bit of that potential. What’s your lifetime value for today’s customer acquisitions if you can achieve dominance and brand position in your category? It’s impossible to calculate. But it’s got to be higher than the “1.5 the average order size,” or whatever, that a conservative business might calculate based on the overt data they have at their disposal.
3. High funnel keywords under-credited. Speaking of attribution, there are now probably a half-dozen major ways your higher and mid funnel keywords are getting credit stolen away from them in platforms like AdWords and in the online customer journey in general. Remarketing is definitely making it harder for you to measure your actual marketing, and scrutinizing “assist clicks” and “funnels” only helps so much. There are a number of ways to approach attribution, obviously. Some of the simplest approaches are (a) avoiding overinvestment in last-click hogs; and (b) relaxing your targets or finding proxy metrics to provide due credit to the earlier clicks on the customer’s journey.

Finally, here’s an exercise to help with strategy on the overall investment level in paid clicks. If conversions appear costly, inevitably the argument will arise that we should “just dial it back” to allow “natural” (organic) search referrals to line our pockets. In this regard, it’s often wildly assumed that organic visits are not only free, but that they convert better to sales than paid clicks. Really? Check the data again. Organic search referral revenue truly is a gift from the gods, but most parts of your paid search campaign should put organic clicks to shame when it comes to conversion rates to meaningful business outcomes.

Bring that nugget to the table in your next strategy call. Appropriately adorned with trust-enhancing extensions, deployed with all due granularity and superior information scent to well-honed landing pages, paid clicks should be addressing high-intent visitors in a way that organic search clicks often cannot.

In a future column, I’ll look more closely at attribution. Beyond improving analytics reports such as Google Analytics Search Funnels, are many of us currently stalled in our attribution modeling efforts?