Self Funding Budget Strategies

Dec 15, 2004 • 4:17 pm | comments (0) by | Filed Under Search Engine Strategies 2004 Chicago

Danny explains that the idea behind this session is to turn your $1 into $2 and your $2 into $4.

Kevin Lee from DidIt explained the concept of self funding. As long as your spend is lower then your cost, you have a self funding strategy. Where it gets complicated is when you look at the different definitions of profit. Self funding is not ROI maximization, but rather you want (1) find highest converting keywords (2) use highest converting copy (3) use the best landing page and so on. Self funding campaigns are all about profit maximization. In paid search you are trading off your volume for conversions. You can spend more, more visibility, higher traffic, more costs, but more revenue, so higher profits. So it depends on your budget. It is also important to find your break even point, you do not want to loose money on every order but make sure you understand if you get orders over phone or via store how those play a part. It is also important to understand where people are in during the buying cycle. Generally the longer the query string the deeper they are into the buying cycle. So, for early stage keywords, you may want to use different metrics to define a goal, because you might loose the cookie over a lag period. He then explains other types of success metrics outside of buying including, registrations, lagged orders, multi channel retailer store lookup, phone order and order taken through reseller. Bidding on keywords is a zero sum game, your always bidding too high or too low, rarely do you have the perfect bid.

Next up was Cheryle Pingel from Range Search Marketing. She says its almost impossible to satiate the search marketing beast, there is never enough to feed it. Growing search funds organically. Problem; annual budgets do not account for great return. Solution; reinvest a portion of the profits back into search. Finding Your Sweet Spot: $30,000 to be tested over 90 days. $10,000 seed money, money taken from other budgets. For 10k they would get 200k returned. So they asked the client to reinvest a portion of that profit back into the search. By reinvesting 13% of the revenue they can generate a ton of revenue. They also reinvested the profit into other media areas.

Q & A:

Kevin added something of value beyond what I have heard before. Someone asked about how do you measure the metrics when you do not sell something on your site. So Cheryle said you need to assign a dollar value to each goal accomplishment. Kevin then added, why not try to score the lead based on the form they fill out. So if they answer A instead of B to a certain question, that might be worth more. So score a weight system to those leads.

Q: How do you make money of bidding on brands? A: Cheryle said that with her, in this case, she targeted brands because they were her biggest conversions. The generic terms were less converting then the brand terms.

Danny jokes on a measuring offline conversions question that Google and Yahoo will have credit cards that collect this data automatically.

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