Think Beyond PPC, Invest in Revenue-Per-Click Advertising

Throughout the last decade, the rise of new technologies and the boundless growth of breakthrough solutions have together empowered digital marketers with a wealth of information at their fingertips that can be used to qualify the impact of marketing initiatives. Traditional approaches to determining success have often been focused on so-called vanity metrics that include page impressions, clicks, click-through rates, and conversion rates. Marketing leaders know that they must measure results in order to ascertain the effectiveness of their overarching strategy and justify budget assignment, yet too many have been paying attention to the wrong data points.

“Marketers are focusing on the wrong marketing metrics”, writes senior analyst and author at Forrester, Tina Moffett, in their January 2018 report: “Marketers: Stop Using Vanity Metrics To Value Your Marketing”. According to the report’s findings, marketers should use these three metrics to assess marketing impact:

It’s clear that as the field evolves, and the need to drive efficiency becomes ever more important, new metrics are surfacing. SEM practitioners are beginning to recognize that the analytical methods that they once trusted religiously harbor serious limitations, all due to the uncomplicated fact that they don’t directly correlate to business outcomes and bottom line.

Consider impressions and click-through rates.

Impressions offer marketers insights into how frequently a display or paid ad is viewed. Valuable information, no question, but an ineffective metric in determining the true success of the ad for it assumes – wrongly – that all consumers will behave and purchase in the same way.

Click-through rate, similarly, is worthwhile to track and report on, yet it presumes readiness on the part of the consumer to move farther through the funnel or high intent to convert. When viewing ads on search engine results pages, or SERPs, users will often click on an ad with absolutely no inclination to fill out a form, buy a product, or ask for a quote – whatever goal your ad was targeting. It can, as such, be viewed as an empty metric.

In short, these numbers are doing nothing of real substance for your business except making your marketing efforts look good. This is problematic for obvious reasons, chief among them channeling your focus away from the things that really move the needle and working with a misleading interpretation of customer interest.

The question, then, is what should you be honing your efforts in on.

The answer in general? Value-based metrics. The answer specifically? Revenue-Per-Click, or RPC. The premise behind RPC is a simple one. It looks at the average revenue of every click on each individual keyword in any given campaign. If a keyword has a calculated average higher than the average CPC, it’s highly valuable. If it’s lower, it can be weeded out or bid down to an appropriate CPC.

Forrester report took a deep dive into a broad range of vanity metrics, championing how they can uncover the power of marketing programs and how they are true indicators of success and operational performance. “Marketers must perform their due diligence by conducting deeper analysis that will help them identify the right metrics to focus on” writes Tina Moffett. “Comparing key marketing metrics against financials will uncover uptrends, dips, and seasonal impact. This will help marketers select the metrics that are highly associated with financial-based metrics. The ones that mesh are probably leading-indicator metrics. Involving finance in the determination of these metrics can result in deeper, more holistic analysis and drive greater value for the business.”

Simply put, if marketers don’t optimize to value-based metrics, they’ll fail to surface insights about consumers who are converting and developing into valuable, long-term brand followers.

Adopting a New Approach

In the modern, data-rich world of paid search, all metrics come to fruition thanks to the keywords you’re employing. At their core, the most successful SEM programs will be utilizing an arsenal of relevant, high search volume keywords that target key audience sectors and drive meaningful returns.

Before you get to that stage, though, you need to have undergone a thorough evaluation of your keyword performance. You need to think about:

  • Why CPAs increase over time for your top converting keywords?
  • Why it’s getting harder to get in front of your target users even while they are actively searching for products like yours?
  • What should you do to scale up your SEM efforts?

These are important questions and indicate common challenges that marketers face today.

There are solutions out there that offer ‘optimization’ and ‘testing’. Most of them, however, just scratch the surface, while some delve deeper but may not be actionable, and others are backed by automation and then execute on desired actions automatically. What you want to establish, ultimately, is the revenue-per-click: the quantitative outcome that indicates real success. The benefits of adopting such an approach are apparent: you can, with a great degree of certainty, pinpoint the exact keywords that are directly leading to sales whilst simultaneously cutting loose the ones that are lagging well behind. Armed with these insights, you can bid with unerring confidence and ensure you’re anticipating and executing the best advertising investments.

It all sounds straightforward in theory, and it is, but getting there requires a great deal of historical data and some dedicated spreadsheet evaluation. You’ll need to have your conversion data (with accompanying revenue numbers) tied back to clicks and keywords as a precondition for the calculation of the estimated keyword value. The more data across multiple channels you have to tie back to those keywords, the more precise the figure will be. For a long time, thinking about bidding in this way wasn’t feasible due to the architectural constraints of existing tools that failed to take into consideration the full complexities – and sheer amount of data – that come with the paid search landscape.

A Modern Solution to the Problem

Such problems for SEM professionals are now a thing of the past. Innovative technologies and pioneering platforms such as QuanticMind have arrived on the scene to help companies gain greater scale and higher granularity of targeting for their paid advertising campaigns. The key differentiator between QuanticMind and other bid management solutions on the market comes down to foundational infrastructure, where the bidding process actively incorporates the latest advances in Data Science – including machine learning algorithms, Bayesian modeling, predictive performance methodology, and natural language processing – to deliver the most intelligent performance. In other words, QuanticMind’s model is wired to automatically minimize wasted advertising spend and maximize business returns.

When it comes to calculating RPC, QuanticMind leads the way. Legacy tools use a basic method to calculate RPC – called a time series model – which takes into account prior values of RPC and that series over time, and then predicts the next RPC based on that. To provide a metaphor: this is akin to making a bet on the stock market having looked at the previous upward and downward trends of the stock price graph, assuming it will behave the same way moving forward.

QuanticMind, instead, operates under a predictive model using a suite of machine learning algorithms in a lower dimensional space, which ultimately empowers customers to incorporate all business-relevant data as attributes into the process to factor into the RPC calculation. In essence, each calculation is based on a range of statistical data about costs and revenue related to each keyword, in addition to time series trends. At its very core, the QuanticMind platform utilizes a non-linear, supervised learning model that virtually represents the millions of interactions at play all at once and automatically determines their influence on one another. The impact of these synergies is then mapped out based on the data fed into the model and it estimates a highly accurate and data-driven value for each individual keyword. The result? Optimal performance across your entire program.

Revenue-Per-Click Advertising in Action

Marketers across the world are today reaping the rewards from this refined approach to bidding. Take gold-standard cruise line Windstar Cruises, for example. Before they made the switch to QuanticMind, they took a long look at their strategy and came to the conclusion that they were wasting money by under-utilizing the most advanced technologies. “The biggest challenge in digital marketing is constant change,” Victor Hernandez, Windstar Cruises’ Director of Digital Marketing, CRM & Social Media explains. “Now that artificial intelligence is coming into play, that’s disrupting how we traditionally do things. When we got the opportunity to start afresh, I decided that a platform that is newer with more recent technology was going to be the way to go.” He was right.

In just a matter of months, Windstar Cruises’ SEM program was seeing returns not previously possible. “We’ve ended up saving $700k and increasing our goal conversions by 16 percent year-over-year,” Hernandez says. “The team at QuanticMind was way above and beyond what every other brand had. This is more of an authentic experience, which matches our brand’s values and vision.”

To check out the full story of how the QuanticMind RPC model drove these record numbers, check out the full case-study.

Success stories like this are numerous. To provide another example, here is how QuanticMind helped 1-800-Dentist lift their profits by 246%.

A Summary

The goal of any marketer should be to track what tactics and which initiatives are leading to customer acquisition, sales, and the metric that counts: revenue. Measuring such metrics requires significant investment from both a time and resource perspective. By utilizing a revenue-per-click advertising approach, you can determine what keywords are truly effective at reaching your target audience and scale up where there is the opportunity for growth. The end result is more profitable performance: what we’re all after.

Simon Hall

Simon Hall is the Content Marketing Manager at QuanticMind. He is using his experience in account development to design innovative programs that drive demand and create messaging that resonates with customers and empowers the sales organization to be successful. Simon earned a bachelor’s degree in Fine and Studio Arts from Loughborough University (UK) and a Diploma in International Studies at Hong Kong Design Institute (Hong Kong).

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