Extending customer LTV via PPC trends.

Targeting has been and always will be the most important facet of direct marketing. Started with direct mail back in the day for a true 1:1 relationship. When Paid Search started to evolve, it shifted from a 1:1 relationship to a 1-to-many, with keywords serving as the apex of targeting. If you could only find the right mix of keywords, you were sure to drive a perfect 10:1 return on your investment.

Sadly, the glory days of Paid Search are long gone. It’s near impossible to find a perfect little niche where you can eek out clicks for pennies. The dramatic rise in competition combined with shifting user behavior and engines’ drive to maximize the CPM of every eye on the site has made it increasingly difficult to achieve dramatic profitability.

As a result, smart marketers are shifting away from a keyword driven strategy and back to a more personalized, audience driven solution for growing Paid Search campaigns. Instead of simply looking at profit per order, we’re now exploring user pathing, multi-step marketing plans and extending customer lifetime value to maximize the ROI on every dollar spent.

We now have to focus on a defined difference between acquisition and retention efforts to fully realize the profitability of each purchase.

Smart retailers know they’ll likely be able to take a hit on the first purchase a customer makes since that customer will hit a break point two or three purchases down the line; this leads to CPA-driven new customer strategies.

On the other hand we may not be able to bid as aggressively for a customer who’s on their third or fourth purchase and instead will focus on an order-level ROI or ROAS target.

Sadly, this isn’t the easiest thing in the world! Users of third party tools (or those who are sneaky, clever coders) have long been able to capture order level data and map it back to a customer ID or some other form of primary key.

Thankfully Google’s made this more widely available in early April with the ability to capture order ID’s on a conversion level.

As we’ve become more and more savvy at tracking on a customer level, we started to identify a few key trends that are crucial in the new changing landscape.

Free Exclusive Bonus: Download Aarons 5 tips that will make you able to adapt to the changes coming to paid search.

Meteoric rise of Google shopping

Across a subset of Elite SEM managed campaigns tracking “same store” growth, we’re seeing shopping click volume increase by over 217% YoY – not chump change by any means.

It makes sense; CPC’s for shopping are still dramatically lower than non-branded search terms. The limited to structure keyword-driven campaigns can hamper advertisers without the know-how or resources to manage a feed driven campaign, leading to diminished long term success.

search vs. shopping

Click volume by channel – # in millions, subset of Elite managed campaigns

What we’ve found is that by focusing as much as possible as feed cleanliness and consistency, we can mimic if not increase conversion rates across search and shopping, making it far more efficient to scale.

However, there’s been one major observation with Google Shopping that’s curiously affected our acquisition efforts; consumers rarely purchase the product they actually click on. Rather a robust product image and a competitive price leads customers to use the Shopping Ad as a portal to your site, where they can shop and find exactly what they want.

The resulting challenge is that in a vacuum, we tend to observe a shorter customer lifetime (and by association, a lower lifetime value. Again, it logically makes sense; Google Shopping is born from price comparison tools. Price sensitive customers tend to be less brand loyal than value driven customers.

As a result we have to turn to other channels and retargeting strategies to keep customers active. Which brings me to the next point:

The crux of CRM and search

At long last, we have the ability to inject our customer data into search campaigns with ease! Google Customer Match is likely just the beginning of syncing customer data across channels.

Elite has used customer match campaigns much in the way you’d use a reactivation list or drip funnel in email marketing; we find a break point when we expect customers to stay or go, create an audience and layer them atop search campaigns.

What we’re finding is that customer match search campaigns, when layered over the right mix of search terms, can garner a higher click-through rate than open rate of similar emails since customers are expecting to find a result someone like what we’re sharing.

How Google uses Customer Match data
Image credit: Google

Now the challenge of course is that Customer Match doesn’t exactly have the most impressive match rate. Generally the match rate for Google is around 50% on the high side, since despite what we’d think not every email in the world is tied to a Google account.

As a result we’re seeing Customer Match affecting roughly 10% of queries in an account, and that’s on the high side. Customer Match isn’t a silver bullet yet, but it certainly offers a compelling alternative to more traditional reactivation methods.

To help maximize the reach of Customer Match, some clients have seen a lot of success marrying customer match audiences with robust retargeting audiences.

If we combine known CRM data with a comparable audience window in a retargeting cookie pool, we can expand reach well beyond what lives in Google accounts.

I’m anxious to see what customers do when layering this tool upon other audience targeting methods.

Shifting consumer device behaviors

Hate to break it to you, but it’s the year of mobile…. Again! We’re continuing to see near exponential growth in mobile impression volume, with mobile responsible for 55% of total impression share YTD in 2016.

It’s remained somewhat stable over the past few months, which leads me to believe we may finally have reached a saturation point. Virtually everybody in the world has some form of smartphone now.

device click share

It’s important to note the growth in mobile has not come at the expense of desktop traffic. Across Elite SEM clients we’re seeing that overall desktop impression and click volume is actually up YoY by nearly 25%; the lift in mobile search volume has been a net new increase in query volume rather than a replacement.

The challenge with this strong rise in mobile (besides the obvious) is that from Elite’s research, it tends to skew low income and/or low tech. Users who search primarily using a mobile device do so because they have to – that is, they don’t own a computer.

This leads to a few unforeseen considerations when building your site.

Yes, most of us nerds love the latest and greatest cell phones with screens the size of televisions, but odds are your customers are on older underpowered units with limited data plans. They may not have great credit, and may not be able to make large purchases without visiting a physical store or calling someone. As a result, it’s on us to do a better job of observing true cross device behaviors, pivoting towards search to store and offline conversion options.

Creating a Complete Customer Experience

Google is going to be expanding text ads in the coming months. No more 25 character headline with a keyword shoved in. Bing recently launched callout and review extensions, taking a page out of Google’s book with more to come.

What we’re seeing is the advertisers who fail to take advantage of these ad formats are missing out, as are those who simply repeat the same message over and over again. It’s become ever more crucial to maintain message given the myriad of new customer targeting opportunities.

To fully capture a user’s attention in a crowded space, a smart marketer must segment campaigns by audience target and by performance all while maintaining enough data to make smart bidding decisions and maximizing return on effort. Simple, right?

For further information on this strategy, take a look at my presentation from this years’ HeroConf, exploring

Needless to say, having a sound PPC strategy has become more important than ever. As you’re coming up with your next marketing plans, be sure to consider how you’d reach every phase of a customer’s lifecycle. You must make sure to present a full brand experience, looking beyond just keywords and 70 character text ads.

Bonus

Are you worried about the changes coming to paid search? You’re in luck. Aaron Levy has created a list with 5 tips that make you able to adapt to the changes coming to paid search. Get it here for free:

Free Exclusive Bonus: Download Aarons 5 tips that will make you able to adapt to the changes coming to paid search.

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Aaron Levy
Aaron has been in digital for a decade, starting when he was “given the keys to the car,” managing Paid Search for DuPont as a college junior. He’s worked in verticals ranging from local adoption agencies & small retailers to B2B/SaaS. Now a Manager of Client Strategy at Elite SEM, he leads a team across the mid-Atlantic and Toronto. His team is focused primarily on enterprise-level B2C companies, including some of the most recognizable eCommerce brands in the world. Outside of Elite, Aaron’s an instructor at Drexel & University of Vermont, working to grow the next generation of great marketers. He moonlights as a homebrewer, hockey player, cyclist and claims to be the industry’s top chef.

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  1. Thanks for the insights, Aaron.

    I’m amazed by your data about Google Shopping :O

    Reply
  2. Hey Aaron,

    What are your thoughts about paid are taking over SERP? We worked with SEO the last 10 years and now it looks like a lot of the work is wasted?

    Reply
    • @Trine – I don’t think that it’s wasted; many of the valiant SEO efforts in years past will translate to other channels as well. Moreso the challenge is assessing KPI’s and the value with them – #1 isn’t exactly #1 anymore since my lovely paid ads are taking up so much space. Much more important to focus on knowledge panels, answer boxes, social/content etc. than it is on pure rankings.

      “Organic” stll has tons of value, just has a lot more paths to entry than the SERP now.

      Reply

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