Last time we discussed how Key Performance Indicators (KPIs) differ across positions in Microsoft adCenter and how that impacts your bidding decisions. Today we review keyword level analysis, where you optimize individual keywords, and portfolio level analysis, where you optimize the overall portfolio performance.
Tell me about Keyword Level Analysis!
A keyword level bidding strategy examines keywords individually, and makes a decision based on each keyword's data independent of other keywords. Each keyword must meet your CPA goal.
Example: You bid on two keywords "keyboards" and "monitor" with a CPA (cost-per-acquisition) goal of $21. adCenter reports you are in position 1 for both keywords generating large number of acquisitions, but "keyboards" is above your CPA goal.
Pre Analysis
|
Keyword
|
Position
|
Clicks
|
CPC
|
Spend
|
Acquisition
|
CPA
|
|
Keyboards
|
1
|
10,000
|
$0.22
|
$2,200
|
100
|
$22.00
|
|
Monitor
|
1
|
2,999
|
$0.81
|
$2,440
|
119
|
$20.00
|
In keyword level analysis, "keyboards" is evaluated independent of "monitor." When you calculate the bid price for "keyboards," you don't account for the performance of "monitor." So you bid down "keyboards," and leave "monitors" untouched as it already meets your goal.
Post Analysis - position 3 for keyboards works!
|
Keyword
|
Position
|
Clicks
|
CPC
|
Spend
|
Acquisition
|
CPA
|
|
Keyboards
|
2
|
8,900
|
$0.20
|
$1,780
|
83
|
$21.45
|
|
Keyboards
|
3
|
3,738
|
$0.18
|
$672.84
|
40
|
$16.82
|
|
Monitor
|
1
|
2,999
|
$0.81
|
$2,440
|
119
|
$20.00
|
In the next two blog posts, my colleagues will introduce two keyword level strategies that will show you how to calculate a bid price for a case like "keyboards":
1. Incremental Bidding Strategy (coming soon)
2. Sales Based Bidding Strategy (coming soon)
Although a keyword bidding strategy can be effective, you may want to consider whether a portfolio bidding strategy makes more sense for you.
Does Portfolio Level Analysis make sense for me?
In portfolio level analysis, you make bid suggestions accounting for other keywords with portfolio level goals. Portfolio analysis ranges from very basic to very complex strategies.
Basic Portfolio Strategy Example
1. Aggregate your data for review
|
Keyboards Position
|
Monitor Position
|
Portfolio Clicks
|
Portfolio CPC
|
Portfolio Spend
|
Portfolio Acquisition
|
Portfolio CPA
|
|
1
|
1
|
12,999
|
$0.36
|
$4,640
|
219
|
$21.19
|
2. Does the "keyboards" and "monitor" portfolio CPA meet your goal?
3. If yes, then no change is needed
4. If no, then reduce the bid of the higher CPA keyword with a keyword level strategy. Repeat until your Portfolio CPA meets your goal
Advanced Portfolio Strategy Example
*This is a simplified illustration to show the concept of an advanced portfolio level analysis - NOT the algorithm behind tool providers.
1. Collect and store keyword metrics such as conversions, impressions, etc across the marketplace
2. Build a mathematical model to forecast data across all metrics, match types, etc
3. Create a programming model to solve for the most optimal solution based on your goal
Post Analysis - sample of result combinations you can bid for "keyboards" and "monitor" below
|
Keyboards Position
|
Monitor Position
|
Portfolio Clicks
|
Portfolio CPC
|
Portfolio Spend
|
Portfolio Acquisition
|
Portfolio CPA
|
|
1
|
1
|
12,999
|
$0.36
|
$4,640
|
219
|
$21.19
|
|
1
|
2
|
10,950
|
$0.28
|
$3,112
|
139
|
$22.39
|
|
1
|
3
|
10,101
|
$0.23
|
$2,276
|
109
|
$20.88
|
|
2
|
1
|
11,899
|
$0.35
|
$4,220
|
202
|
$20.89
|
|
2
|
2
|
9,850
|
$0.27
|
$2,692
|
122
|
$22.07
|
|
2
|
3
|
9,001
|
$0.21
|
$1,856
|
92
|
$20.17
|
· Found 3 combinations that is below our CPA goal (highlighted in blue) opposed to 1 from the keyword level strategy
· "Keyboards" in position 2 and "monitor" in position 1 generates 202 acquisitions - 43 more acquisitions than our previous result
· Beware "keyboards" in position 2 has a CPA above our goal ($21.45), so your business model needs to accept a CPA of X% above the CPA goal for each keyword
OK, what's the difference between Keyword and Portfolio Level Analysis?
Keyword level analysis strategies typically can be implemented by a single individual - usually with a simple formula in Excel or other spreadsheet applications. The cost includes the spreadsheet application and the time it takes to implement the formula.
Advanced portfolio level analysis requires a lot of resources. Imagine looking at 1,000 keywords - that's 8^1000 position combinations alone! It would be difficult to examine each combination on your own. To simplify the task, there are many companies that offer a tool to do this in the backend - list of bid management tools1, but you may have to pay hundreds of dollars.
Summary Table
|
Criteria
|
Keyword Level Analysis
|
Advanced Portfolio Analysis
|
|
# of People Required
|
1
|
1 + Tool Provider
|
|
Complexity
|
Low
|
High
|
|
Combinations to review for 1,000 keywords
|
1,000
|
8^1000 or more depending on number of factors modeled
|
|
CPA
|
Each keyword must meet CPA goal
|
Portfolio CPA meets CPA goal. Each keyword CPA can be X% above the CPA goal.
|
|
Price
|
Free - given you own a spreadsheet application
|
Free - hundreds of dollars
|
So is keyword or portfolio level analysis better for your business?
· If you are the only marketing manager with limited bandwidth and budget, utilize the keyword level strategies.
· If you have a large budget with complex campaigns and a business model that accepts +-X% CPA goal for each keyword, investigate tool providers.
Next time we will discuss a few keyword level bidding strategies.
1. Not all bid management tools on the list use a portfolio level strategy, but that is the best list I found. If anyone has a better list, please share!