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A bit of number crunching speaks volumes about the quandary many search engine marketers find themselves in. According to the Search Engine Marketing Professionals Organization (SEMPO), during the past two years spending on paid-placement search engine marketing has increased from $4.7 billion to $8.6 billion, or a little more than 70%. At the same time, search query volume has increased only 23%, according to Nielsen/NetRatings. Because spend is growing faster than query volume, advertisers are spending more on average per query, which translates into costlier keywords.
So marketers with tight budgets may find themselves slipping lower and lower on the search engine results pages, if not off them entirely. But they can't afford to idly sit by and watch competitors steal market share on their best keywords. This leads to a paradox: They can't afford to be in search, and they can't afford not to be in search.
The way out of this paradox is to manage keyword bids intelligently. An intelligent bidding strategy starts by ensuring that you're making money and continues by looking for ways to increase your profit. It entails 1) knowing the true value of your keywords, 2) managing your bids based on a conversion metric, and 3) proactively adjusting bids to segment your audience.
Calculating keyword value
Smart marketers assess the value of their keywords based on conversions, but many of them don't look beyond the average value of an immediate conversion. The truth is, however, that a lot of conversions happen well after the initial click.
Indeed, a comScore study released last year determined that, on average, 25% of searchers bought an item directly related to their search query - but of those buyers, 63% converted offline. Of the 37% who converted online, some may have done so at a later date, or from a different computer, or by phone.
You need to understand these lagged conversions and to credit them back to the initial keyword. Only then will you understand the keyword's true value.
While it's clear that keywords are more valuable than their immediate conversions, figuring out exactly how much more valuable is tricky. For offline conversions, try tracking how many times your site visitors use your store-locator function on your Website. You can also present...