CPC is no KPI

Source: https://www.kaushik.net/avinash/ 

Someone asked, why are advertisers obsessed about Cost Per Click?

The postulation was that at best CPCs could indicate high or low competition in the auction. It could possibly indicate the influence of a poor quality score (keyword, ad content, landing page relevance).

I agree that CPCs could possibly help with the above elements. CPC is, even in the best case scenarios, a diagnostic metric (for any marketing strategy).

CPC is not a Key Performance Indicator.

Sadly, many companies/agencies use CPCs as a KPI.

This results in narrowing the vision of the company. It almost always set’s the company on a wrong path (to becoming less glorious than they deserve to be!).

Here’s one corrosive manifestation: I only want to pay $2 max CPC.

Or: We have to reduce our CPCs by 15% this quarter.

Both lead to the same outcome: You cut off your legs to try to run faster.

An obsession with CPCs ignores important considerations like the hundreds of thousands of customers you will leave for your (delighted) competition.

Here’s what you should actually care about: Profit Per Click.

Even if all you can muster up is the supremely easy to compute Gross Profit Per Click.

If you are making a profit, why do you care if the CPC is $40 or $4?

Let’s say you are paying Bing $40 per click. This delivers a revenue of $200 and a profit of $50. That is a win.

If there are any more clicks left to get from Bing, go all the way to $49 per click to get even more customers. You are still making money.

Instead, let’s say you decide to pay Bing $20 per click. Sure, your CPC looks better. Maybe your boss loves you for 24 hours. After that period your profit reports will come in and show that company profit dropped massively. Less love from your boss. Maybe even the opposite of love.

That’s what I mean by cutting your legs off to try to run faster.

Oh, and when you disappear are all the customers going stop running queries? Of course not, they’ll simply click and convert with your competitors.

An even smarter strategy.

Once you know your profit by silo (Search/Bing above), the next level smart thing is to consider this question: Can I invest that $40 anywhere else (billboards, television, AOL) and make more than $50 in profit ?

If the answer is yes, with that $40 you can make $60 with billboards strategy. Shift money from Bing PPC strategy to billboards.

If the answer is no, keep spending it on Bing.

Classic portfolio management.

Bottom-line: Let the profit you make drive your marketing investment strategy. It seems hard to get to real profit, but see the post I’ve linked to above to compute Gross Profit. It is a simple stepping stone. If your boss insists on CPC as a KPI, you know it is time to refresh your resume for how long can a company focused on CPCs survive? :)



PS: You’ll understand now why CPA is also a terrible KPI. You want PPA. Or, even better, its sexier cousin PPH.

Dark social analytics


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“there is a way to shed some light on your #Dark #Social #traffic: by diving into your Direct traffic.”


ROI TV and social

TV advertising accounted for 71% of total ad-generated profit made by campaigns over three years – or the equivalent of £4.20 in profit for every £1 spent.

That compared with £2.43 for print, £2.35 for online video, £2.09 for radio, £1.15 for out of home, and £0.84 for online display advertising. Taken together, advertising created total ROI over three years of £3.24 for every £1 spent.

Webinar effectiveness digital reach

Goede uitleg van de 60/40 en short term focus. haalt claim ‘tv is dead’ onderuit op basis van data, goede uitleg brandbuilding long term en short term activation

In this webinar, Les Binet explains how marketing effectiveness works in the digital age, a topic covered in the Warc Toolkit 2017 of marketing trends.

  • It provides insight into Les Binet and Peter Field’s latest work ‘Marketing in the Digital Age’ which looks into the causes of marketing effectiveness.
  • It also explores how short-termism has undermined the link between creativity and effectiveness.
  • Key trends covered include marketing ROI and the role of TV and digital channels.

Purpose and metrics of storytelling

B2B organizations “spend roughly the equivalent of 50 percent of the marketing budget on content, and 83 percent plan to increase that investment.” Yet, despite the increased investment, zero percent of these brands feel they are effectively tracking content ROI. That’s right, zero.

All of this data comes back to purpose. What is your brand trying to accomplish? And if you’re moving the needle, how are you going to ensure that your content success ultimately impacts the bottom line?

Storytelling Is Not a Strategy

ROI questions for content by CMI

Are You Asking the Right Questions?

Last week a colleague told me about a company that has decided to kill its content marketing program because no one could answer the question “What is the ROI of thought leadership in terms of sales?” Well, people knew the answer. Management just didn’t like it. The answer was “We don’t know.”

Asking the right question is important to us in marketing. This ability enables us to discover things that others don’t see. And until we discover things that others don’t see, we can’t differentiate our ideas and our businesses.

Asking the wrong question – even if we get an answer we like – can lead straight to failure. This situation is classically represented by the now-famous line that Henry Ford actually never said: “If I had asked customers what they wanted, they would have said ‘faster horses.’” The lesson isn’t that we should stop asking customers what they want. No. It’s that until we ask the right questions, we can’t get the answers we need.

In the case of my colleague’s story, “What is the ROI of thought leadership in terms of sales?” is the wrong question. It misdirects the inquiry. It stunts the exploration. It prevents discovery. This question’s truthful answer – “We don’t know” – brought assessment to a halt and kept the team from seeing any kind of value in its content marketing program.

Ironically, the content marketing program might have won a reprieve if the team had manufactured a questionably rosy answer, like “The sales ROI was positive.” Two wrongs – a misguided answer to a misguided question – might have made a perverted right, buying time for the team to come up with better answers and better questions for discerning the program’s true value.

How do you know you’re asking the right questions? Consider your intent. Ask yourself whether you’re open to answers that challenge your convictions or whether you’re looking to support those convictions. Right questions typically come from curiosity and openness to discovery rather than from an urge to prove something or someone right or wrong.

Even if you’re asking the right questions, how do you know you’re getting truthful, useful (right) answers? Consider the likely intent of the people answering you. Do you sense that they’re teaching? Selling? Exploring a concept? Lying? It does you no good to ask the right questions if you accept wrong answers.

If you want right answers to right questions, look at what’s behind your questions before you ask them, and then look at what’s probably behind the answers. Be curious and open in your asking, and be scrupulous in your listening. You just may discover something worth discovering, something no one else has seen, something that could differentiate your business.

Let’s return to the company that killed its content marketing program. The team got hung up on ROI in terms of sales. They posed an obvious question that was easy to ask and maddeningly impossible to address. These folks might have come to a more satisfying decision if they had asked a broader, tougher, potentially more productive question: “What is the value of thought leadership for our business?” That’s a question that deserves a right answer.

Robert Rose
Chief Content Adviser
Content Marketing Institute

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