Profit Maximizing Analysis
Suppose you are selling concert tickets. You’d like to make the most profit as possible, but you are not sure what price to charge. How can you determine what the most profit-maximizing price is for the concert tickets?
Let’s suppose that you pay $25 for each ticket that you plan to sell. You are considering charging between $40 and $80 for a concert ticket. You believe that at a price of $40, you will sell 60 concert tickets. At a price of $60, you think you will sell 50 tickets, and at a price of $80, you will sell 25 tickets. What price should you charge for a ticket?
Download the Profit Maximizing Analysis from Smart Digital Spending. Step-by-step instructions so easy to follow a caveman can do it. Each tutorial comes with written, audio and video instructions including an Excel file that takes you from beginning to end on how each analysis was performed.
How to forecast online conversions
Forecasting online conversions is quite easy if there is historical data available. If all of sudden you were given extra budget for your search or online display campaign, performing a diminishing returns model will help predict the amount of conversions you can expect to generate with this increased budget. Likewise, if you have to cut online spend, a diminishing returns model will show you the expected conversion volume loss as a result.
Let’s suppose we want to predict the increase in search conversions (dependent variable) based on an increase in paid search spend (independent variable). Would we use a linear or logarithmic-scale to determine our forecast equation?
The Optimal Spend tutorial explains step-by-step how to forecast online conversions. Written, audio and video instructions so easy to follow a caveman can do it! Also included is an Excel file with sample data based on a real-world case. 7 pages of written instructions and 11 minutes of video will take you from start to finish on how to construct a diminishing returns model. Helpful for when your client wants to know what is the maximum spend you can spend in order to maintain a cost-per-acquisition goal or forecast online conversions.
Smart Digital Spending is the FIRST company to provide agencies and online marketing professionals with written, audio and video tutorials on how to use data analysis to enhance campaign performance.
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Quickly identify which keywords to drop and which paid search terms to invest more in!
It is quite easy to set-up a paid search campaign in Google or Yahoo! Google even provides some neat tools to show you which keywords are not showing up in top positions or receiving clicks. The problem with these tools is that there is too much information to look and play with (this is okay if you have lots of time to kill). Wouldn’t it be easier to classify keywords in 4 different categories?
Top Performers – High traffic generating keywords with low cost per clicks.
Potentials – Low traffic generating keywords with low cost per clicks.
The Uncertains – High traffic generating keywords with high cost per clicks.
Bad Performers – Low traffic generating keywords with high cost per clicks.
Performing a Volume/Efficiency Matrix can save you hundreds or even thousands of dollars in your paid search campaign! A volume/efficiency analysis will tell you whether certain keywords are performing poorly in efficiency and volume in relation to other keywords.
So how do we perform this analysis?
All that is required is a basic keyword report from your search engine that shows name of keyword, clicks and spend. By following along with the Smart Digital Spending tutorial, I will show you step-by-step how to process the data using an Excel spreadsheet and the keyword report from the search engine. The written instructions are 6 pages and length of video is just over 11 minutes.
The tutorials include written, audio and video instructions along with an Excel spreadsheet that contains sample data so you can see how the analysis was completed from beginning to end. Analysis so easy a caveman can do it!
The End Result?
The best part about performing a Volume / Efficiency Matrix is the findings. This analysis will give you a rough estimate on how much money you would save if you were to remove a certain group of keywords and show you how much click activity would be lost. It is a fantastic way to optimize a search campaign on an ad hoc, quarterly, semi-annual, or yearly basis. More importantly, your clients will be pleased that you are monitoring their search campaign wisely.
If you have any comments or thoughts, please share. Thanks.
Beyond CTR and CPC
Recently I came upon a question posted on LinkedIn asking if there were any good metrics besides CTR and CPC. While the question was already several days old, I was surprised to read the responses. Most of the respondents agreed that cost per conversion was the only metric that really matters. However, what if your client is not running a direct acquisition campaign? If your client is a service company or perhaps cannot sell their products on the web (i.e. Pharma, Consulting companies), then there is no cost per conversion metric.
Just because your ads may receive a high CTR on a certain site, this does not mean that the audience is actually navigating beyond the homepage. Even if you judge the performance of a publisher based on cost per acquisition, there are still other things you would like your visitor to perform while visiting your site.
So what metric can be applied to both branding and direct acquisition campaigns? Actually, what do I consider the best (and proven) metric for measuring online performance?
Well ideally you want your consumers to visit your key pages on your website correct? So lets imagine that you have a website where you sale tennis rackets online and in total, you have 12 different pages on this site. The primary action you want people to do on your site is buy a tennis racket. Here are a list of all the pages on your site:
- Selection of Rackets on Sale Page
- Famous quotes from John McEnroe
- 2009 ATP schedule
- Contact Us Page
- Learn about different tennis strings
- Rafael vs Federer blog – who is better?
- Tips from Jimmy Connors
- Sign up for Email Newsletter
- Past Grand Slam Winners
- Order Page
- Order Confirmation Thank You Page
While the John McEnroe quotes, Federer blog, and Jimmy Connors tips pages are amusing and helpful, they don’t really help sell tennis rackets on your site. However, you have an email newsletter that people can sign up for which is an important action you want your visitors to do. In addition, visitors reaching out to you are important, so the Contact Us Page is of value. Finally, you want people to go to the Selection of Rackets on Sale page from the Home page since this is where you display the rackets you are selling. Out of all these pages, there are 5 that you want your target audience to navigate to. (Order Page and Order Confirmation Thank You page being the other two).
Okay, so now what?
So now that we have determined the pages that we want our audience to visit, we assign a ‘weight’ to those pages. The more important the page, the higher the weight. Obviously the Order Confirmation Thank You Page is the page we value most since we know a sale took place, thus it is weighted the highest. If you are not selling any products, but have a ’sign up for newsletter’ or ‘print coupon’ page, those pages can be weighted the highest. Now that we understand the concept of a weighted scale and have established the amount of weight we are going to apply to our most important pages, we can move on to the report we generally pull from our ad server (Atlas, DoubleClick, Zedo or whichever ad server you use as your 3rd party).
A standard report will show the date, name of publisher, creative description, impressions, clicks, cost and the volume of actions that occurred on all the pages that are tagged. (actions are visits to all pages on the website). By following the Smart Digital Spending Weighted Point Scale tutorial, you will learn how to evaluate publishers on both a CPC method and a cost-per-weighted-point (CPWP) method. The written, audio and video tutorial (written instructions are 4 pages long, video is 9 minutes) will use a real-life example and take you from start to finish on how to implement the CPWP method. So easy to follow along, a caveman can do it!
After implementing the CPWP, you can compare the two methods of evaluation: Cost per Click versus Cost per Weighted Point. Comparing the two methods of evaluation will show you that making planning decisions based on CPC leads to media waste since we really don’t know if these publishers are driving the right people to key pages on our website. Utilizing a weighted point scale DOES show you which publishers you should drop from your campaign and which ones you should keep. Utilizing a weighted point scale leads to smarter media buying decisions!
Have any thoughts or opinions? Please share. Thanks.