When it comes to work (or life, let’s be honest) it’s easy to get in a rut and find yourself always playing follow the leader. At the 2014 Google Think Performance Event I had the privilege of attending they set out to challenge attendees to change this.
The theme for the day was Breaking Mental Models. Speakers included Lisa Bodell, Founder and CEO of futurethink, Jessica O. Matthew, Co-Founder and CEO of Uncharted Play and Dr. Lawrence Hofmann, Chief, Interventional Radiology, Stanford; Co-Founder, Grand Rounds, among others. Several Googlers presented as well, giving us the tools to change not only the way we think about digital processes, but how to put these ideas into action in the paid search space.
How many of us go through our days at work completing processes that we couldn’t give a good explanation for, other than, “that’s how it’s always been done?” The Founder and CEO of futurethink, Lisa Bodell spends her days asking companies these questions and teaching ways to create a culture of innovative thinking. The most profound tool that she gives companies to make this change is the knowledge of how to take smart risks. This includes being open to change, thinking like competitors, coming up with alternatives, killing a stupid rule and to make all this happen – fostering an environment that supports true innovation, not just creativity.
I would also highly suggest you spend some time learning about what is happening at Uncharted Play and Grand Rounds. I would argue that you can’t possibly learn about these two companies without being inspired to explore innovation as it relates to your work and personal life.
What I found to be the most powerful concept discussed, as it relates to paid search strategy, was the idea of Profit Driven Marketing. By using the profit driven marketing strategy, it allows paid search managers and clients the ability to recognize value, target outcomes and capture demand in a more holistic way than a more traditional CPA focused campaign might allow for.
First things, first. In order to make this approach successful, it will take real buy-in from your clients. Clients will be asked to share information they may not otherwise share with their paid search team and spend more money than they have before. By using a profit calculation though, it allows managers and clients the ability to better recognize value and make better investments by measuring the full customer journey as it relates to actual profits. Once you are able to recognize full customer value, you can match your bidding strategy to the business objectives. And with this comes the ability to capture demand by maximizing your opportunity with customers.
The profit driven marketing calculation will ask you to factor in metrics such as; the lifetime value of a customer, gross margins, % of conversions not properly attributed to Google, a customer referral factor and even an optional offline sales multiplier. Where it will get increasingly scary for the client is when you are asking them to break the mental mold of paid search being strictly a CPA driven channel and spend more money outside of their desired CPA. As an account manager that can be a scary ask too.
To ease this transition in thinking, there are 5 key tactics to adhere to as an account manager and to communicate to the client:
1. Make profits your main KPI
Rather than just looking at cost-per-acquisition, look at the actual profit from your efforts. This could free up some money that could lead to substantial growth opportunities.
2. Adopt a growth mindset
Like I said – growth! You aren’t held back by a CPA target. What if a higher CPA also drove a higher ROI with more conversions?
3. Understand your opportunity
When focused on a CPA, you may be missing out on opportunities across channels (unbranded, display and beyond)
4. Test bids to maximize profits
5. Don’t over-optimize
Let the data guide your decisions!
The best part? Google has profit driven calculation worksheets (that your rep can give you) for various business models that will help you get started!
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