Negotiating a Great Price on SEM Software

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Feb. 05

Are you in the market for SEM Software? If you’re running a large paid search program, I certainly hope so. SEM Software produces great returns, but it certainly does not come cheap. Today, I’m going to share a few tips that will help you negotiate a super price on your SEM Software.

Tip 1: Compare Prices on SEM Software

Marketing Automation Flow Chart

There’s a lot of different, great SEM Software packages available these days. You can read about a few of them in my post titled, SEM Software – Four Amazing Tools. The beauty of all these options? SEM Software companies are fighting for your business! Audition all of the platforms out there. Make it known that you are doing your homework. Leverage the fact that you are comparing platforms to negotiate prices down.

It’s expensive to build search engine marketing software. That said, it is possible to negotiate prices. Don’t give up and hold your ground. If you’re not a super experienced negotiator, you may even want to include someone from your sales or business development team. They can get a great read on the situation and help you with your negotiations.

Tip 2: Offer Yourself As A Reference

SEM Software companies only make money if they sign up a huge number of clients who spend a large amount of money on paid search. There is no better way to sign up new business than via referral. Tell the SEM Software company that you are willing to be a reference if they offer you and your company a discounted price. Just remember: Once you’re on their platform, make good on your promise. It’s the right thing to do, and it’s a fun way to meet new people in our great industry.

Tip 3: Become An SEM Software Testimonial

This one really ties into the last point. Offer yourself and your company as a potential testimonial for the SEM Software company. SEM Automation companies are always looking for testimonials, case studies, and even video interviews with clients. These help their marketing team drive more new business. Before promising this one, make sure to check with your company’s legal team. Are you authorized to be a testimonial? What are your company’s policies on testimonials? What type of data can you share and what can you not? Testimonials are a win-win, they keep prices down and will even get you some media exposure!

Tip 4: Is a "Lite" Version Available?

These days, SEM Software companies realize that large, enterprise customers have different needs than smaller organizations. Assess your monthly spend and understand if a "Lite" version is available. Many search marketing platforms offer abridged versions (at a cheaper price) that are still incredibly powerful for smaller advertisers.

Best of luck in purchasing your pay per click software and I also recommend reading my SEM Automation Buyer’s Guide Whitepaper for more tips on your big purchase.

Image of SEM Software Flow Chart © iStockPhoto – Henrik5000

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PPC Bidding Automation Tips

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Sep. 21

If you’ve been reading PPC Ian for a while, I bet you know that I’m a huge proponent of SEM automation. I even wrote a whitepaper a while back, PPC Ian’s SEM Automation Buyer’s Guide. One of my favorite aspects of PPC platforms such as Kenshoo, Acquisio, and Marin Software is automated bidding. In that spirit, I wanted to provide a few invaluable tips to keep in mind when setting up and maintaining your automated bidding platform.

Tip 1: Verify Your Platform’s Data Daily

What You Need To Know

Good data means good decisions. Bad data means bad bidding decisions. I’ve seen it hundreds of times: Something goes wrong and your SEM platform does not sync data properly. Perhaps the search engine API is down. Perhaps your own API (or FTP) is not working and the platform cannot access your internal conversion data. Perhaps your internal system does not update conversions properly. Sometimes it’s just a day’s worth of bad data. Sometimes, the bad data can pour in for multiple days (my worst nightmare, that is if it goes undetected).

Here’s the problem: Automated bidding systems rely on accurate data. If the clicks, cost, conversions, or other important metrics are off, the bidding system is going to make mistakes. These mistakes can be incredibly costly. It’s important to audit your data daily on all levels: Account, campaign, adgroup, and keyword. It’s also important to make sure your internal conversion data is passed into the system correctly (if applicable). When you do catch issues, make sure to work closely with your account management team and, until the problem is fixed, make sure the bidding system ignores the bad data dates.

Tip 2: Leverage Internal Conversion Data

Do you currently bid based on conversion collected via search engine pixels? Or, do you leverage your own, internal conversion data? From my experience, search engine pixels are always off. They will never offer as accurate of a picture as your own internal data. As such, I highly recommend passing your internal conversion data into your automated bidding platform, if at all possible. By doing so, you will see an instant lift in your results (good data equals good results). If not easily possible, search engine pixel data can be a stepping stone until you’re able to integrate internal conversion data.

Tip 3: Invest Heavily In Your Bidding Setup

Long term, automated bidding systems save a ton of time while also driving improved results (more conversions at lower CPA). Short run, however, they require a ton of setup. In my experience, it’s the setup (or lack thereof) that will make or break your bidding system. My advice is to spend a good amount of time upfront thinking through all the details. I’m talking about these types of questions:

  • Should I pass data across search engines? For example, if Microsoft adCenter does not have statistically significant data on a keyword, should I leverage my Google data?
  • Should I minimize bid movement on a day-to-day basis? Let’s say my current bid is at $0.50 and I’m headed toward $1.00. Should the system make the entire move in one day or should the system make the move gradually?
  • What should my bidding system consider statistically significant? Is 100 clicks worth of data statistically significant? How about 1,000 clicks worth of data?

My advice is to compile a list of at least 30-50 such questions and then think through them in great detail. Engage your account management team and expect to dedicate a full time employee (for at least one month’s time) to make your new automated bidding system work.

So, there you have it. Some of my favorite automated bidding tips, especially if you’re newer to the exciting world of PPC bidding automation. I sincerely hope this helps and encourage you to investigate the great SEM platforms out there.

Image of What You Need To Know © marekuliasz

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SEM Software – Four Amazing Tools

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Jul. 21

I’m a tremendous fan of pay per click automation. I just wrote a FREE 12 page whitepaper all about buying the right search marketing software platform. I highly recommend checking it out!

Last Friday, I also wrote all about portfolio theory versus margin maximization bidding models. Today, I’m super excited to continue the SEM automation trend and discuss four of the most popular SEM software tools. Specifically, I’m going to introduce Marin Software, Kenshoo, Efficient Frontier, and ClickEquations. While there are pros and cons with all tools, I’m really going to focus on some of the high level pros of each tool today. At the end of today’s post, I’m hoping you go away with four great tools that you can evaluate for your organization’s SEM program.

Marin Software – The Industry Leader

One Plus One

I’m starting with Marin Software because it’s one of my favorite SEM software tools of all time. In fact, I had the pleasure of recently interviewing Matt Lawson from Marin Software (one of my favorite posts on PPC Ian). Following are a few of my favorite things about Marin:

  • As the largest search marketing application, Marin has over 180 customers and $1 billion in annual paid search spend. This figure is absolutely amazing! More than anything, more spend equals more features (and better features). Marin clearly has the client base to support best of breed innovation.
    • Just one recent example: Marin now supports Facebook Ads. (I’m a big believer in the future of Facebook and also recommend checking out my review of Jonathan Volk’s Facebook Ads book.)
  • Marin Software has the best account management team, period. I personally know several of the account managers at Marin and give them my highest recommendation. Marin hires the top dogs of the corporate pay per click industry, account managers that can truly add value to your program. It’s actually quite funny: The best campaign managers I know all end up joining Marin!
  • As you know from my last post, I’m a huge fan of the margin maximization bidding model. Marin offers a no-nonsense (anti-black box) bidding model that absolutely delivers. In my opinion, it’s the best bidding engine out there.
  • Marin’s user interface is amazing and polished. If you’re going to be in one application all day, you want one that’s easy to use, visually appealing, and powerful, right? You get all of these benefits with Marin. They truly put the user first.
Kenshoo – Intelligent Campaign Automation

Kenshoo is another one of my favorite search marketing applications. It’s actually really crazy: About a year ago, I visited an office warming party at Kenshoo’s new San Francisco office and had the pleasure of meeting and chatting with Mike Moritz, one of the top venture capitalists in the world. Over the last year and a half, I’ve really gotten to know the Kenshoo team and give them my top recommendation. Following are just a of my favorite things about Kenshoo:

  • Kenshoo is new! Let’s face it: The search engine marketing industry has matured. I’ve been doing this stuff for over 6 years now and can hardly believe it. The beauty of Kenshoo is it’s a brand new application so its code base is fresh, innovative, and fast.
  • As you may know, I earned my BS in Computer Science from Stanford University back in 2004. Recently, I spoke all about online marketing at Stanford’s Graduate School of Business. I love technology and innovation. Kenshoo is all about innovation. Their roots are in technology and they think and build innovation like true engineers.
  • If you’re in product shopping, Kenshoo offers amazing crawling technology that will spider your site and link your SEM campaigns into the various nodes of your site. This technology can do some really great stuff such as keeping prices in your ad copy up to date with current prices on your site, and so much more.
Efficient Frontier – Optimized Performance Marketing

Next I’m looking forward to discussing some of my favorite aspects of Efficient Frontier. Efficient Frontier is a little different than Marin Software and Kenshoo in that it’s more of an agency package. Marin Software and Kenshoo enable internal SEM teams to better manage their campaigns. Efficient Frontier, however, not only offers an amazing software solution but also combines it with the leverage of agency resources. If you’re looking to leverage one of the most amazing bidding models out there while outsourcing your campaign management, Efficient Frontier is an excellent option. Following are a few highlights:

  • Efficient Frontier offers the premier portfolio theory based bidding model around. As I discussed in my last post, there are two really great bidding models for the corporate setting: portfolio theory and also margin maximization. If you’re under a budget (especially a strict one), I’d definitely encourage you to investigate portfolio theory.
  • How many people work on your team? Do you plan to hire more? Let’s face it: There are many situations where you simply don’t have the ability to hire more team members, but you need more scale. Now, it’s my firm belief that any of the tools in this post will help you in that situation, they all offer scale. However, there’s nothing like the power of outsourcing and agency assistance for maximum leverage.
  • Efficient Frontier is the leader in algorithmic bidding. They employ some of the most amazing PhDs in the industry and can truly take your bidding to the next level.
ClickEquations – The First Intelligent Paid Search Solution

I’m going to close out today with ClickEquations. ClickEquations is a newer paid search application that has taken the industry by storm. I’m going to write a bit less about ClickEquations simply because I don’t know as much about it. However, that definitely doesn’t mean there is anything less valuable with this tool. Following are some of my favorite things about ClickEquations:

  • The management team at ClickEquations truly gets it. At SMX Advanced Seattle, I had the pleasure of hearing Craig Danuloff, President and Founder of ClickEquations, talk about Quality score. He presented a quality score whitepaper that is truly the best I’ve seen on the topic. I highly recommend checking it out! After reading this whitepaper, I’m convinced you will be a fan of ClickEquations too!
  • ClickEquations has a superb team. At multiple conferences, I’ve heard Alex Cohen (Digital Alex) speak on behalf of his employer, ClickEquations. This guy always hits the ball out of the park and makes a great name for his company. It’s people like this that truly inspire confidence.
  • I’m a big fan of the ClickEquations Blog. The blog makes a great name for the company and I can’t wait to learn more about this great SEM tool.

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Portfolio Theory Versus Margin Maximization

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Jul. 16

Have you checked out my SEM Automation Buyer’s Guide yet? I highly recommend it! You’ll get 12 FREE pages of information about buying the perfect SEM software for your company. I’ve been at the forefront of SEM technology for the last six years and share my proprietary methodology for choosing the perfect platform.

Two Very Popular SEM Bidding Models

Math Formulas

Today, I’d like to stay on the topic of SEM automation and specifically discuss two very popular bidding strategies: portfolio theory and margin maximization. I’m a tremendous fan of bidding automation. It’s really the only way to go when you manage hundreds of thousands if not millions of keywords. Of course, you’ll always want to involve human judgment (and supervision), especially on high volume keywords, but a solid bidding model will become your organization’s SEM backbone. At the end of this post, you will walk away with two things:

  1. An understanding of the differences between portfolio theory and margin maximization.
  2. An understanding of which model makes the most sense for your particular business model.
What is Portfolio Theory?

Portfolio theory based bidding models involve a parameter (or parameters) you’re trying to maximize given certain constraints. Typically, you’ll find portfolio models set up to maximize volume of conversions within a budget constraint. You’ll often have a cost per acquisition constraint as well, whereby the algorithm stops short of the budget if your overall CPA is running too high.

Within your portfolio, different keywords will end up running at very different CPAs (cost per acquisition). You may have some running at extremely high margins with others even running at a negative margin. It’s all really a function of the CPA/volume tradeoff. In those cases where the algorithm can drive significantly more volume at slightly higher CPAs, it will go for it. In cases where higher CPAs drive relatively less incremental volume, the algorithm will decide to go for margin. At the end of the day, the algorithm does its best to make intelligent tradeoffs so the overall portfolio’s volume is maximized within the constraints.

In my opinion, portfolio based bidding models are absolutely awesome! They tend to break down a bit when you have an unlimited budget, although elements of the portfolio theory can still help you out in that scenario (more on this later). The most well known portfolio software out there: Efficient Frontier.

What is Margin Maximization?

So now we’ll move onto margin maximization. Over the course of my SEM career, I’ve worked mostly at companies that have had unlimited budgets. That’s right! As long as the CPA is at or below the target, I have been free to drive as many conversions as possible. It’s precisely in these types of situations that a margin maximization model thrives.

What is margin maximization? It’s simple: The model basically maximizes your margin (typically percentage margin) on a keyword level. If you have enough statistically significant data on a keyword level, it’s easy to just bid 1 – margin percentage target (while also adjusting upward to take into account slack, the delta between your bid and actual CPC). What if you don’t have enough statistically significant data on a keyword level? The best margin maximization models will forecast your keyword level revenue per visitor based on closely related keywords.

The primary benefit of margin maximization: You can rest at night knowing that you are never losing money on any keywords (as long as your forecasted keyword values are accurate). One of the downsides of margin maximization: You can sometimes leave volume on the table. If you simply take a lower percentage margin on certain keywords, you may be able to drive significantly more volume. There are a few tricks in getting around this downside, however. The first involves experimenting with different percentage margins in an effort to optimize your dollar margin. The second involves experimentation on a keyword level to allow a few loss leaders in your campaign. The margin maximization platform that I’m most familiar with (and highly recommend): Marin Software.

Which SEM Bidding Model Do I Prefer?

So what’s my preference: Portfolio theory or margin maximization? It’s really a function of my constraints. If I have a budget constraint, I’m a portfolio theory guy all the way. If I have unlimited budget, I’m all for margin maximization.

Let me tell you however, even in the second case (unlimited budget), I’m a fan of a hybrid approach. I’ll manage most keywords to a strict margin percentage. However, I will experiment placing my the best keywords (Google.com only, exact match only, category leaders) at higher bids. In cases where I can drive significantly more volume at a lower percentage margin, I’ll sometimes make the tradeoff, especially if my organization needs the volume. In terms of making up the percentage margin for the overall portfolio, I’ll often rely on my trademark terms because they run at such high margins.

So I’ve mentioned Efficient Frontier and Marin Software. What are some other great SEM applications? I recommend checking out Kenshoo and ClickEquations. In a future post, I’m looking forward to discussing some of these SEM applications and more!

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Pay Per Click Automation

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Jan. 22

As you may know from my about me page, I majored in computer science at Stanford University. I truly feel like my computer science background prepared me perfectly for the corporate pay per click career path. Why? When you’re dealing with extremely large campaigns (especially across a portfolio of verticals), it’s nearly impossible to scale without automation of some sort. As someone who’s product managed several internal automation tools and who has worked with third party solutions, I’m thrilled to start discussing PPC automation today. I’ll start off with an overview of my automation thoughts and will follow up with a series of in-depth PPC automation articles over the coming months.

Why Automate Corporate Pay Per Click Campaigns?

Automation Gears

What’s the key difference between affiliate marketing and corporate pay per click marketing? There are a few, but the big one is scope. In the affiliate world, you can make quite the decent living by focusing on a very specific niche. However, in the corporate world, it’s all about going big. You’re dealing with millions of keywords, unreal budgets, extremely complex accounts, often across multiple categories.

As a computer science guy at heart, I like to equate manual campaign management to The Mythical Man Month. After a certain point (usually after 5-10 campaign managers), throwing more marketing professionals at your corporation’s campaigns will simply not help. Actually, more people at a certain point can actually slow you down! Here’s where automation comes in: Automation will take your program to the next level. Automation will assist your human team in executing certain aspects of PPC faster and more accurately than possible through manual campaign management. Automation will get you over that plateau your team is facing.

Another critical point: Corporate PPC is an extremely competitive field. You need to assume your competitors are investing in automation. If you’re not, your PPC campaigns will fall behind. You simply cannot keep up without automation. For this reason alone, it’s extremely important to automate aspects of your PPC campaigns to maintain your edge against the competition.

What Aspects of PPC Should You Automate?

I want to be clear from the beginning: I’m not one of those guys that recommends automating all aspects of PPC. In my opinion, that’s a recipe for disaster. I’ve seen it play out before: You automate everything, the campaigns start trending down, and then a manual manager needs to jump in and fix everything. What I am arguing however is that automation should play an absolutely critical role supporting your human campaign management team. Below are just a few aspects of PPC that are totally worth automating.

Automate PPC Bidding: Biding is perhaps the primary aspect of PPC that should be automated. Bidding is very tedious, it’s totally based on data, and it’s very time consuming. In my experience, it’s very easy for humans to make major mistakes with manual bidding.

Automate PPC Reporting: There’s no doubt about it, reporting is extremely important. Corporate PPC is all about data analysis and data-driven action. If you automate your reporting, your team can spend more time analyzing and driving action versus pulling numbers together.

Automate Keyword Generation: I have mixed feelings on this one because some of the best gains in PPC have been a direct result of creative keyword generation. At the same time, you simply cannot scale your keyword set effectively without automation. In a product shopping vertical? Leverage your catalog to generate keywords as new products are released. Looking to deploy more exact match queries for increased bidding efficiency, targeting, and position? Deploy exact match versions of all raw user queries that drove conversions. Looking to leverage the competitive intelligence of your industry? Pull keyword lists from tools such as Trellian, Wordtracker, and KeyCompete.

Build Versus Buy and a Few Great SEM Platforms

As discussed in the introduction, I’ve both built and bought PPC automation tools during my career. While building was the only option when I first got started (there were simply no tools available on the market for purchase), buying is a lot easier these days (thank goodness).

As a general rule, I’m much more in favor of buying versus building for smaller organizations. Small organizations need to focus on their core business, they simply don’t have the resources to effectively build and maintain automation tools. There’s actually quite a bit of overhead in simply maintaining SEM tools due to search engine API upgrades that happen regularly. Moreover, the tools available on the market these days are absolutely astounding. Two tools that I highly recommend are Marin and Kenshoo.

Now, if you’re at a larger organization, the decision can become a bit more difficult. Because most SEM platforms out there operate on a percentage fee model, buying at a large organization can become very expensive (unless you’re able to negotiate a great deal). There may come a point where building becomes more cost effective than buying. One thing is for sure: SEM automation is very high leverage and should be an important decision that every corporate SEM team considers regularly.

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