Original Search Engine Land Publish Date: October 23, 2012
In the last few articles, we focused on the basics of keyword research and measuring performance; now we can extend that process to budgeting. With search budgets, especially for paid search, we have three different options for budgeting.
As the fairy tale goes, Goldilocks samples each of the bowls of porridge to see which is the right one for her. In developing our global search budget, we need to build our same three bowls, and let’s call these bowls of budget could, should, and would.
For one project recently, I mined a universe of 150,000 keywords for a company across their entire product portfolio. We took keywords from paid, organic, site search and keyword expansion to map their entire keyword universe.
Since they are a global brand, they set a benchmark of 80% share-of-voice from a combination of paid and organic. We pulled search volume from data from Google, resulting in over 850 million searches a month for this portfolio of keywords.
We went on to replicate this exercise for fourteen countries with various edits. Starting with deleting products not sold in the market, then adjusting for language and buy cycle nuances such as multiple keywords, varied purchase cycles and English local language opportunities.
How Much Could We Spend?
In the first budget bowl offered to the executives, we took the entire base of keywords and multiplied the number of searches for each by the desired/average click rate, then multiplied that result by each keyword’s average cost per click.
This resulted in a potential budget requirement of $60 million a month. This is the cost for us to be seen 80% of the time, with their average click rate of 2 percent.
Clearly, this budget bowl was way too hot for the executives, but it did reflect what the total universe of opportunity was for their keyword portfolio.
This reframed the thinking of the executives since they now understood how much interest there really was in their products and services. It also made them better understand the importance of aligning keywords to the buy cycle and the value of organic traffic.
How Much Would We Spend?
This is how most budgets are developed – management tells us how much money we have to spend. In this case, their allocation estimate was for $3.8 million.
Essentially asking “what can we get for this budget?” and forcing the search team to take a SWAG (scientific wild-ass guess) at an amount, or they take a percentage of the marketing budget. We are forced to reduce share-of-voice, click rate, and/or remove keywords from our portfolio to keep us within those budget constraints.
This budget bowl is obviously way too cold since it leaves a lot of opportunity on the table, sacrificing traffic and conversions. This type of budget also results in the absence of many keywords that could enhance overall performance but may be too expensive to incorporate into the mix.
How Much Should We Spend?
We know that we could spend $60 million per month to capture the majority of the opportunity for all words, but that is not realistic, and neither is a traditional percent of marketing budget approach.
With the just-right budget bowl, we leveraged a framework of keyword prioritization based on the business objectives phase of the buy cycle, potential sales/leads, and those words without a high organic position. We identified that we should spend around $24 million a month to ensure we were maximizing the words that would provide the maximum yield for our business goals.
This more detailed and objectives-based framework results in an optimal mix of keywords and share of voice to achieve the traffic and conversions necessary to ensure goal attainment.
Another aspect of the optimal budget is to take into account organic performance for essential and expensive keywords, ensuring you rank well and potentially reducing the cost of coverage with paid search.
Business Case & Budget Alignment
The goal of the three budgets is to show management the full range of opportunities. Most don’t really understand the universe of opportunity available to them with search marketing, which is why the could budget is important even though we know we will never spend that amount. You may not get funding for the should budget either, but at least they can understand what it includes and how it will perform.
We also want to demonstrate to management that a traditional percent budget forces the sacrifice of significant traffic and conversion opportunities, and that one is not optional. When we create and fund a budget that combines opportunity with established goals, that is the most effective way to budget for any local market.
