The following is a proposal that I just found on my old laptop that I presented on October 28th 2003 advocating the creation of an internal roll of “Paid Search Manager” and further integrating paid and organic search activities at a large multinational. Edited to remove the name of the company and business units.

What is interesting is that after nearly 9 years there are still few companies that have integrated these teams and efforts. While bid management has become more sophisticated and there is more collaboration today; I do find that if companies better integrated their paid and organic efforts they could yield significant improvements in their campaigns.

Move to an Integrated Search Engine Marketing Program

According to the experts presenting at the recent August Search Engine Strategies in San Jose (ironically, I was one of the presenters) named higher overall click-through rates, greater penetration of search engine results “real estate,” more comprehensive keyword research, and building credibility as clear reasons to create integrated campaign strategies with both organic and paid listings.

The optimal strategy is to use both in a carefully managed campaign to complement one-another. A recommended strategy is to maximize free listings through SEO first, then augment and round off with PPC placements. However, it is strongly recommended we continue to leverage PPC activities for must-have keywords while SEO is in progress. The primary value from an integrated strategy will reside in the overall efficiency and cost savings that will occur as a result of the same person overlooking both practices.

We as an organization currently have 50 Tier 1 keyword phrases currently in the #1 position in Google. For 48 of these phrases, we receive 5x to 10x the clicks on organic than on the corresponding paid listing and 42% higher leads.

The average CPC for these phrases ranges from $3.00 – $8.00 per click. My research shows that we have enough brand leverage in these top positions to minimize the need to pay for clicks. Especially for those words where the organic click rate is at least 5x the paid click and lead generation rate.

By effectively coordinating paid and natural we can save significant amount of media spend through this efficiency.

Searches Click Rate Avg CPC Excess CPC Fees
1,000,000.00 100,000.00 $ 5.00 $ 500,000.00

Intel Reimbursement Loss Revenue

Business Unit C developed a campaign-landing page to introduce visitors to our line of servers that contained Intel processors for which we could be reimbursed for the costs of those clicks under their co-op marketing program. Since the internal search team, who negotiated the deal with Intel Search team was not consulted until the ads were live and the landing page content was final (we detected the ads using our competitive monitoring process). Since the page content omitted certain words from the landing page, thereby disallowing us to use those phrases, it restricted our keyword list of those considered for reimbursement. These omissions from the landing pages cost us $25k worth of reimbursed advertising.

Linux Keywords Example:

During the Q3 PPC campaign we had a situation where Business Unit A and Business Unit B were buying the phrase “linux” and “linux server.” While it would be ok for both of them to “own” this word in a PPC program, the fact that they were set up in the system in a competitive bid scenario (both set to be #1) it resulted in our paying significantly more per click than we should have. Fortunately, we caught this problem quick and were able to update the system before there was a significant cost.

Business Unit A – had a max bid of $25.00 per click for “linux server” to be #1
Business Unit B — had a max bid of $6.86 per click for “linux server” to be #1

These two positions were competing for 1stnd place up to their max bid. Due to the higher max bid of the #1 advertiser (business unit A) Business Unit B would be placed #2 at their max bid. However, the competing #2 place advertiser was paying $5.50 per click resulting in a difference of $1.36 per click. Had these two not been in a competitive position to each other they could have competed with the #3 position and not the #1 position. This situation pushed the max bids of both phrases to their max levels resulting in a higher CPC of $1.36 and $1.37 respectively per click for “both” placements. Had this not been noticed immediately and left to run over the course of a year, the potential excess cost to IBM would have been at least $11,164.51.

Annual Searches Annual Clicks CPC Delta Excess CPC Fees
41,046 8,209 $ 1.36 $ 11,164.51

This is for 1 phrase and we will have potentially thousands of phrases all competing for the same positions. This needs to be managed effectively along with the current natural placements.

Efficient Management Opportunity

Generally speaking the average PPC campaign that is not managed in a centralized manner using an effective management and execution protocol is believed to waste at least 35 percent of the budget due to poor management, excessive per click fees, and internal competitive bidding. If we were to take the proposed Paid Placement budget tentatively approved for FY2004 of $6 million this “cost of waste” could be significant in the neighborhood of $2 million dollars.

Program Change Request

1. Create and fund a new position of Global Paid Search Manager to oversee all paid search activities and monitor the duplicate keyword process to ensure business units are not bidding for the search term in a on-collaborative process.
2. Integrate this role with a dotted line report to the Search Team Manager to ensure collaboration and integration of best practices.
3. Establish a “Co-Optimization” process to monitor the collaboration or cannibalization of paid and organic search to ensure that they are working together especially for our “Always On” keywords
4. Create a rigorous performance scorecard for the media agency to ensure that they are coordinating and monitoring the performance of paid search within the standards we have set to prevent both the Intel reimbursement loss as well as any anti-competitive performance placements.

While this proposal is 9 years old it could be used nearly identically today by any company. This experience and others from large multinationals resulted in my creating the “Cost of Not Ranking” worksheet and integrating the Cost of Not Ranking Analysis as a key function into our Keyword Management Suite.