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58
How-to 11 min read November 4, 2019

Media plan for paid search advertising for small and medium-sized businesses: how to link it to the real world?

Автор статьи о продвинутых инструментах Serpstat
Eugene Kaduk
PPC Tech Lead of Enterprise Department at Netpeak
A common mistake is to believe that automatic services can correctly process raw data and produce results that are suitable for a specific business project in a particular region.
So, for example, specialists make mistakes when drawing up a media plan for an advertising campaign and setting the numbers obtained in the Google Ads Keyword Planner or other similar services as advertising targets.

How you should not draw up a media plan — an anticase

I experimented with a real advertising campaign on Google Ads. I uploaded all the keywords of the ad groups into the Keyword Planner, added all the negative keywords from this campaign and compared the actual performance of the advertising campaign for 7 days to those that the Planner gave me twice. Let me remind you that the keys, negative keywords and geographic targeting were identical.

Here are the results:
Impressions, clicks and CPC in contextual advertising: plan and fact
I got roughly the same results only at the cost per click (CPC), but the results of the Planner and the actual number of impressions and clicks differ significantly, in some cases for almost 20 times.

Now imagine that you paid for the Serpstat account and the hours to collect the semantic kernel, and then unconditionally trusted the Keyword Planner to plan your advertising campaign.

How to draw up a target media plan

My suggestion is to reduce risks and draw up a target media plan; here we will calculate the indicators at which advertising is beneficial to the customer. That is, consider what cost per click and conversion rate you need to have to achieve your goals.

How does it work?
1
Determine the maximum allowed cost of the target action (CPA).
2
Obtain data on CPC and the average conversion rate (CR).
3
We calculate the effective cost per click (eCPC) and CR to reach the desired level of payback.
4
Set these indicators as KPIs for the paid search advertising specialist.
5
Calculate your budget.
6
Run campaigns, gather statistics and adjust your data.
As a result, your media plan will look something like this:
Example of media plan for paid search

How to define the maximum allowed CPA value?

The maximum allowed CPA value should be less than your profit per transaction. If we earn $4 from one transaction, our CPA must be at least $3.99 so that we receive a cent of profit from one transaction.

In other words, the maximum allowed CPA should be lower than the average check multiplied by a margin. That is if the average check is $4, and we earn $0.8 from each transaction, then the CPA should not exceed $0.79.

It happens that an online store sells different types of goods, and each product category has its own margin. In this case, you need to draw up a target media plan for each category separately.

Remember the sequence of actions:
1
Figure out the product margins.
2
Segment your products by category.
3
Draw up a media plan.
Note: margin and markup are two different things. Many people confuse them. If you think that you have a 110% margin, most likely you just calculate it the wrong way.

The average conversion rate: where to get the cost-per-click data (CPC)

The most reliable source is historical data. If you already had advertising activities, it is better to take them as a basis. Even if you configured a mediocre paid search advertising campaign, this data will be a good starting point for further calculations.

An important note: if you take data from an old account, be sure to exclude statistics on brand queries as it distorts the real picture.
Total traffic and non-brand queries in search
The screenshot on the right shows the results where queries with the name of an online store were excluded, that is, queries from users who were already loyal.

Why is it important? The purpose of paid search advertising is to acquire a disloyal audience; loyal users will come to your website themselves.

If there is no historical data, see the cost per click and the conversion rate figures in other sources. For example, if you work with an agency, specialists can look for the necessary figures in projects of similar subjects and with the same geographic targeting.

These data will also be fairly accurate, although not the same as your historical data. In Netpeak, you can break the data down by topic, region, type of platform. We regularly publish studies on the cost per click based on a sample of such projects on our blog.

Where to calculate a media plan?

Google Spreadsheets are a very convenient tool for such tasks.
How to create a PPC media plan
At first glance, this table looks scary, but in fact, there are only three main indicators.

Let's say we have an online store with an average order value of $300 and a margin rate of 28%. At the first stage, you need to calculate the target CPA, for this we use the average store's check parameters (take it as a constant if there are no instruments to influence the special offers in the store, and so on).

The conversion rate depends on the customer's unique selling proposition (how beneficial it is to the target audience), website usability and the level of optimization of advertising campaigns.

Cost-per-click is the responsibility domain of paid search advertising specialists. The better we work on our campaigns, the lower the cost per click we get; the better we optimize the campaigns, the higher the quality score, the more clicks at a given price we can get without paying too much.

Our goal is to determine how much we can change the cost-per-click and conversion rates so that the advertising campaign pays off. Moreover, the CPC and conversion rates from the media plan sheet are ready-made KPIs of the paid search advertising specialist.

A lot of things surely depend on the website owner. In one of the projects of the Netpeak agency (I can't disclose the name due to the NDA), the conversion rate increased by 30% after the website loading speed was optimized.
Note: the ultimate purpose is always making a profit, and CPC and CR from the media plan are smart goals for your paid search advertising professionals. You can come to them and say that you need to increase the conversion rate by 30% and reduce the cost-per-click by 28% in 3 months and, provided that the average order value remains the same, paid search advertising will pay off.
You can check the dynamics of your paid search advertising and, if anything happens, recalculate the media plan. Especially if you see that some indicators cannot be achieved.

Let's repeat what we discussed earlier. A PPC specialist can:
1
Decrease the cost-per-click.
2
Increase the number of transactions provided that the conversion rate and the cost-per-click remain adequate.
After calculating this data and compiling a media plan, you can run advertising campaigns and collect statistics.

Analytics of the advertising campaign results in a media plan

I have analyzed the results of one of the online store advertising campaigns:
How to analyze the effectiveness of an advertising campaign in PPC
We see that even according to the results of the first month of operation, our return on investment (ROI) amounted to almost 5%. What to do next? Either work on increasing advertising expenditures and the number of transactions or work on the cost-per-click and conversion rate to earn more from each transaction.

Media plan for services

What to do if you are promoting not an online store, but an online project where nothing is sold on the website and your goal is just a lead? Essentially, there are no differences, everything is the same. The main goal is profit anyway, and we can calculate this profit in the same media plan calculation sheet (see the "Service media plan" sheet).
Media plan template for contextual advertising
The table above shows a real case of promoting a service for selling car spare parts in St. Petersburg. We already see how much we can reduce the cost-per-click in order to generate profit and not fall out of the auction.

With that client, we have configured the end-to-end analytics, listened to all the calls and found out that only 6% of all leads converted to sales. That is, even an increase in the conversion rate will not significantly affect profits since the work of programmers will cost a lot of money.

According to the table, it is clear that if the business owner does not work on their proposal, if managers do not convert leads better, the project will never reach the payback level. A bottleneck may not be in paid search advertising at all.

If you are generating leads, consider implementing end-to-end analytics so that you understand at what step you might have issues.

Conclusion

1
Planners for drawing up media plans do not provide accurate data.
2
Draw up a target media plan; this way you will find out why advertising is not paying off, you will see bottlenecks in the sales funnel, and your paid search advertising specialists will get clear KPIs.
3
Before calculating a media plan, you need to know exactly the maximum allowed CPA value. It is best to use historical data for the purposes of calculation.
4
Calculate the cost-per-click and conversion rates to achieve payback.
5
Set the right KPIs to your paid search advertising specialists, if you expect to deliver them and want to control them.
6
Remember that your ultimate goal is profit. Strive to maximize your revenue from advertising campaigns.
7
Look for bottlenecks in your sales funnel and work on them.

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