Reduce paid search spend by 40% and only lose 18% in click volume? Is that possible?

The goal of performing a search position test is to analyze core keyword performance in
position 1 versus lower positions 2-5 based on total click volume and CPC efficiency in
your paid search engine. If you have to reduce paid search budget, this is an effective way
to optimize.

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 Is there a way to identify areas to reduce investment in paid search without
sacrificing too much return?

Yes! The Search Position Placement analysis can analyze core keyword performance in
position 1 versus lower positions 2-5 based on total click volume and CPC efficiency.
Basically, keeping your core keywords in the top #1 spot is expensive and we want to
determine if we can save money by keeping some of these keywords in lower positions 2
through 5 without losing too much activity.

The purpose of this document is to help you set up the test properly and then to evaluate
results so a strategic decision can be made whether or not to keep core keywords in the
lower positions. Generally, placing keywords in lower positions usually results in a lower
CTR, lower CPC and less web site activity as fewer people select to click on keywords in
lower positions. So let’s get started.

First, let your paid search campaign run as usual for a period of at least four weeks. Then
select your core keywords – paid keywords that represent roughly 80% of total click
volume. Speaking from experience, probably 25-35 terms will represent your ‘core
keywords’. We are in the ‘Raw Data’ worksheet in the Search Position Placement file.

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As you can see above, the Clicks have been sorted from most to least to identify the terms
that generate the greatest amount of click volume. The % of Clicks that each keyword
generates is shown in cells E5:E237. % of Clicks in cell E5 is calculated as =C5/$C$238
and copied from cell E6 to E238. C238 is the total sum of all Clicks and is calculated as
=SUM(C5:C237). There are 34 keywords out of 205 that represent approximately 81% of
total clicks in your campaign. Now that we’ve identified which keywords are going to
test, the next step is to place these keywords in the top position (position #1) of search
results for 4 weeks (28 days).

How do I place these keywords in the top position?

In order to ensure that these keywords result in the top position of search results, you
need to release bidding caps for these terms so that you are bidding the highest for these
keywords. And of course, it is best to do this with your primary search engine.

After these keywords have run in the top position for 4 weeks, record the results
(Impressions, Clicks, Cost, and CPC) for each keyword. Let the keywords resume to
‘normal’ campaign activity (revert to bidding the amount you were bidding prior to the
position #1 test) for a couple of weeks. Now, we can run the second part of the test which
is to run these same keywords in lower positions (position 2-5) for 4 weeks. Obviously,
you will need to place a budget cap for each keyword to ensure that you will NOT be in
position #1 but rather lower positions. However, we do want to ensure that these terms
are appearing in positions 2-5, so it will be necessary to keep an eye on search results
daily and raise bidding caps if necessary during these 4 weeks.

Now that we have the results for both testing periods (as shown in the Test Results
worksheet), we can determine which keywords perform almost as well in lower positions
as in the top position but cost significantly less in positions 2-5.

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Let’s jump to the Click Assessment worksheet where we can see the % Difference in
Click Activity for both test periods.

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To see where we can reduce spend significantly while still maintaining the most click
volume possible, we are going to identify keywords that drove less than 50% more
volume in position 1 as compared to position 2-5. The formula in cell L3 is calculated as
=IF(K3>-0.5,"yes","no") and copied from K4 to K36.

As you can see, I’ve highlighted the “yes” which identifies the keywords that drove less
than 50% more volume in position 1 as compared to position 2-5. There are 10 keywords
that are highlighted yellow.

Looking at the Results worksheet, we can see what the expected outcome would be if we
were to lower positioning on these 10 terms that drove only marginally more volume in
position 1 as compared to positions 2-5 to maximize efficiency without sacrificing
significant volume.

As we can see, placing these core keywords in positions 2-5 is more effective at
improving efficiency as total clicks for these terms only drop 18% while spend drops by
40%. In other words, you could potentially save $51,591 dollars every 4 weeks without
losing significant click volume!
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The opinions and analyses provided here represent my own and not those of my Clients.
Bears repeating: The tutorials do not represent the thoughts, intentions, plans, actual data
or strategies of my clients or employer.