For Keyword Targeting in Paid Search, Beware The Galaxy Effect

SMS Text
For Keyword Targeting in Paid Search, Beware The Galaxy Effect

Description: the-galaxy-effect-sem-universe.jpg

Are you targeting the entire universe of prospective customers via your paid search campaigns? If you are unsure, you’re not alone.  There are many factors that go into running a successful paid search initiative, including mapping out the right account structure, performing extensive keyword research, building ad creative, crafting campaign landing pages, analyzing and optimizing campaigns based on analytics, etc.  Paid search has definitely grown in complexity over the past several years, and innovation in SEM is not slowing down.  It’s one of the reasons I’ve been performing more and more paid search audits recently.  Similar to SEO audits, paid search audits enable you to understand the strengths, weaknesses, and opportunities across your SEM campaigns.  Based on an audit, there are usually a number of items to address, including adjusting campaign settings, revamping account structure, refining keyword targeting, changing network targeting, etc.

One extremely important part of an SEM audit includes analyzing a company’s keyword targeting, or reviewing the keywords a company is running to target prospective customers.  In the current paid search environment, if you don’t target the right keywords, you’re missing huge opportunities to reach targeted users.  And that directly impacts the effectiveness of your campaigns.

Keyword Targeting & The Galaxy Effect

When it comes to selecting targeted keywords, how many categories and keywords should a company target?  Most companies can quickly figure out the obvious starting points for their businesses, but that’s typically not enough.  For example, some companies simply run branded keywords or keywords that consumers already associate with the company at hand.  In my experience, it’s common for companies either just starting out in paid search, or companies without a lot of experience in SEM, to unknowingly limit their keyword targeting.  This can lead to missed opportunities and potentially wasted budget.  I call this phenomenon “The Galaxy Effect” and it can severely limit the potential performance of any SEM effort.

I call it The Galaxy Effect because it’s very easy to focus on one star in a Galaxy, because it’s so bright and powerful (the people that already know about your brand, products, and services).  But there might be tens of thousands of stars in a galaxy that could very well include prospects.  So, if you’re goal is to increase your customer base, gain incremental sales and revenue, etc., then The Galaxy Effect will often fail you (or lead you to very limited success).

To be clear, I’m not saying to ignore branded keywords and people that already know about your brand or products.  I actually think it’s a smart move to target them in many situations.  Instead, I’m saying you should perform extensive keyword research, understand the range of categories and keywords that prospects are searching for, and then structure a robust set of paid search campaigns to target those prospects.  Then, using a strong analytics setup, you should analyze and optimize those campaigns to increase performance.  That very well might mean pausing campaigns and ad groups that don’t perform well, but you might also find incredible ways to target prospects that weren’t apparent before your research.  This will enable you to hone your campaigns on the highest performing ad groups and keywords.  If you don’t go through this process, then you are probably leaving money on the table.  That’s money that your competitors might very well be scooping up.  That’s why The Galaxy Effect bothers me so much.  It leads to lost opportunities…

Here’s a graphic showing The Galaxy Effect.  It represents targeting a limited number of prospects in a given market versus targeting the entire universe of prospects in that market:

The Galaxy Effect

An Example of Identifying The Galaxy Effect

Imagine for a second you were hired to perform an SEM audit for a medium size business doing about $50MM in revenue.  They contacted you because they started running paid search last year, but they want to better understand their opportunities in SEM.  They tell you that they are very happy so far with their paid search performance, so you ask for some top-level statistics (just to get a basic feel for the account before you begin the audit).  They send along an email with the following statistics:

Top-Level Campaign Performance for Past 6 Months:

Top-Level Campaign Performance for Past 6 Month

Yes, that’s it.  One campaign with a ridiculously high click-through rate (CTR) and a very high conversion rate (CR).  Your next question might be, “how many keywords are you running? “ The answer comes back pretty quickly: 38.  And they are all branded.  Note, although you might think this data would be from a small business, that’s not always the case.  I’ve seen this situation many times, across companies both large and small.

If you’re a paid search marketer, you probably already know what’s going on with this campaign.  The company is simply targeting people that already know about their brand and products, which means they are missing out on a huge market of potential customers.  I say “huge”, because I’ve performed extensive keyword research for companies that were in this situation, and often found dozens of core categories that they should target, with tens of thousands of keywords they could run and test.   In addition, I often found hundreds of additional keywords (and negatives) for the one ad group they had set up.  Never underestimate the power of a good brainstorm mixed with extensive keyword research.  You often end up with a range of categories and thousands of keywords to target.  On that note, if you are interested in learning how to analyze your keywords and Search campaigns via Google Analytics, you should sign up for my webinar that’s being held on February 24th.  I’ll be covering a number of key topics during the session.

What Causes The Galaxy Effect?

So why would a company only target people who already know about their brand, products, or services?  We already covered why a company would want to target the full universe of prospects across a wide range of categories and keywords (to land new customers and incremental revenue).  To me, companies with limited targeting need to neutralize The Galaxy Effect, but it’s sometimes not so easy to do (unfortunately).  It should be relatively straight-forward, but there are several factors at play that can make the situation harder to remedy.  After seeing this in action enough times, and speaking with many companies about the situation, I think The Galaxy Effect is caused by three major reasons.

1) Lack of Budget

This might be the simplest reason why you see The Galaxy Effect in action.  Simply put, the company just doesn’t have enough of an SEM budget to target a wide range of categories or keywords.  Since they don’t, they choose to target their branded keywords (and other keywords that consumers already know are associated with the company or brand).  If this is the case, then I somewhat get it.  I would still argue that they should test other categories and keywords in order to bring in new customers that don’t already know about their products and brand.  This is especially true if they are already ranking highly in organic search for branded keywords.  But, a small SEM budget won’t get you very far, so I understand.

2) Inexperience with Paid Search

As I stated earlier, paid search has grown in complexity over the past several years, and it’s extremely hard for people new to SEM to keep up with the latest advancements.  I often say that I don’t envy people just getting started in SEM.  They have a boatload of information to get up to speed on.  So, if a company started by targeting a limited set of keywords and an “ROI-friendly” group of prospects, then I understand.  When I present The Galaxy Effect (along with keyword research) to companies that are inexperienced with SEM, they often get it immediately.  Then I help them form a plan for neutralizing The Galaxy Effect so they can target a wide range of prospects, across several categories and many more keywords.   The process typically moves quickly.

To give you a real-world example, I performed an extensive SEM audit for a new paid search client before I started managing the account.  I typically do this before making any changes to an account so the client fully understands why the changes are being made (and the potential impact the changes will have).  The account started with 1 campaign, 2 ad groups, and 165 total keywords.  After the audit, I restructured the account to have 4 campaigns, 78 ad groups, and 11,850 keywords.  Needless to say, they were covering a much wider range of prospects after the account was restructured.

3.) The Performance is Just Too Good To Change

There are times I present The Galaxy Effect to clients, and to my surprise, they don’t push to make changes.  The first few times this happened, I left the meeting baffled.  I couldn’t understand why a company viewing all of the impressions, clicks, and sales being left on the table, wouldn’t immediately change their keyword targeting strategy.   Well, the reason unfortunately came down to “image” and “perception”.

For example, I remember analyzing the SEM efforts for a well-established brand and finding The Galaxy Effect in action.  After presenting this information to the group leading SEM for the organization, they told me that they understood what I was saying, but the SEM performance numbers go “all the way up to the top”.  It ends up the CEO reviews the performance data each month, so the group managing SEM wanted to make sure the numbers looked as good as possible (click-through rate and conversion).

Needless to say, I had a hard time understanding this point of view, since they were only targeting a handful of keyword across a limited set of categories.  They asked me if targeting a wider range of categories and keywords would bring down the click-through rate and conversion rate of the account.  Yes, it would (overall), since the account had an incredibly high CTR and conversion rate (due to the limited targeting).  But, if they changed their keyword targeting, the resulting increase in revenue could be very powerful, since they would be targeting the full range of prospects, across many categories and keywords.  It would be a smart business move, to say the least.

Also, since I was advocating simply adding on to the current campaign, this would be a win-win for the team.  They would have the same performance from their current branded campaign plus the performance from the new campaigns and ad groups.  But, they decided to not change their strategy and keep targeting the same star in the galaxy. I’ll be completely honest here… this situation drives me nuts.  It’s frustrating and almost pointless SEM-wise.  But, they made their decision.  🙂

How to Neutralize The Galaxy Effect

  • Audit and Education If you’ve read my previous posts, then you know I’m a firm believer in bringing data to every meeting.  Performing an SEM audit, building a remediation plan, and then presenting that to a company can go a long way.  It comes packed with data, best practices, and an overview of the impressions, clicks, and dollars being left on the table.
  • Extensive Keyword Research Performing extensive keyword research is at the heart of effective keyword targeting.  It enables you to find all of the potential categories and keywords that a company can run and test.  You might end up with a spreadsheet filled with categorized worksheets of keywords, along with query volume, level of competition, etc.  If this doesn’t open a company’s eyes with regard to the universe of prospective customers, then I don’t know what will.

  • Data – The Potential Impact This step ties everything together.  You’ve already completed an audit, presented the results, performed keyword research, and shown your client the full range of categories and keywords they can target.  Now it’s time to talk potential conversion (which depending on the site can mean revenue, new registrations, downloads, etc.)  Based on query volume, estimated CPC’s, CTR, and estimated conversion rates, you could gauge the impact of targeting the new categories and keywords.

    For example, you could take the estimated query volume for your new keywords, use an estimated impression share, and then use a rough click-through rate to determine the potential new visitors from your campaigns.  In addition, you could determine a rough conversion rate to estimate the impact of those new visitors.  Note, this will obviously not be perfect, but can help your client better understand the business impact of what you are recommending.  In addition, it can help you gain a better understanding of the budget required to effectively execute those new campaigns and ad groups.  Again, you are just trying to give a rough estimate, and not precise financials.

Beware The Galaxy Effect, and Neutralize It

Whether you’re an in-house SEM, a consultant, or at an agency, The Galaxy Effect could be limiting the SEM potential for your company or clients.  The first step to neutralizing The Galaxy Effect is to identify the problem via an audit and present the results.  After which, you can form a strategy for expanding the account to target several categories across many more keywords.  At that point, it’s important to analyze and optimize those campaigns based on performance. And in the end, you might find that you increased targeted traffic, increased revenue, increased your customer base, while also educating everyone involved with SEM at your organization.  Then, just make sure you all wear tin foil hats to ensure The Galaxy Effect doesn’t return.  🙂

Subscribe to SEJ!
Get our weekly newsletter from SEJ's Founder Loren Baker about the latest news in the industry!