Managing the risk of your search engine marketing tactics

Photo by hosullivanAlthough you wouldn’t immediately think so, Search Engine Marketing (SEM) and the popular board game Risk have a lot in common.

In the tactical game of Risk, victory or defeat is based on how the dice are rolled. Offensive and defensive strategies are based on the strength of your army and how many battles you’re willing to lose before winning the war on that territory. Similarly, in SEM, victory for online marketing managers is decided on customer behaviour online and the strength of keywords. Just as you would in a game of Risk, online marketing managers must make sacrifices – only in this case they have to ask themselves how much they are prepared to lose in order to occupy a keyword position to win a customer and reach their ROI target.

For most SEM managers, how much they’re willing to lose is dependent upon their acquisition cost target – this is perfectly fair. In fact, a SEM manager could simply state that, for the sake of job security, if an acquisition cost must stay below $30 then it will stay below $30 – taking risks simply isn’t an option.

But where a potential problem can arise is if a SEM manager’s acquisition cost (CPA) is in fact $17 but on the dashboard it appears as $29.99. In this case, playing it safe is in fact making some SEM managers’ blind to important data. There is clearly a gap between actual CPA and perceived CPA. So how do we overcome this?

In a game of Risk, a player’s defensive has to be strong with every factor accounted for. Likewise, SEM managers need to ensure that their tools do not lack crucial data. Often, customer phone call data is grossly ignored. What if customer acquisition is happening on the phone because there is a phone number on a business’ website but no one thought to track the calls and make this data available to inform SEM tactics?

By sticking rigidly to revenue caps set by the boss or senior managers and missing crucial data such as customer phone calls, SEM managers can lose position on some strategic keywords that could bring customers to a website. Indeed, marketing executives can demand their SEM agency not to spend over a fixed amount but they do so with the risk of a dip in sales.

Strategic players in a game of Risk often ask themselves what the value of a victory is worth in a single battle at a particular moment in the game. Similarly, SEM managers will have to ask themselves how much an extra client is worth. Although it’s a question that will have to be answered at some point, SEM managers can at least postpone it by appreciating an acquisition cost calculation that is 100% accurate and takes into account all their distribution channels data – online sales, but also call centre sales.

Risk is all about evaluation in the end. SEM managers should track calls, make sure that data sits in their online conversion analytics dashboards, and should pass the information to their bid management tools, so they don’t pull back too early on their SEM tactics but instead take calculated risks which might mean an even greater victory.

Thomas Sevège is CCO of Freespee