Getting the Best ROI from Your SEM Campaign

How to Maximise the Impact of Your SEM Strategies

Over the last decade, the number of internet users worldwide has been increasing at an accelerated rate. There are over 5 billion internet users, and this number accounts for roughly 65% of the world’s population. In Singapore, about 92% (out of the 5 million plus Singaporeans and permanent residents) are internet users.

Given these statistics, any modern day business owner or marketer instinctively understands that being online is indispensable, since the majority of customers are online these days. In other words, digital marketing isn’t just a buzzword, but rather a necessity. 

However, it isn’t enough that your brand has an online presence. In the face of stiff competition and economic fluctuations, effective digital marketing techniques have to be employed to maximise your marketing return on investment (ROI). With the right implementation, you’ll not only be able to drive more traffic to your company’s website, but also increase conversion rates, i.e. the end goal of converting website visitors into actual paying customers. 

One of the most effective online marketing strategies is known as Search Engine Marketing (SEM). SEM refers to paid search advertising, which is different from its counterpart Search Engine Optimisation (SEO), where SEO focuses on increasing your website rankings on the search engine results page (SERP) organically.

How do you measure ROI in Marketing?

ROI stands for return on investment, which is the amount of money you get back after investing in any kind of endeavour. Marketing ROI takes into account the amount of profit or loss generated by your marketing campaigns.

Calculating Marketing ROI

ROI is calculated using the following formula: 

ROI = Total Revenue / Total Costs

An ROI that’s less than 1 indicates a loss, while any number higher than 1 indicates a profit. Achieving an ROI of exactly 1, indicates that the investment has broken even.

Understanding your SEM ROI

The ROI from SEM is the amount of financial returns you have gained from investing in your SEM campaigns. For businesses that rely on SEM to drive sales or enquiries, determining your SEM ROI is of utmost importance. Whether your goal is to maximise brand awareness, store visits or enquiries, understanding your SEM ROI is a key indicator that measures how your paid search campaigns are performing. In essence, ROI is a measure of the effectiveness of your SEM strategy.

Determining an Effective ROI for Your SEM Campaign

How can you determine if your SEM ROI is effective? This depends. SEM ROI can vary for different sectors and industries. SEM may not be the ideal platform for all industries. There are other factors as well such as your branding, reputation, online presence, price, competition, geography, seasonality and economic cycle etc.

The Golden Ratio of Marketing ROI

When it comes to measuring ROI, it pays to take heed of the golden ratio of 5:1. This means that for every dollar you spend on SEM, you should get five dollars in profit. However that may vary as your SEM ROI depends on the industry you’re in and the products or services that you’re marketing. Some brands may see an ROI of 3 times, while others experience an ROI of 7 or more times. 

Note that the lifetime value of each customer is an important consideration. For instance, if your customer makes a purchase today, their business doesn’t usually end there. Over the course of the customer’s lifetime, they may make multiple purchases. This also means that in order to measure the true ROI of each customer, it is crucial to account for the customer’s lifetime value. And when aggregating data across customers, understanding the average amount each customer spends provides a broader perspective in the success (or failure) of your marketing campaign(s). 

A high ROI should be the goal of any campaign, however that figure has to be realistic as well. If you’re struggling to maximise your SEM ROI, consider implementing some of the SEM strategies that we’ve listed below. Our team of experts have used these SEM strategies to achieve an ROI upwards of the golden ratio for brands across industries. If you’d like to do an SEM audit, or look at case studies, reach out to us via this link. 

Why is Measuring the ROI of your SEM Crucial?

Theoretically, the SEM platform that you use, whether it’s Google, Bing or Yahoo Ads doesn’t matter as long as your ROI is positive. However, this perspective could be limited since the total number of users and searchers of the SEM platform that you’re investing in is important to a large extent. 

To achieve a decent ROI, you would first have to establish your presence in a search engine that has sufficient users, otherwise your campaign may underspend or not spend at all, due to the lack of potential customers. In Singapore, Google is the search engine of choice; at least over 90% of Singaporean internet users rely on Google This is why Google is undoubtedly an essential SEM channel. With that established, here are some benefits of measuring your SEM ROI:

1. Measuring SEM ROI helps with Increasing Cost-effectiveness

An SEM campaign wouldn’t be effective if not every cent spent is accounted for, since accurate ROI tracking requires every dollar invested to be measurable to effectively turn a profit. 

By calculating ROI, you will have a greater understanding of whether your marketing expenditure, for any SEM or marketing campaign in particular, is making a profit or a loss. 

In other words, if any channel isn’t achieving it’s target ROI, optimisation or a re-allocation of budget is needed. Conversely, if you’re not measuring ROI, your SEM reports may look great, but you could, in reality, be making a loss unknowingly.

By identifying the campaigns, ad groups, ads, keywords, search terms, audiences and demographics that are underperforming, you can allocate your budget to the more effective aspects of your SEM campaigns, such as the converting keywords that are generating conversions (sales and/or enquiries). 

The bottom line? Tracking SEM ROI helps to reduce unnecessary costs by minimising cost-inefficiencies.

2. Drive Quality Traffic Your Website

When you measure the results of your SEM ROI accurately, you’ll be able to assess if you are leveraging the right keywords, demographics, topics, placements and audiences. Without measuring ROI however, you won’t be able to determine if your target audience resonates with your business effectively, leading to missed opportunities, ineffective spending, and ultimately lost revenue.

3. Staying Competitive

As the saying goes “out of sight equals out of mind”, in competitive markets, staying effective is often a requisite to maintaining profitability. Consider, for example, larger brands; brand awareness is crucial to maintaining their market share and consumer base. 

This also means making sure that you hold and maintain a reasonable search engine market share, or in the world of SEM, search impression share. Nevertheless, effective optimisation is critical for a brand to grow in a competitive SEM landscape in order to allow its revenue to flourish. 

Leveraging ROI provides marketers with data that enables them to make informed marketing decisions backed by hard numbers. Planning and deploying targeted SEM campaigns aimed at driving positive returns while maintaining and growing brand awareness increases a brand’s competitiveness. In doing so, brands would be poised to conquer both the search engine result pages and the mindshare of the consumer.

4. Keeping Ahead of Trends and Fluctuations

SEM marketers should be constantly vigilant, since the results from your SEM campaign can fluctuate quickly, and trends, consumer behaviour and economic conditions, may change over time.

Keeping track of your ROI over long periods gives you an edge over your competition, in the sense that it is a measurable parameter of efficacy. If a certain keyword, ad or landing page stops working, a sharp-eyed SEM strategist would immediately know that it’s time to switch gears by adopting a new or revised strategy and in essence, implement timely optimisation.

How Can You Maximise Your ROI from SEM?

The processes involved in maximising your revenue from your SEM campaigns is an ongoing process, and the best strategies adopt the concepts of accurate and transparent tracking, timely optimisation and adaptability. More importantly, since every brand, campaign, industry, geography, seasonality and economic climate is different, the willingness to learn from past mistakes, the ability to adapt and the will to continuously test varying strategies and impeccable monitoring is indispensable. 

After all, triumphant SEM strategies often involve a fair amount of trial and error before the campaign actually succeeds, however, an SEM agency that has the cumulative performance expertise could achieve your target ROI at unprecedented speeds. 

Here are some of the SEM strategies you can adopt to increase your marketing ROI:

1. Immaculate Tracking

The first step in maximising your SEM ROI would be to set up the means to measure results accurately. After all, without the ability to accurately measure the success of an SEM campaign, effective optimisation would not be possible. You wouldn’t be able to differentiate the factors that work from the ones that don’t.

In a competitive ad space where stakes are high, being able to crank the right levers at the right moment could increase ROI substantially. Making wrong adjustments, however, could lead to disastrous results.

To run your SEM campaign effectively, you need to assess the key success indicators of your SEM campaign. Are you aiming to drive online sales, enquiries or website traffic? Perhaps you’d like to maximise brand awareness for a new product. Regardless of your goal, accurate tracking is indispensable to ensuring the success of your campaign.

2. Set Clear Marketing Goals Before Launching Your SEM Campaign

Getting to know the concepts surrounding digital marketing is your first step in setting a goal. The worst thing you can do for your brand is going into the competitive realm of SEM blindly or worse, without a clear objective. 

There are a couple of marketing goals that can be achieved through SEM campaigns. For starters, you might want to increase website visits, generate enquiries or drive online sales. You could also be more specific with your goals. For example if you have a target number of website visits that you’d like to generate with a fixed SEM budget, set a bid limit which limits the average cost per click (Avg. CPC). Perhaps you are in charge of an ecommerce business that aims to maximise every dollar spent to drive store purchases, by setting a target for return on ad spend (ROAS), or in SEM terms, conversion value / cost. 

The optimal strategy for each campaign objective differs depending on your goal. Additionally, you shouldn’t conflate your campaign objectives, as you may end up not achieving either of them. For instance, if your goal is to achieve a ROAS of 5 times, then the notion of generating as many sales as possible or maximising conversion value may conflict with this goal, since your ROAS go below target after hitting a certain sales threshold.

3. Timely Optimisation

SEM campaigns are dynamic, as they depend a lot on the search engine’s algorithm as well as the target audiences’ response. Therefore, you shouldn’t expect the performance of your current SEM campaign to l remain the same throughout the entirety of your business.

You have to check back regularly and make the necessary changes; or try out different versions of the same thing (E.g, different keywords, search terms, ad copies, call-to-actions and landing pages etc) to optimise the ad campaign’s performance. Optimisation itself is a process that’s fluid and dynamic, and so we recommend making timely improvements to your current approach, no matter how well your campaign performed in the past.

4. Have Options for A/B Testing on Your Website

One approach you can adopt when optimising your SEM campaign is to test multiple variants of the same element with the goal of identifying the winning variant. This is known as A/B testing. Basically, you try out different versions of your ads, keywords, landing page or website, for instance, to identify variants that are the most effective in achieving your marketing objectives. 

Depending on your campaign objective, the metric that determines the winning variant in the A/B test would also be different. For example, if our goal is identifying which ad copy resonates best with our target audience, we might want to look at the ad with the highest click-through rate (CTR). On the other hand, if the campaign objective was to identify which landing page variant resonates best with potential customers, we might want to hone in on metrics such as bounce rate and the average time spent on the webpage.

5. Adapting your Strategy

Potential customers can be a fickle bunch. This is why you should be aware of changing trends, competition, seasonality, and the economic climate while adjusting your campaign to ensure that targets are met.

For example, during the COVID-19 pandemic, more people were either working from home, under some form of lockdown, or even undergoing quarantine. As such, there was a surge in demand for online goods and services. 

Brick and mortar businesses that did well during this period were the ones that focused their efforts on reaching these online customers, rather than focusing on attracting physical foot traffic to their retail store.

6. Slicing Data

Leveraging the data that your SEM campaign collects can give you rich insights into your customer’s behaviour, which, in turn, allows you to make the right adjustments that bring maximum ROI.

Some examples of data that may provide useful information include, click-through rates, bounce rates, heat map data, number of pages viewed per session, average time on site, search impression share, hour of the day, day of the week, network (Google vs Search Partners), device and so on. Notice that we’re not just talking about ad data from your SEM campaign, but behavioural data collected from your website with platforms such as Google Analytics.

7. Leveraging High-Performing Keywords and Search Terms

Keywords play an important role in SEM, and while SEM agencies utilise Google Ads Keyword Planner and other technologies to identify business opportunities in your campaign, the process doesn’t stop there.

Identifying keywords that convert is really the first step. On a day-to-day basis, your SEM agency would also have to change, adjust, edit, replace keywords using the data that they collect while testing variants to assess which keyword combinations work best with your target audience.

8. Create High-Quality Landing Pages

Creating high-quality landing pages is something that often gets neglected in the process of maximising results, this is especially true if the brand doesn’t have a skilled team of writers supporting their marketing efforts.

If your landing pages are monotonous, too generic or lack originality, you may lose the potential customer’s interest. High-quality content should be unique and crafted for your target audience, with your own distinct brand voice, and should more importantly, resonate with your customer.

But that’s not all the advantages high-quality landing pages bring to the table, not only do they captivate the reader, but also increase conversion rates as well, meaning that potential customers are more likely to take action (e.g. seek more information, submit an enquiry or even visit your retail outlet). 

Additionally, one of the key criterias that determine the quality of your landing pages would be its relevance, which in turn, impacts the quality score of your SEM campaign. With a higher quality score, your SEM campaigns incur lower expenses as well. 

The quality scores of your ad is a numerical measure of how well your ad is performing compared to others; hence one should aim for a quality score that is as high as possible.

9. Leverage Ad Extensions

You set up your SEM campaign, added relevant keywords to your targeting and crafted witty and compelling ad copies, so what’s next? Consider ad extensions. 

What are ad extensions in SEM? Essentially ad extensions are useful pieces of information that accompany your search ad on Google. Used correctly, ad extensions can be a powerful addition to your SEM campaign. In one study, search ads accompanied by 4 sitelink extensions saw higher click-through rates by 20%. 

But that’s not all there is to search ad extensions. Different ad extensions are built for different purposes. For instance, lead form extensions allow you to capture enquiries without requiring potential customers to click into your ads or landing page. Call extensions, on the other hand, allow potential customers to call your business directly without additional hassle.

10. Target them Again

Remarketing (or retargeting) is a simple concept that involves showing your ads to people who have interacted with your business before. They could have clicked into your website last month, added items to their shopping cart without buying anything, or even visited your YouTube channel previously.

Done correctly, retargeting has a higher chance of generating conversions compared to targeting new customers who may not know anything about your brand. Therefore, remarketing is a strategy you should incorporate into your SEM campaign since this strategy allows you to maximise results, when combined with other SEM strategies.

Getting the Best ROI Next Steps

Maximising your SEM ROIs is certainly a process that requires constant care, attention and timely action. Just like oiling an engine, selecting the right fuel and timely maintenance is essential. The key difference between ROI and other marketing metrics is that ROI is a measurement that directly reflects your profits, which signals the true effectiveness of your SEM efforts. Or in other words, the stakes are higher when it comes to measuring return on investment.

Are you looking for an SEM agency? Reach out to us for a non-obligatory review here. Our team of experienced SEM strategists have a proven track record of delivering ROI growth for organisations.