The Portfolio Concept

You should approach your online marketing efforts the same way professional investors handle their portfolios of investments—diversify to mitigate risk, ease the management burden and meet performance objectives.

Your Keyword Portfolio

The key concepts of an investment portfolio can be applied directly to your search engine marketing keyword “portfolio.” For example:

Each investment should be designed to achieve a shared objective—such as market share growth or increased income.
Managing the collective performance of your portfolio is more important than controlling the individual performance of any one keyword.
Established business rules should control all decisions to buy, hold or remove keywords.
Spread your marketing investment across your portfolio. While your total investment budget may remain the same, the amount invested in any keyword can change daily or even hourly, depending on how it is performing for your business.

There are many benefits to creating a diverse portfolio of keywords. By grouping keywords that share a common objective and adjusting their bidding as a group you no longer have to make individual decisions for each keyword. You instead evaluate how they perform and update them as a group. For instance, let’s say you are an advertiser with 500 keywords in 5 search engines—this means you are managing 2,500 individual keyword investments. If you were to create 5 groups of 100 related keywords, you would only have to make decisions for 25 keyword groups, a number far easier to manage.

Setting Portfolio Rules

The portfolio concept also lets you manage keywords according to defined rules based on your performance objectives. While you still bid each individual keyword uniquely, your portfolio helps you analyze how all keywords are performing as a whole. Our proprietary technology is designed to determine the best way to spread your available advertising dollars across your entire portfolio to help maximize your return on investment.

It’s important to remember that your portfolio is only as good as the rules used to manage it. Since all decisions in a portfolio are made to increase performance, your rules should be flexible so they can change as necessary to meet your performance objectives.

We have identified six performance objectives you can use to create effective rules for your portfolio:

Revenue
ROI
Cost per Acquisition (CPA)
Conversion Rate
Cost per Click (CPC)
Traffic

When you set a performance objective, you also define the parameters for that objective. You can create up to 36 different rules to achieve the objective of a targeted keyword group.

Examples of performance objectives and rules include:

Maximize REVENUE while ROI is greater than 400%
Minimize CPA while REVENUE is greater than $50,000
Maximize ROI while CPA is less than $25
Minimize CPC while ROI is greater than 500%
Maximize TRAFFIC while (average) CPC is less than $0.35

Building rules such as these let you logically group keywords. For example, suppose you have a group of keywords that will really increase awareness of your site and drive traffic. You can group these keywords together and assign a TRAFFIC rule for an average CPC to them. Another group of keywords might effectively sell a specific product on your site. For these keywords, you could assign a rule that maximizes REVENUE for a given ROI.

Diversification

When developing your keyword portfolio, we believe it is important that you diversify. You should consider selecting a wide range of keywords, even ones that compete with each other, to make sure you are not “putting all your eggs in one basket.” You should consider choosing some keywords that are risky but yield a high ROI, and balance them with keywords that provide a more stable and predictable, if lower, return. This strategy of diversification could protect your investment. If any of your keywords begins to perform badly, your other investments could make up for their loss until your portfolio can be realigned.

Get Time on Your Side

While developing your portfolio, you should consider using time as a parameter for keywords as well. A recent trend in investment management was “day trading” where investors buy and trade stocks throughout the day. Day traders take advantage of the shifts that occur in the stock market throughout the day.

This concept can also be applied to keyword management. By analyzing your keyword performance data, you can determine the times of day when certain searches are more likely to produce good results. You can then map the times of day to create a “Bidding Time Zone™” or BTZ™—you can increase cost per click for keywords during your positive BTZ times and decrease or suspend bidding during negative BTZs.

Questions? Call us at 978-298-1525, or e-mail SalesSMS@idearc.com.