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Optimize Your Budget & Local Paid Search With 3 Simple Steps

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There are various ways in which one can optimize one’s budget and conduct local paid search. While doing online advertising, it is very important to keep the location of the service in mind, specially where the service or product is available. We shall look at 3 simple steps to do the same in an efficient manner:

1. Determining An Efficient But Scalable Account Structure

  • Localized campaigns, no location bid modifiers: One must remember that the campaigns set must be more specific to the location where the product is getting sold or can be made available. Here, the campaign is set for the specific location where the product or service is sold or available. However, no bid modifiers are used in this case and the value set as the bid is same for all locations. Hence, this is a very simple step and does not require too much of monitoring. If the campaign is set visible to all locations across the globe, then there is a high chance that it will lead to a lot of incorrect clicks and irrelevant marketing, thereby leading to wastage of budget allocated for running the paid campaign. However, one must also include certain top cities, in addition to the exact location. The only issue with this kind of setting is that, it requires a lot of monitoring and difficult budget decisions to be made, while allocating the budget to different locations.
  • Nationwide campaigns with location bid modifiers: In this case, the same campaign can be run in various locations across the nation. This is specifically done for off the shelf products or services, which are not location specific. The bid amount can however, be modified across various locations depending upon the popularity of the product or potential of selling the product in that location. For example, a florist selling bouquets will find that most of his sales are coming for Tier1 and Tier 2 cities and not from the interior villages. Hence, he can bid more in these cities where the likelihood of getting a sale is higher as compared to in a village.

Localized-Campaigns-vs.-LBAs

  • The third type, is a blend of localized and nationwide campaigns, wherein a localized campaign can be run in top cities and a nationwide campaign for the remaining locations across the country.

Blend

The main reason why one should go for the above mentioned hybrid structure is that, marketers tap true potential of running their campaigns in the top locations, while they can continue to keep their paid search accounts manageable.

2. Get Started With Location Bid Adjustments

How to go about doing location bid adjustments? It is not very difficult to understand the theory behind certain adjustments. One needs to consider the cost and revenue aspect applicable to a geographic location in order to see if there is any scope for improvement. One will find that there is always a scope for improvement and a lot can be done to better and optimize the same. The scope for improvement can be determined by looking at ROAS distribution across various campaigns and their locations. That is, if the same ROAS is seen across all Designated Market Area (DMAs), then there is little or no scope for improvement. However, if different locations have different local ROAS, then there is a good scope to improve. The rule of thumb is to bid high where the ROAS is high and get higher revenue volume and bid low where the ROAS is low. One must remember that while measuring the ROAS, some other factors also need to be considered such as effect of online advertising on offline sales. That is, to check whether the sales happened over the phone, app or in the store. It makes business sense to make bidding and budget allocation decisions based on true revenue figures.

Based on the location wise ROAS data obtained, one can make strategic decisions as follows:

When the distance of ROAS is more that 1 standard deviation from the mean, it means there is a 68% chance that they are not performing as per their potential. Similarly, when the distance of ROAS is more that 2 standard deviation from the mean, it means there is a 95% chance that they are not performing as per their potential.

Local-ROAS-frequency1

The location bid modifiers for a campaign can calculated using the following formula:

[Location LBA] = [Location ROAS]/[Average Campaign ROAS]-1.

Location Bid Adjustments (LBA) is a form of advertising which integrates digital advertising with location-based services. This technology is mainly used to identify consumer locations to provide location-based advertisements on their mobile devices. Here, the advertisement bidding is done basis the potential of the location generating revenue.

3. Analyze & Predict Local Ad Spend & Returns

It has been normally seen that analysis of location bid adjustments based on historical geographic performance can be done easily and is done by marketers to allocate the bid amounts. However, it is difficult to take into consideration the LBA impact on the same and re- allocate their budgets accordingly.

Ideally, one would want to build a cost Vs revenue model for each and every campaign/location pair, by LBA. That is, when the cost and revenue show a change when one applies different LBA values. For this, one will need to run a test for some campaign/location combinations and record the changes seen in number of clicks, average CPC value, and conversions/revenue. To calculate the pure impact of LBAs without the effect of any other change, one will need to set the intercept to zero, thereby assuming a LBA of 0%.

In this manner, one can follow these steps to optimize one’s budget and conduct local paid search.

Image Credit: searchengineland

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  • There are 2 comments


    • 2 years ago

      Aparna   /   Reply

      Identifying the location of target audience is very important. Whether the campaign is for local audience or national audience or international audience. The requirements vary. Instead of wasting the budget because of improper planning, its better to demarcate the territory before launching the campaign.

    • 2 years ago

      Pratik Ahuja   /   Reply

      Location based targeting has been one of the major drivers of online advertising. Companies must invest proper time and strategies and budget to make campaigns appropriate to the audience whether it be local or national or global.

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