Travelocity Reports 96% Of ROI From Branded SEM

Today's post is from Jason Lee Miller from Web Pro News who briefly talks about Travelocity's success with branded keywords used for paid search. Based on the numbers that follow - strong brands can benefit from branded search...

Travelocity's chief marketing officer Jeffrey Glueck recently spilled out some ROI numbers on paid search that has the industry buzzing. Glueck said 96 percent of Travelocity's conversions came from branded keywords used for paid search.

Travelocity's numbers focus on the real ROI of search marketing, and build a convincing case for branded keywords against non-branded keywords, which converted into a booking just 4 percent of the time.

While the numbers are convincing, Glueck has not addressed in sufficient detail the idea that non-branded keywords are used mostly in the research phase of the search experience.

The ROI on that presence during research may not be directly measurable, as Glueck would like, but it stands to reason that it is important to have your brand present wherever it matters.

But for good measure, we'll consider Glueck's stats, as presented at the IAB's Performance Marketing Forum:

* 2% of paid-search conversions originated from a searcher clicking on a non-branded term and then a branded term later

* According to 360i, branded keywords account for just 5% of search marketers' total spend, but account for 80% of profits from paid search

* 65% of Travelocity paid-search visitors arrived via one ad from one keyword

* 27% of Travelocity paid-search visitors clicked ads multiple times via the same keyword repeatedly

* 8% used a variety of keywords

* Geo-targeting works: local flight information offered in ads converted 6 to 7 times better than ad banners

Glueck told AdAge, which has more stats, that it was a "profound mistake by all of us to think we've figured out how to measure ROI on search. We're in stage one."

Established businesses should test the use of branded key-words. The key is to develop campaigns that last for a short 'testing period'. Once you've established a base-line, measure through to conversion and see if you've improved your ROI.

Marketing ROI: Make Sure Your Marketing is Making Money

Today, if you ask any marketer what his biggest challenges are you will no doubt here Return on Investment (ROI) at the top of their list. With competitive pressures, businesses more focused on profitable growth, and an increased need to do more with less, marketing professionals need to generate favorable returns on most – if not all of their marketing campaigns.

Upon first blush, this looks rather simple. Just take the total cost of your campaign, track it through to conversion and determine that the revenue generated is greater than the expense. However, most people make the mistake of assuming that calculating ROI is only involves direct expenses and revenue. There are other factors to consider when determining your return on investment.

In a moment, I’ll show you a quick formula to help calculate ROI, but before I do, let me explain the types of expenses you need to consider:

Direct Expenses. Any cash outlay you have to develop, create, and distribute your marketing campaign is considered a direct expense. For example, if you’re doing a direct marketing campaign, you’ll have to print your mailer, pay for postage, and offer an incentive. All of these factors are direct expenses because they cost you money.

If you’re marketing online with Google Adwords or a similar type of service, you’re paying for each and every click – this is considered a direct expense.

Indirect Expenses. An indirect expense is something you spend to in conjunction with your marketing efforts but doesn’t necessarily involve a cash outlay. For example, if you pay a copywriter or designer to help with your creative, their time and expense must be considered. Other indirect expenses might include your overhead such as rent, electric, phone, insurance, etc.

Now that we’ve identified some of your expenses associated with an ROI calculation, lets look at a specific campaign example and how we can determine our return on investment in a simple manner.


Example1: MarketingScoop, LLC decides to send a post card mailing to a list of small businesses promoting their directory service listing. Here is a list of expenses associated with the mailing:

Direct Expenses
Post card design $100
1,000 post cards $200
Postage $500
Total $800


Indirect Expenses
Indirect Expenses X .25* $200

A rule of thumb you can use to calculate your indirect expenses is to multiply your direct expenses by 25%. If you want a more exact determinant of indirect expense, you will have to record the amount of time attributed to this particular marketing project as a percentage of your annual ‘available working hours’. Then, multiply this percentage against your total business expense.


Based on our calculation above, total campaign cost equals $1,000. For this example, let’s assume that the campaign brings in $2,500 in revenue. Simply divide revenue by expense ($2,500/$1,000) to determine ROI. In this example, our ROI was 2.5.

Note: This is a Gross calculation which means that we have not subtracted any product related expenses. This gets into Net Income, EBITDA, and other stuff for the accounting team to figure out.

The key is to use this information as a benchmark for future campaigns. Instead of assuming that a marketing campaign is productive, you now have a basic measurement to evaluate it and compare future campaigns.

Marketing Innovation: How to Improve Marketing ROI

There are a number of basic marketing fundamentals that everyone needs to know in order to generate attention, interest, desire and action among prospects. But to be successful in today's competitive environment, you need more than a basic understanding of a traditional AIDA model and the
4 P's (product, place, price, promotion).  One way to acquire this knowledge is with the help of online MBA programs. Online MBA rankings can be a guide for finding powerful online MBA programs that get you up to speed on core concepts and more advanced ones.

A number of years ago, I discovered a marketing methodology made popular by Michael Gerber. For those of you who have never heard of him, you can still find his books on Amazon or your local bookstore. Mr. Gerber referred to this marketing methodology as the E-myth which was comprised of: innovation, quantification, orchestration, and documentation.

This methodology is the key behind major marketing successes like McDonalds, the Four Seasons, and many other well-known brands. Let me explain his methodology and illustrate how it can be applied to your business to deliver significant ROI.

Innovation

If you do what everyone else is doing, you'll get the same results – if you're lucky. Most often, those who excel in any market are the innovators, those who are continually trying new things, creating new methods of doing business, or standing for something unique.

Whether you’re Ben & Jerry's ice cream, Apple computer, or Tommy Hilfiger, innovation is baked into the sale, marketing, and product development process. To illustrate, let's take a look at your run-of-the-mill retail clothing store. When you enter the store, what's the first thing the sales rep says to you? You guessed it, "How can I help you?"

An example of applying innovation would be to have that same sales representative open with a new greeting, something like, "Hello, is it your first time visiting our store?". If yes, there's a perfect opportunity to discuss what makes you unique, how to navigate the store, and so on. If no, the same holds true… "Welcome back. Were you successful in finding what you needed upon your last visit? What can I help you with today?"

Regardless of the actual questions used, the example of innovation in a sales/marketing sense gives you the ability to try something new. This 'something' can take a variety of different formats, but most importantly it iis something that can move you towards a greater ROI. Especially if you understand the next step which is quantification.

Quantification

With each innovation, an action is taken – a product sampled, research conducted, a new sales pitch or value proposition delivered. To be truly effective with your marketing you must measure your results.

The most successful marketing programs are always working to improve their return on investment (ROI). The key is to measure each independent element that could possibly influence your result.
Using our example of the retail establishment, you wouldn't want to ask all of your sales reps to start using a new pitch AND change their dress code. Doing so might dilute your ability to measure the effectiveness of a new sales script. Additionally, you wouldn’t want to change other store elements like the music or store layout at the same time – doing so would make accurate measurement next to impossible.

Now that you've tried something new and measured its effectiveness, you're ready for the third component, orchestration.

Orchestration

After trying something innovative, and measuring the result, you now know what works and what doesn't. The key is to keep innovating in small ways, continually testing and evaluating the results. Once you have your successes identified, you need to roll them out in a systemic fashion.
All sales and marketing personnel should be utilizing and implementing the latest innovation in all they do. This methodology now becomes your control. Your next innovation is only effective if it produces better results than your control.

Improving your process of orchestration is also extremely important. The faster you implement your innovation across the business – in a consistent fashion, the better your results become. Walmart is a master of this. If there is an innovation in one store, it is quickly shared and implemented with all store managers across the U.S. The result is innovation on a massive scale which has a direct and positive influence on ROI.

Documentation

The top innovators do this last step extremely well. Documentation doesn't mean creating reams of manuals that are esoteric or difficult to navigate. Rather, documentation is the development of a guide, procedure, or system that allows consistent implementation of the innovations you develop.
As new personnel come into your business, you want to make sure that the innovations and enhancements you've made to your sales and marketing practices are fully implemented. The best way to do this is to not expect an employee to memorize a 700 page employee instruction manual. Rather, they should become familiar with your way of doing business - which needs to be documented in a simple, easily understandable format.

You know you're at a company that does this well when you hear things like, that's "the Walmart way" or "This is how we do it here". It’s those companies that create living documentation that is easily understood and implemented that excel.

Conclusion
If you’re trying to enhance your marketing program, or create one from scratch, keep this methodology in mind: innovation, quantification, orchestration, documentation. This process will ensure constant growth and improvement in your marketing results.

Don't just take my word for it, look at most major brands or category leaders. Under the hood, you'll find systems for innovation, ways of testing, measuring, implementing, and documenting in a seemingly effortless fashion.

By Michael Fleischner | Internet Marketing Expert