Hey Everyone,
PPC Ian here. I’m honored today to share a guest post for you from my good friend David Rodnitzky, CEO of PPC Associates. What is PPC Associates? It’s Silicon Valley’s SEM Agency. David just spoke at SMX West 2012 and did an amazing job! Without further ado, let’s jump into today’s guest post…
All the best,
Ian

The hero in George Orwell’s 1984 has a simple job: rewriting history. He scours over old newspapers (at the direction of the ironically named “Ministry of Truth”) and changes stories to make it appear that the government is doing an incredible job. For example:

As short a time ago as February, the Ministry of Plenty had issued a promise (a ‘categorical pledge’ were the official words) that there would be no reduction of the chocolate ration during 1984. Actually, as Winston was aware, the chocolate ration was to be reduced from thirty grammes to twenty at the end of the present week. All that was needed was to substitute for the original promise a warning that it would probably be necessary to reduce the ration at some time in April.

To the citizens of Oceana – whose only source of information is the government – this ongoing manipulation of the truth creates a sense of incredible progress:

The fabulous statistics continued to pour out of the telescreen. As compared with last year there was more food, more clothes, more houses, more furniture, more cooking-pots, more fuel, more ships, more helicopters, more books, more babies — more of everything except disease, crime, and insanity. Year by year and minute by minute, everybody and everything was whizzing rapidly upwards.

You might wonder, what does this have to do with search engine marketing? Well, a lot, actually, and the fact that you don’t immediately recognize it as such only further proves my point!

Consider the following changes to AdWords over the last few years and see if you notice any similarities:

1. The addition of many-per-click conversions;
2. The addition of view-through conversion tracking;
3. The addition of multi-channel funnel reporting in Google Analytics;
4. The addition of “top versus side” reporting;
5. The addition of “impression share” reporting;
6. The addition of “minimum first page bid” reporting.

To me, all of these reports serve one purpose: to convince you to spend more money with less regard for your actual ROI. Take view-through tracking, a metric that counts a conversion when a user sees – but does not click on – a display ad and later converts at your site. Do you have any proof that this user was influenced by the display ad? Generally, no – but Google wants you to think twice about disabling display ads with no actual conversions but plenty of “view through” conversions.

Top versus side reporting is another example. Mike Nelson wrote an awesome post outlining how to use top versus side reporting to improve your ROI, but I suspect that most AdWords users see too much “side” position as an affront to their manhood and spend more per click not to increase performance but to increase their own vanity.

It’s worth noting that tools like multi-channel funnel and view-throughs never existed in AdWords or Analytics until Google decided to snap up DoubleClick and YouTube. Suddenly, last-click data (i.e. paid search) needed to share the spotlight with first-click data (display, video, etc.). No doubt if Google+ takes off, we can expect to see a lot more integration of “social conversions” into AdWords and Analytics.

Google’s long-term plan is to create a single dashboard that integrates AdWords, YouTube, Analytics, Google Affiliate Network, DoubleClick Display, and Mobile in one place. Perhaps this will be given to advertisers for free (like Analytics and AdWords currently are), or perhaps this will have a nominal fee associated with it (like ad serving or campaign management through DoubleClick). Either way, the true benefit to Google will be the ability to control how advertisers determine success.

As long as Google controls the reporting and analytics, Google can heavily influence how advertisers measure success. As such, as new Google products and channels roll out, Google can increase advertiser adoption by creating new metrics that validate investment in these products.

Now, before I get an agitated call from one our fabulous AdWords reps (thanks for the cupcakes last week, Elizabeth!), I want to note that I don’t blame Google for trying to influence advertisers through their reporting tools. As noted, all of these tools can be incredibly useful for advertisers if applied properly, and it’s hard to argue with the price!

If anything, the point of this post is to caution advertisers to think carefully about how you define success, rather than blindly accepting what your vendors – Google or otherwise – tell you is a winning strategy. There are lies, damn lies, and statistics. At the end of the day, the one metric that never lies is profit. View-throughs, cost per engagement, virality coefficients, and other fancy stats are all interesting enough, but you can’t pay the bills with them. Focus on profit, and no ministry of truth can ever deceive you!

David Rodnitzky is the CEO and co-founder of PPC Associates, a digital-marketing firm with offices in the Bay Area and Chicago. He can be contacted at info@ppcassociates.com.

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