Do You Know Your Negative ROI (Risk Of Inaction)?

Like most retailers, you're probably spending your time analyzing your Positive ROI (Return On Investment) to determine how to spend on your next Search campaign. But do you also have a solid understanding of your Negative ROI (or Risk Of Inaction)? How many sales are you leaving on the table by not taking action? And how many of those sales are going to your competition?

Here's how I would think about your negative ROI: when your customers are searching for you online -- every time you are NOT in front of them is a missed opportunity for a sale. And thus a negative ROI.

Here are a 4 suggestions about how you may want to think about your negative ROI:

• Your Daily Budget Strategy: Do you know at what time of day your daily caps start kicking in? Are they set to tap out at 7:00 in the evening when your customers stop shopping … or do your ads stop serving at 2:00 in the afternoon? Thought about a different way, are you closing the doors to your brick-and-mortar stores at 2:00 or 7:00? Because if you are “closing your online doors” too early your customers are walking down the street and shopping elsewhere (i.e. clicking an ad and visiting your competitors’ sites).

• Your Non-Brand Terms Strategy: A new face walks into your store who’s never been there before. Do your salespeople completely ignore him or do they ask him how they can help him? Well, if they ignore him there’s a good chance he walks out that door never to return – which is what you are doing when you ignore many of your non-branded keywords. Queries you never address are queries that will never be converted to a sale.

• Matching Your Customer’s “Search Cycle” Strategy: Are you coordinating your search plans (both creative and buying) to match your customer’s buying cycle? Are they getting a different message when you know they are in the information-gathering phase than when they are in the buying phase? Are they being directed to different landing pages after they’ve already visited your site versus their first visit? If your search strategy fails to recognize these different cycles of customer behavior -- you risk your customers failing to recognize why they should be visiting your site.

• Your Bidding and Positioning Strategy: You know the top 100 queries you want your ads showing up on … but do you also know which position is most profitable for you on each page? And at what CPC? Asked another way, do you know how to best spend your next $100? Do you know which keywords will pay-out at a higher ROI if only you bid a little more to get higher position and thus a higher CTR? Test and optimize so that you are keenly aware of how you might spend your next $100 to get your maximum ROI … by not knowing your further promoting your negative ROI.

In summary, make sure to take the time to understand your negative ROI as much as your positive ROI. It’s important to expand your strategic thinking beyond what you already know and start trying out new methods to gain new learning. Test and Optimize. Work with your Google consultants. Don’t let your Risk of Inaction catch you buy surprise. By being proactive and strategic, you’re sure to improve that other positive ROI – your bottom line!

Posted by Dan Schock, The Google Retail Team