SEM Lessons

I wish you had one, as well. What can we do to get more granular and really lay it out for young marketers? Just the basics and what you’ve learnt. Even for me, right now, this is really interesting. It’s good to hear the mistakes that you made. How do you go about minimizing CAC?

First of all, I would conceptualize it. The budget that you put in ads, especially search engine marketing, it is actually the amount that you are paying for a click, times the amount of clicks. The amount that you are paying for a click, is a combination of the bid and your relevance score and the competition. But if you think about that, what can I influence? I can influence the relevance, by making sure that I have the right ad, the right landing page, the right keywords. You can influence the bid, by making sure that you have the highest conversion rate, that your average order value is right, that your margin is healthy, that you do enough cross-sell. Even that you are putting some LTV methods in there, where you can predict that new customers that come in, will make so much more money. That’s the way that you can win big.

Going back to the other side of the equation, which is the amount of clicks, the amount of clicks is determined by your click through rate – the amount of people who actually click on your ad – times the amount of impressions. How can you influence the CTR, the click through rate? By adding a relevant ad there. By having good ad copy. By making sure that you have all the extensions in there. By making sure that you do audience targeting. How can you influence the amount of impressions? That is divided by queries times coverage. So the amount of people searching on Google, times your coverage. How many of those relevant queries are you covering? You need to have a system in place that understands, what are all of the queries that are relevant to me, and are we showing ads on it, yes or no? That’s also something that you can influence.

Talking about reducing CAC, you can pick any of these things in the whole Google search investment tree, whether it’s the CTR, the coverage, the bid conversion rate, margin, cross-sell, LTV. All of these things you can touch, yourself. Just pick and choose. Where are you doing better or worse than your competition? In Google, you can actually see, what is my percentage above rate. You know how much overlap rate you have with other competition. If they are always on top, then the question is, what is their whole user experience? Perhaps they just do stuff smarter than you, so take a look and learn.

What would you tell a 28-year-old Wouter today, about performance marketing, looking back from what you know now?

The 28-year-old Wouter was already knee-deep in performance marketing. I actually started working when I was 21, so I was quite early in. I would say, the key is, great customer experience, in the end. It’s such a no-brainer, but that’s it. Think about Google’s see, think, do, care. Who is your audience across all of these four phases? Then for those audiences, what is the value proposition? You need to tailor to those audiences, so make sure that the creatives and the text and everything tailors to them.

Then if you have your audience and your value proposition, you need to connect them to each other. Then technology comes in. After audience and value proposition, you need to make sure that you match those two, through the right channels and the right format. Remember, some channels are easier to track than others. Radio, for instance, is not as easy to track as certain other things in marketing. Conferences are even less easy to track. You have all of these different channels, from high, easy to track to pretty hard to track. Again, if you set up the right experimentation framework, any channel can become a performance-marketing channel.

That brings me to the last point, which is measurement and incrementality. Know how to set the right hypotheses, to draft the right experiments and to make sure you measure it right and that your whole company works like that. Because then you can increase speed and become wiser, quicker.