After reading the second half of Ron Jones’s article, Measuring Success, on Search Engine Watch, I was struck with an overwhelming urge to blatantly steal his ideas.  However, my more noble tendencies forced me to merely reference them, while giving him credit for the inspiration.

Mr. Jones’s article discusses the methods for planning and measuring success in SEO efforts using SMART goals:
Specific
Measurable
Attainable
Realistic
Timely

These principles can also be applied to PPC campaign optimization.
 

Specific – The tendency for PPC campaigns always seems to be more, more, more.  More clicks, more orders, more revenue…  And, while “more” isn’t an unreasonable goal, it’s an extremely vague plan.  Starting with a specific goal – e.g.  “improve campaign click through rate by 3% over last month,” or “increase SEM orders by 5%.” – makes it much easier to focus.

Measurable – Obviously, the ability to track traffic and sales is essential to running a successful sponsored search campaign.  Regular ad group and keyword analysis is necessary to be sure you’re getting the most out of your campaigns.  Along with maximizing the keywords and ads that do lead to conversions, it’s equally important to limit, or completely eliminate, the ads and keywords that do not lead to orders.

Attainable & Realistic – These two points go together.  Is it realistic and possible to increase orders by 25% in any given time period?  Maybe, but there are many outside factors that contribute to it.  In the direct response industry, sales are still largely driven by television and/or radio exposure.  If there’s no change in the media exposure for a product, it’s very difficult to significantly increase the impact of paid search efforts.  It’s important to realize that marginal improvements in click-through or conversion rates can drastically affect the bottom line (i.e., net revenue) only if there’s a corresponding bump in relevant traffic.

Timely – Timing is particularly important for direct response campaigns, where products typically have a relatively short lifespan.  Whether those product lifespans are dictated by seasonality – i.e., gardening products, which are mainly viable in the spring and summer – or by market demands – i.e., there’s a 6 month period before the next generation technology is available – it’s important to maximize efforts when they can be most effective.  Increases in click through and conversion rates when a site is getting 500 searches per day are far less useful than when that site is getting 5,000 per day.

Ultimately, as in many other aspects of life, the key to creating and successfully managing effective PPC campaigns is to be as SMART as possible.