Strategy   |   June 24, 2019

How to Improve Your Paid Search Strategy By Forecasting With Predictive Analytics

A 4 minute read by Chris Campbell, Manager, Analytics

Before we dig into the nuts and bolts of predictive analytics, let's start with a story that will probably sound familiar. 

You want to grow your business through digital advertising — but you're not sure how much budget will be needed or what kind of results you can expect. Because of that uncertainty, you have a hard time planning your digital marketing goals for the year. Forecasting with predictive analytics can help you fill that void. By getting data from your digital ad platforms and your web analytics platform to work together, you can get a better picture of how your year will look.

Before you dive in, you'll want to make sure that your web analytics are set up properly and are showing accurate data. 

Look at Your Historical Data

To find out where you're going, you have to analyze where you've been. You need to analyze historical data from past campaigns to create an accurate forecast for your campaigns. You need at least 1-2 year’s worth of historical data to provide context for past major events, seasonal trends, and advertising spend.

Look Into Clicks and Average Cost Per Click

Average Cost Per Click (Avg. CPC) on your paid advertising platforms is a key indicator as to how much traffic you'll receive based on the budget that you provide. There are several reasons your Avg. CPC can adjust, but one driving factor is demand from other advertisers — especially during a period or season of high demand for your business and competitors.

Here's a quick example to illustrate this:

  • $50k budget for an Avg. CPC of $0.50 will deliver 100,000 clicks.
  • If the Avg. CPC increases to $0.60 (which may appear small), that will change your click amount to approximately 83,000 clicks.

It's important to understand when these peaks and valleys occur throughout the year to better plan your budget.

How does this relate back to your web analytics platform? When reviewing the session (or visit) traffic from the sources of those ad platforms, you need to compare that with the number of clicks on your ads. Ideally, they both should be fairly close— but there are instances where they may be slightly higher or lower.

Understanding those differences can help you create an average click-to-session ratio. From there, you’re able to estimate how much monthly traffic you will receive based on a particular budget.

Review Your Conversion Rate

After getting an idea of your annual traffic forecast, another metric to review is your conversion rate. When you forecast both your traffic and conversion rate, you’re then able to determine how many leads per month you’re going to be able to deliver.

There are many variables to take into account when determining a monthly average conversion rate.

  1. Is there seasonality in how your audiences convert throughout the year? Make sure to highlight monthly variations.
  2. Consider your promotions. When do these promotions occur? Are there different types or promotions? How well does your audience respond to them?
  3. How well do your other channels perform (e.g. Organic)? Evaluating these in your web analytics platform is crucial.
  4. Consider any future website enhancements or upcoming features. These may or may not deliver a positive impact when launched. 


Wrapping Things Up

Once these questions are answered, you’ll be able to fill in the blanks to this sentence:

"Based on $_____ budget for the month of ______, we anticipate to deliver _______ leads based on ____ traffic and an average conversion rate of ___%."

On top of the items above, there will be many important topics to factor into your forecast that are specific to your business and industry. That being said, taking advantage of data from your digital ad and web analytics platforms will provide a better outlook in your digital advertising efforts.