Predictive Marketing empowers you to outbid your competitors for the keywords that deliver the prime prospects most likely to convert, while your competitors get the keywords that deliver tire-kickers. Using predictive marketing, one Mintigo customer, a leader in IT solutions, improved ROI on PPC by 45%, resulting in millions of dollars of potential revenue.
In 1970, economist George Akerlof published a groundbreaking paper that gave him world fame and a Nobel Prize. The Market for Lemons: Quality Uncertainty and the Market Mechanism explored the concept of Adverse Selection. Akerlof gave the example of the market for used cars to demonstrate how asymmetric information causes the market to collapse.
The market for lemons
According to Akerlof, if buyers cannot distinguish between a high quality car (a peach) and a low quality car (a lemon), obviously, buyers would not be willing to shell out for a top quality car, fearing that they might get a lemon for the price of a peach. This, according to Akerlof, creates an Adverse Selection, where owners of high quality cars would leave the market (as they would not get the price they want) and only lemons would be sold.
Apply this theory to PPC search advertising. Marketers bid on search keywords and get leads in return. At first glance, the leads look similar—like the high quality and low quality cars in Akerlof’s example. The scarce data that accompany leads via online forms is not exactly a leads-evaluating process, and further verification is required to establish quality. It requires time and Sales Development Reps (SDRs) to verify leads by phone or email to determine lead value.
If a marketer can’t distinguish high quality leads from low quality leads, it makes sense to pay a similar cost per lead for all leads delivered by PPC. As the bid for each keyword has no quality benchmark, marketers pay the same for a likely buyer and a tire-kicker.
Enter predictive marketing. Applying real-time data and lead scoring, Predictive Marketing changes the rules of the game. Now marketers know immediately which keywords deliver top leads. They can intelligently up their bids on the peaches and lower or even withdraw their bids for keywords that deliver lemons.
Predictive marketing is powered by your CustomerDNA. CustomerDNA, a powerful predictor of fit, is comprised of a string of indicators that discern the profile of your ideal customer. Applying your CustomerDNA, determine for each incoming lead how characteristic it is of your existing customers.
The next stage is to score each incoming lead. Using the CustomerDNA, each lead receives a score that determines how similar the lead is to your ideal customer. The peachier leads score from 90 to 100, while the likely-to-be-lemon leads get the lowest score.
Marketers can now score incoming leads in real time, giving them the scoop on the keywords that deliver high quality leads. Connect the Predictive Marketing platform to your search marketing management platform and now you can adjust your bids automatically, bidding higher for the keywords that drive revenue.
Boosting ROI by 45%
One of Mintigo’s customers achieved remarkable results by leveraging Predictive Marketing for PPC. For this leader in IT management and monitoring tools, PPC was an important channel for new business and represented millions of dollars in annual marketing investment. Even a small improvement in ROI would have had a significant business impact.
Using predictive marketing, Mintigo scored incoming leads in real time, identifying the keywords that were delivering the leads with the highest average score. Then, by connecting with Marin Software, the client’s PPC management platform, the client was abile to dynamically adjust the bid to account for quality.
Results were far beyond expectations. As a direct result of Predictive Marketing, the client increased ROI by 45%, resulting in millions of dollars of potential revenue annually. Furthermore, the client was able to increase conversion rate by more than twofold for the highest scoring leads.
With Predictive Marketing, you can trounce the competition. Armed with proprietary data on the keywords that usher the highest likely prospects geared to your company, you can outbid the competition for the keywords that matter. There is even more benefit if your competitors don’t have predictive marketing. It leaves the lousy keywords for them—they’ll drain their marketing budget on all of those tire-kickers that you didn’t bid on.