Revenue Allocation Madness

Here’s a wild one to end the year:

One of our clients bought a keyword, got a click, and made a sale. So far so good.

Actually they made three sales, to the same person who clicked on that one keyword.

• One conversion was during the visit following the click.
• One was made an hour later when they returned and bought some more.
• And then again 7 days later and bought even more.

Here’s the surprising part: Google Adwords took revenue credit for all three sales as one conversion and applied the total as revenue on the day of the click.

The second conversion could have come from click on a follow-on offer in the first purchase confirmation email. The third one could have come from a click on a banner ad the person saw 6 days later. Should that first keyword get the revenue credit for all three sales?

There is no easy answer.

But this does end the year where I think we’ll spend a lot of time next year – improving both the understanding and practice of revenue allocation.

All paid search campaigns are an effort to gain some type of return; we spend in hopes that we get back more, either in terms of gross revenue or net profit. If we can’t measure how much we get back, and/or if we can’t easily and accurately associate that revenue with the keywords or other sources of traffic to the site, we can’t measure our return correctly. And if we can’t measure return correctly we can’t come to conclusions about our current efforts or make decisions about what to do next.

It’s a giant problem and the stakes in PPC have risen to the point that we can’t ignore it anymore. I know this blog will devote a lot of attention to it in 2009 and I believe it will become a common theme in the industry.