What can PPC manager learn from electricity scheduling?

There is a surprising amount in common between PPC management and electricity scheduling, and techniques used in the power industry can be applied to the management of paid search advertising.

PPC management casestudy

Electricity scheduling is a complex business involving a huge amount of data, and the skill is matching supply to demand. This is complicated by the fact that there is a time lag involved in turning on most power stations – in cases of many hours. Also demand changes  in many ways – there is a daily pattern, a weekly pattern and seasonal variations, plus other sudden peaks.

Paid search management is remarkably similar. There is a huge amount of data. Search patterns change in many ways – with daily , weekly and seasonal variations, plus other sudden changes. There is even a ‘time lag’ involved – and this is the time it takes for keywords and adcopies to gain high “quality scores”.

The similarities go much deeper when bid management is considered as both are electronic bid market places.

In the electricity market prices are bid for individual power stations (or more accurately units within a power station) and the total country scheduling depends on the prices bid. So companies owning many power stations need to consider carefully how they price the bids of each unit. And these change in periods across the day. Which power station units are asked to generate depends on the relative prices if different power stations. So it is important to understand how your competitors are bidding or pricing and to consider each individual bid.

This is virtually identical to the keyword bid management within paid search advertising. PPC agencies or companies set bids and then Google AdWords (or another platform) schedules which ads are shown. For effective PPC management you need to understand how your competitors are bidding, and the impact on the overall ad scheduling. Also to consider optimisation at the keyword level and not the campaign level.

So very similar modelling and optimisation techniques can be used in optimising PPC accounts as in optimising electricity scheduling.

Of course for small budgets it is not cost effective to consider this level of modelling, but for large spends the savings from detailed optimisation can be huge. ExtraDigital have been using some of these techniques on large spending accounts for many years and seen some impressive account improvements as a result. These techniques are particularly good at reducing overall paid advertising spend whilst still increasing sales revenues. In practise this is what most businesses want as there is a cap on advertising spend for budgeting purposes.

If you are spending over £60k/month on paid advertising and would like an account review to see how much you could save and gain by a detailed account optimisation at the keyword level contact ExtraDigital PPC agency.

Sunday 31st March 2013

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