A well-managed PPC account can be a great source of revenue for your business. However, it can also be a time-consuming source of revenue.

If you’ve found that tracking conversions, managing bids and customizing settings for hundreds of keywords can be a little tedious, you might feel like PPC is a golden egg that needs an automatic egg turner.

That’s the promise of PPC management software: it will automate the day-to-day decisions of your account and minimize the time you spend supervising it.

However, as Charlie Chaplin might tell you, automation may be efficient, but it doesn’t always lead to positive results…

PPC management Software works really well for some accounts, but for others it can actually decrease profitability.

Is your PPC account a good fit for PPC management software? To answer that, here are five questions you should ask yourself before signing up for a software solution.

1. Can I solve for ROI?

Each PPC management program optimizes your account using a different algorithm. However, as complex as these algorithms may be, they all operate off of a simple principle you learned in pre-algebra: solve for X.

Now, X can be any kind of PPC metric: clicks, conversions, etc. Whatever X is, PPC management software will optimize your campaigns to maximize it. So, if you want to make money on an automated campaign, X had better equal $.

This seems kind of obvious, but you’d be surprised how many companies don’t actually know what revenue their online marketing is driving.

I discovered this early in my career. While working at Omniture helping Fortune 500 and even 100 companies implement Site Catalyst (now Adobe Analytics), I found that many didn’t report on the revenue from their online ad campaigns… but they were still using account optimization software.

If these companies didn’t track revenue, that meant their software was optimizing for something else, like impressions, clicks or conversions.

Unfortunately, while these metrics can be helpful, you don’t make money off of clicks (quite the opposite, in fact).

If the end-goal of a PPC campaign is to get clicks, you could bid through the roof and monopolize the term “cat video,” but as intelligent marketers we know that none of these expensive clicks would actually make us money.

But a software program doesn’t know that. Without additional data, software can’t tell the difference between a click that makes money and a click that wastes it. So if your software is optimizing for clicks, it’s probably optimizing for wasted money.

In general, it’s not a great idea to trust a program to make financial decisions unless it is set up to solve for profit.

But how do you track revenue?

Well, it depends on your business model. If you sell directly from your site, then a conversion is often the same thing as a sale. In this case, you may only need to use the AdWords Conversions tool, which generates code to place on your landing pages, enabling AdWords to start tracking conversions.

If, however, your PPC doesn’t drive online sales directly, you may need a more complex alternative.

Many companies implement customer relationship management (CRM) software to do this job (Prosperworks, Salesforce, Zoho, etc). You don’t have to purchase software though — with some extra effort you can track from impression to sale on an Excel spreadsheet.

Regardless of how you choose to track PPC-generated revenue, if you want to use PPC account management software you need to be sure that your revenue tracking data can be effectively incorporated into your software.

If you can’t do that, your software can’t solve for return on investment (ROI), and you run the risk of poor automated decision-making and an unprofitable campaign.

2. Do I have enough data?

Computers don’t make decisions based on intuition, creativity or know-how. They make decisions based on data patterns.

In a nutshell, data points (impressions, conversions, etc) create patterns that are a lot like pixels on a television set.

If you’ve only got a few points of reference, it’s difficult to make sense of what you’re seeing:

Is this a DVD cover? A stack of papers in a red folder? Based on this many data points, it’s pretty hard to tell.

Double the data points and the picture becomes a bit clearer.

Now it’s starting to look more like something sports-related — a race car, perhaps?

The problem is, with this few data points, it’s still hard to get a sense for the big picture. Based on this much data, it’s not very likely that you would guess that the whole picture looks like this:

The same principle applies to PPC management software.

If you don’t have enough data, small trends in your data will “look” important to your software, but the software will miss the “big picture.”

As general rule of thumb, PPC algorithms work best when you have at least 50 conversions per day. Otherwise, there is simply too much day-to-day, week-to-week and month-to-month variability in the data to make accurate predictions and adjustments.

If you’re solving for revenue, you need around 50 sales per day, because the software also has to learn the pattern that connects conversions to ROI.

If you’re not getting these kinds of conversion numbers, your optimization software will struggle to make accurate decisions. At this point, a better solution than software would be to try and improve your account performance by manually adjusting your ads, your landing pages and your PPC strategy.

3. Is my account too complex to manage on my own?

Even if you’re getting a lot of conversions, it doesn’t necessarily mean that your account needs software management.

After auditing over 2,000 AdWords accounts at Disruptive, we’ve discovered that less than 6% of the keywords in an account actually produce conversions.

So if your account seems overwhelmingly large, you may not need to hand it off to a software program. Instead, you may simply need to trim the fat from your account.

Get rid of your useless keywords and your account may suddenly become much more manageable.

In addition to reducing your workload, this will cut down on wasted ad spend and allow you to put your money where it counts.

I’ve seen some accounts make a profit by putting $100,000+ into a mere handful of carefully-chosen keywords. Despite the size of their marketing budgets, these companies didn’t need software because their campaigns were focused on the terms that really drove results.

If you have 10 or fewer campaigns and under 100 converting keywords, your account may be simple enough to manage with AdWords’ native features (see section 5).

4. Is my business consistent enough?

Even if an account is active enough and complex enough to warrant automation, you may still need to ask yourself whether there are important aspects of your business which you couldn’t expect a computer to react to.

For example, say your company is highly dependent on seasonal sales. If specific keywords are very profitable at one time of year, but not at another, automation may not be for you. In your software’s eyes, one month of profitability won’t outweigh 12 months of terrible results. So when your hot season rolls around, your software will stubbornly keep underbidding while it waits for the fluke to end.

Not exactly what your business needs, right?

You see the same problem with rapidly changing markets. Optimization software assumes that the future will look pretty much like the past.

This works well for some businesses, but if your success rides on being able to predict the “next big thing,” then you may be disappointed by a program which only detects changes in hindsight.

Like a dog in training, optimization software does best with consistency.

If the pattern of today will be true tomorrow, then an automated solution may be appropriate. But, if your business is more art than science, you may need a more personal touch.

5. Why do you want software?

If you’ve answered “yes” to all the above questions, then some degree of automation may be right for you, but before you run off and buy all the bells and whistles, I’ve got one more question for you:

What is it that you imagine your software doing for you?

Can you think of two or three specific things?

Now that you have a mental list, check this link to see if the things on it can already be done with an AdWords script.

Or, if you’d rather avoid adding scripts, AdWords may have what you want as a native feature:

• If you want your bids to rise or fall automatically with the success of a keyword—you can do that in AdWords.
• If you want to identify and pause keywords that are below your productivity threshold—you can do that in AdWords, too.
• If you just want reminder messages when something happens in your account that needs your attention—AdWords has you covered.

AdWords’ native features include these and a lot more. They may not be as cool as having your own software system, but if your wants and needs are simple enough…why pay more?

Not a one-size-fits-all solution

Under the right circumstances, PPC management software can provide a ton of value. It’s just not a one-size-fits-all solution.

If your account doesn’t seem like a fit in all five of the areas discussed in this article, you may need to put some work into your account before PPC management software makes sense.

Choosing an automated system is a little like interviewing a new employee. If you can think like a computer and realize its strengths and weaknesses then you can make an informed decision about whether or not it is a good fit for your company.

I would love to hear about your past experiences with optimizing software—the good, the bad, and the ugly. Are there any factors you’d add to this list?

Please comment below and let me know your thoughts!

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