Unit economics: The foundation of a good SEM campaign
Contributor Kevin Lee outlines how SEM campaigns can benefit from applying smarter business unit economics and asking rational questions.
A strong understanding of the economics of any business unit is absolutely critical to any digital marketing campaign managed against non-brand key performance indicators (KPIs) in a search engine marketing (SEM) campaign.
One would think any reasonably large and successful business would have a good handle on their unit economics, and that this knowledge will be shared down the chain of command to the mid and lower levels of the marketing team.
But time and time again, I have found this critical foundation is missing, miscommunicated, insufficient or is so outdated as to make it worse than worthless. “Worthless” in this case means that bad data does no actual harm. “Worse than worthless” means the utilization of the wrong KPI goals resulting in media waste and — more importantly — missed revenue and profit opportunity.
In other words, the company’s health is at actual risk because the marketing team and the business team aren’t on the same page. In some cases, members of the marketing team may be working at cross-purposes, using incompatible KPIs and metrics.