When setting up your paid search campaigns, Google Adwords and Yahoo Search Marketing both suggest keywords to use. This feature makes it easy for you to find popular keywords. It also helps you estimate how many clicks you might get. There are also excellent tools such as WordTracker that can assist you to research keywords.

But popularity isn’t everything; it’s conversion that really counts.

One adage that I have always liked from the world of finance is “buy the rumour and sell the fact”. This means if there is a rumour that a share is about to rise in price, traders will often buy that share based on this rumour. They do this so not to miss out on a potential money making opportunity.

What separates the good traders (i.e. the ones that stay in business) from the poor ones is “sell the fact”. A disciplined trader will rapidly dump any shares they hold when the rumour turns out to be false. They take a small loss and then look for other opportunities. At the core of most successful share trading schemes is a strong discipline to keep losses small and to make the most of any rise in the price.

With a little bit of lateral thinking the same approach can be applied to search marketing. To do this treat each new keyword added to the campaign as a “rumour” and invest some money into them. Once they are attracting clicks to the site then look for whether they convert combined with other performance indicators. Once the “fact” is known a decision can be made whether to sell or change the keyword.

To do this successfully a professional web analytics tool such as Google Analytics or Urchin is needed. You also need to define your website goals and ensure that your campaigns are tagged correctly. With all of this in place, you can then start to assess the value of each keyword. In order of priority here are the factors that I assess for each keyword:

  1. Conversion Rate: Goals achieved / total visits from that keyword. Higher is better
  2. Bounce Rate: Visitors who leave immediately / total visits from that keyword. Lower is generally better
  3. Time on site: How long on average do visitors from this keyword spend on the site. Longer is generally better
  4. Av. Pages per visitor: How many pages on average do visitors from this keyword view on the site. More is generally better

Where a keyword fails to have good values on at least 3 of these it should be dropped. Assessing keywords in this way can help you to priorities your advertising budget and to only take small losses whilst making big wins.