Brokers spend a lot of time and resources on marketing using banner ads. Creating banners, finding placements and sites that work, trafficking & tracking – let alone how much money is being spent on the placements themselves. Don’t get us wrong, Display marketing is obviously necessary to have a well-rounded marketing communications mix, and this tactic can be very effective in getting clients. The issue is that it takes away from the time and focus spent on search engine marketing.
So why should brokers spend time on Search Engine Marketing?
Glad that you asked. There are a few reasons:
1. A very important part of the acquisition funnel
If you think about your own usage of search engines, you’ll notice that when you’re interested in a new product category on average you’ll first search for generic terms in Google.. you’ll then start reading on sites that seem authorative (and see /click the banner ads there) and proceed to google and read about specific brands. Ofcourse this is just one scenario, but our research confirms this is a very representative user journey . Well, if you want to influence brand selection, you will have to be there when users first start searching for the product category (ie ‘forex’ or ‘CFD ‘s’) and when they start searching for your brand (ie ‘FXCM’ or ‘IG MARKETS’). See an illustration below using the classic marketing theory for the decision making process. In red, the steps that usually start with search. Depending on your strategy, you may or may not want to skip the need recognition phase as a target.
source is internal MGL data, q1-3 2011
On the other hand, the market has gotten very competitive. Looking at figures from Adgooroo on the US market on a selection of Forex related keywords in Google, the top 20 brokers together have spent over $5M in the 6 month period from June till December 1st. Find a table of that US top twenty below.
Note that FXCM seems to be the only broker using more than one account and grabbing a huge share of all the clicks out there targeting different audiences and using different propositions (brands) – a strategy of diversification that is clearly working well for them. As you can see, of these Forex.com (GAIN Capital) has the highest CTR, that clearly has a lot to do with their domain forex.com being so relevant.
Looking at the average cost per click over this period, the top 20 keywords by CPC is below. Of course these vary by broker and period, but should give you a good idea of the competitiveness of the industry.
Data from Adgooroo
Looking at these big spends and CPC’s there is one important thing to remember; CPL versus number of leads is inversely related, meaning that when you want more leads, your CPL is going to go up (of course that is only the case above a certain budget level).
Some brokers plot a demand ceiling to see where their spend should be to hit their targets both CPL and volume wise. This could look something like the curve below and depending on your strategy you might pick a point on the curve as your goal. For instance, if a low CPL is your goal, on this curve we would pick 440 leads at a 75 CPL as a target for PPC advertising.
This goal could be very different from what goals you have in other channels – your overall CPL could be much lower or much higher – but being pragmatic means optimizing channel by channel. There’s no use in getting a few more leads if that means your CPL increases by 20% overall (likewise in the other direction), so thread carefully.
No matter what your goals are, if you are at the level where you could use some outside help with your campaigns, contact us on email@example.com for a no-obligation consult on your PPC account or read more on www.mediagrouplondon.com.
This article was published earlier in the ForexMagnates Industry Report.