Spend to Maximize Impression Share
Updated: Feb 1
Written by Filippo Milano @MYDIGITALIN
What is Spend to Maximize Impression Share?
Spend to Maximize Impression Share describes the investment level or budget an ad campaign needs to maximize Search Impression Share with its current targeting settings. It is based on the idea that an ad campaign’s spend or budget controls the frequency with which an ad is displayed.
Alternate names: Spend to Minimize Impression Share Loss, Budget to Maximize Impression Share
Formula:
ƒ Sum(Spend) / (1 - Sum(Search Impression Share Loss due to Budget))
How to calculate
€400 was spent on a Google Ads campaign yesterday and the Search Impression Share Loss due to this budget was 20%. The formula works as follows: divide the spend of €400 by the Search Impression Share Loss subtracted from 1. We get €400 / (1 - 0.2) giving us €500. This indicates that the spend for this campaign must be increased from €400 to €500 to achieve maximum ad exposure and reach.
There is no benchmark since a campaign's Impression Share depends on targeting settings, approval statuses, bids, quality, and competition.
1. Using CPCs to Increase Impression Share
Consider the diagram below, which shows a relationship between marginal cost per click, marginal revenue per click, and Impression Share. Since we are talking about marginal costs and marginal revenue, it illustrates how costs and revenues would change as impression volume (and therefore click volume) changes.
The green line shows how the cost per click (CPC) price for each extra click would increase as Impression Share increases. Since you would arguably need to bid higher CPCs to get more impressions, and show on broader, more generic and competitive keywords, this makes sense. The more you want to increase your Impression Share, the higher each potential click will cost, hence the upward-sloping line.
The red line shows how revenue per click (RPC) would fall for each extra click as Impression Share is increased. Since increasing your impression share will arguably result in needing to show higher for your more generic, broader, and less profitable keywords, the downward-sloping marginal revenue line makes sense. If you want more volume, each extra click is likely to deliver you less revenue.
For each click where your marginal revenue is higher than your marginal cost, you are making extra profit. For each click where your costs are higher than your revenue, you are making a marginal loss.
The point of profit maximisation is therefore where your marginal cost are equal to your marginal revenue (highlighted by the blue dot). This is at an impression share of 65%. When the revenue for an extra click is greater than your costs for that extra click (i.e. anywhere to the left of 65% Impression Share), increasing your CPCs to increase your Impression Share would be a wide move, as it would increase overall profit.
When costs for extra clicks is higher than the revenue those extra clicks generate (i.e. anywhere to the right of the blue dot), you are making a marginal loss, so reducing your CPC bids and reducing your Impression Share would increase your overall profits.
The point of profit maximisation is therefore where Impression Share is at 65%. Any less than 65%, then increasing your CPC bids would increase your profits. Any higher than 65%, then reducing your CPC bids would increase your profits.
To determine your point of profit maximisation, you will need to tweak your CPC bids, measure the effect, and adjust accordingly. This is known as keyword bid optimisation. Your campaign strategy has the primary objective to increase profits, and data about profits is fed back to you for further optimisations.
Over 65% you will start losing so be careful and of course keep in mind that you still need to be focus on your profit.
You might achieve higher Impression Shares, but what about profit?
2. Using Quality Scores to Increase Impression Share
Similarly, if your campaign strategy was simply to maximise your Quality Scores, then you probably will achieve higher Quality Scores, and also probably achieve higher Impression Shares. But what good has this achieved if higher Quality Scores and higher Impression Shares do not translate into higher profits?
If your campaign strategy is focused around a secondary objective such as increasing Quality Scores, then you have once again disconnected with your primary goal of maximising profits from your campaigns.
For example, to boost your Impression Share via the Quality Scores method, you could simply look to create some over-enticing ad messages and achieve an extremely high CTR (one of the key components of Quality Score). This will likely result in a high CTR, high Quality Score, and high Impression Share, and will likely deliver a many more visitors to your website.
But if these visitors are unqualified, poorly-targeted, and poorly-engaged, your profitability will be terrible.
My conclusion is that if you create a highly-relevant, targeted, long-tail strategy from the bottom-up, and optimise your campaigns with the primary focus to maximise profit, then it does not matter whether you achieve Quality Scores of 5 or Quality Scores of 9.
Neither does it matter whether you've got an Impression Share of 47% or an Impression Share of 63%. All that matters is that you've maximised profits for your campaigns.
Read more about:
Paid Search Strategy: Planning Phase
Paid Search Strategy: Execution Phase