When Dayparting is Not a Good Idea

For several years now, AdWords has offered dayparting, a feature that was once all the rage (as tends to be the case for any new functionality in PPC). Even MSN AdCenter has offered dayparting for some time now, which shows just how old this news is. But while dayparting may be old news, it’s still a major lever that PPC managers can pull to fine-tune their accounts. I’ll discuss this in the context of a recent conversation with one of our PPC agency’s clients.

Very Old Newspaper

Old News

We recently began reporting to a new hire for one of our long-time clients. Since we have had this client for several years, we naturally have considered dayparting from time to time. This new direct report suggested we reconsider using dayparting in our AdWords account, citing it as a way to increase bids during periods of heightened impression activity. This is a poor idea. Let me explain why.

The key thing to remember is that we want to maximize value; impressions alone denote zero value, and they may even have a negative correlation with value. Value is comprised of revenue (or some other conversion metric) and click costs.  If we talk only about revenue, conversions, or conversion rates, we are missing out on a key component of value.

For instance, it may be the case that revenue and revenue-per-click (RPC) increase greatly from 2pm to 5pm, but unless cost rises at a slower rate than does revenue, increasing bids is probably not a great idea.  If, however, average CPCs for some reason stay the same while RPC increases 20%+, then a daypart bid multiplier could be a great idea.

Dayparting as a response to increased or decreased impression activity misses the point that the goal is centered around value. Further, to calculate value you have to take costs into account. We do want to increase revenue or conversions, but within a certain efficiency metric. For a conversion-oriented account, CPA (Cost Per Acquisition) is the efficiency metric. For a revenue-oriented account, ROAS (Revenue Over Ad Spend) may be the efficiency metric.  But to talk about impressions or clicks without talking about revenue or conversions, not to mention costs, will lead to poor decisions.