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Geography Not Too Valuable in PPC Bid Management

Study Looks at User Zip Code Correlation to PPC

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A study that the Rimm-Kaufman Group began in early August set out to find out if certain regions and specific zip codes play significant roles in paid search conversions. The thinking was that low-population areas with fewer brick and mortar stores are usually more successful for catalogs, so perhaps the same would be true with paid search.

The Rimm-Kaufman Group took IP address and zip code information from Digital Element, and used it to tie 3 million PPC clicks to their zip codes for one data set, and nearly 2 million click-throughs for the other.

George Michie"We then tied each zip code to census data we purchased which provided information about the location, average household income, population, land area, average age, average home value, number of business addresses, number of residential addresses, etc." says George Michie of the Rimm Kaufman Group.

According to the findings from the study, there is "very little correlation" between the factors upon which the study is based. "There were a handful of zip codes and regions that appeared materially better than average, but on balance, we have to conclude that knowing the zip code of the user doesn’t have much value for retailers in Paid Search bid management," says Michie.

"It may be much more predictive for financial institutions trying to anticipate lead values, and it may have tremendous value for advertisers to have this information on their websites to target offers appropriately, note store locations and local offers, etc," adds Kichie. "But for national retailers, it appears that the person in rural Arizona searching for a leather ottoman is no more, or less likely to buy it than the person in downtown Chicago."

The Rimm Kaufman Group did find that people in rural areas were more likely to conduct searches than average. These people, as well as those in densely populated urban areas are more likely to use PPC than people in suburban towns, the group concludes.

More on the findings as well as the methodology used for this study can be found here.

Geography Not Too Valuable in PPC Bid Management
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  • http://www.seoconcepts.net Jason

    I have run very large ppc campaigns and i must say that i disagree with how they look at ppc in terms of geo-targeting. While targeting down to the zip code level is almost always overkill, targeting at the state, region, or city level (on certain occasions) is almost a must. The more competitive the keyword, the more likely others are targeting at smaller areas and thus any “nationally” targeted keywords will show an average position of 1 – 3 but in reality the most populated areas have your keywords ranking in position 6 – 8. Also in ppc ad copy is a major player and if you can add the location (state or major city) in the ad copy along with the keyword you can see ctr in the range of 10 – 30%. With all that being said it only works with certain products and most services. Testing this out you will find that certain states and regions have drastically different conversion rates as well as click through rates. Two places to look for information of where to target first is your website analytic’s and Google inSight for search. Just thought i would throw that out there :)

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