Day Parting is a growing part of the PPC field, with many systems and tools trying to take advantage of different traffic cycles for particular products and services. There are a lot of misconceptions about what day parting is and how it can be used, but we do believe that it is useful if you keep in mind that the goal for any direct marketing PPC campaign is to lower cost per conversion while increasing or maintaining total traffic.

How might day parting work to do this? Well, consider two scenarios:

Market I:

A market where there is truly different cost per click on keyphrases for different times of day with about the same conversion rates. This is often the case in competitive markets where other advertisers increase the bids of their ads in order to get higher rankings.

Market II:

Markets with very different conversion rates at any given time of day, but with about the same traffic rates.

In market (1), Day Parting allows an advertiser to segment the market and literally put a cost per conversion value on any given period of the day. For example, the cost per click in the morning might be $5 and $20 in the afternoon. In that situation, the first goal is to capture as many of the $5 customers as possible and only go after the $20 customers after all other choices have been expended. As long as the ROI stays above what the client wants, the advertiser can continue to increase visibility during competitive time periods and therefore get more total traffic and sales. But if they start with the cheaper clicks they will ultimately have better margins.In market (2), the same is true except that the advertiser should choose time periods with the highest conversion rates first and then start to work into increasingly low conversion rates.

Usually the real world is a combination of the two, so the best way to measure the value of a given time period is to simply talk about cost per conversion.

At the simplest level, any given time period should have a cpConv that will either be more or less than what the client is willing to pay. Assuming that the client has fewer advertising dollars to spend than total available clicks for a given word market, the model is fairly simple. If all periods are less than what the client is willing to pay, advertise all the time. If not, skip those periods that aren’t profitable and advertise during the time periods in decreasing levels of profitability.

This is the simple model, but in truth one major consideration makes things a little more complicated. Many advertisers have a budget that far exceeds what PPC can actually cost. In other words, they could advertise all the time and not run out of money. What do you tell those folks in terms of their ad spend budget? It is at this point that the decisions about day parting leave the realm of direct sales and enter into branding, which is a discussion for another time.

When Google Adwords and other Pay Per Click services started to offer time-dependent ad distribution, they called it “Dayparting” as a way to quickly conceptualize the feature. Since then, Day Parting has become a marketing buzzword for many search engine marketing companies.

The problem is that, like many marketing buzz words, it is widely used and poorly understood.

First, what exactly IS day parting? Historically day parting was used as a way to maximize an ad spend in broadcast media (i.e., radio and Television) by only putting ads on when the most people would see an ad that was aired. Radio and TV stations could then charge differential amounts for an ad based on the expected audience that would see an ad at any given time. The ultimate expression of this concept in America is the Super Bowl, where companies will pay huge amounts of money for ads that they know will reach many people.The opposite kind of broadcast Dayparting is late-night infomercials, because they are inexpensive to air but still draw enough of an audience to be profitable for some products.

The problem is that the concept doesn’t translate well, and as a result there are many misconceptions about its use and value. Victims of Dayparting misconceptions broadly fall into two categories: the “superbowlers” and the “day traders”. “Superbowlers” perceive day parting as a way to maximize the number of people who can see your ad and thus drive up business. “Day traders” see day parting as a way to most efficiently get traffic by finding a “sweet spot” where any given click will give a better ROI (We’ll talk about daytraders in another post).

Both views have fallacies, although the “day traders” in the second category are probably closer to doing the right things in PPC word markets.

The “superbowlers” are in trouble, though. Pay per Click is vastly different from broadcast media,and applying broadcast media models to PPC is going to result in very inefficient allocation of resources.

The biggest difference between broadcast marketing and search engine marketing is the ability to measure the effectiveness of advertising. In broadcast marketing the only measurable success anyone can use for advertising is the direct correlation between the number of people who saw a campaign and the increase in sales.

Pay Per Click, in contrast, allows us to measure the actual correlation between a searcher’s interest in a product and their ultimate decision to buy. To put it more simply, just because you put your advertising dollars into the pool when things are the most busy does not mean that those dollars are going to turn into sales. What if the busiest times of day are also the most expensive, and as a result you are actually spending more per sale? What if people at that time are surfing but are less likely to make a decision? Dayparting’s simplistic perspective on traffic misses all of these qualities.

Superbowlers will get more sales if they spend more money in busy times of day, but they will not necessarily get sales at the best cost per acquisition. The next step for them is to move away from a perception of clicks and to start to think about how many of those clicks turn into sales.