The best pay-per-click advertising campaigns are always constantly evolving and moving with industry trends. This is because your potential customers can change just as quickly as the meaning of a keyword or phrase can. What this means is that a poorly monitored PPC campaign will end up wasting both your time and money.
Rather than hiring a league of workers to closely monitor, process and then act out changes within your PPC campaign. You are far better off to use an automated service to collect your data, catalog it and then interpret it in order to offer you the best performing campaign available.
Let's take a look at why your PPC campaigns should be as simple as “rinse and repeat”.
What's Wrong With Using Cost-Per-Acquisition?
Cost-per-acquisition is the main strategy that most businesses choose to use when it comes to pay-per-click campaign optimization. It tracks the cost of a keyword and pits it against how successful that keyword is at bringing in a conversion.
You may already see the problem with this strategy. Say that you have an active campaign running with a PPC keyword that has an average cost-per-click value of $0.50. You find that it takes on average 20 clicks to make a sale of a $5 item. That means you end up with a CPA value of around $10 per product sold.
By the books, $10 as a cost isn't so bad when you're selling products that are worth a lot more than $10. The problem here is that with cost-per-acquisition logic this might be one of your highest converting keywords but you end up losing money due to your final sale value simply because this is an inefficient keywords for your product or service.
Cost-Per-Value: A Better Way to Run Your PPC Campaigns
Cost-per-value are statistics that calculate the value of completing a specific action for a specific return. If it was used in the earlier example, then the $10 Adspend for the keyword is not beneficial to the company as it is only producing a $5 sale each time but incurring double this in advertising spend.
One difficulty that is associated with optimizing your PPC campaign on the value of each individual keyword is that the price of your items and keywords both continually move up and down. This requires a constant, vigilant eye on not only your PPC statistics, but also on the sale price of items you offer and the value that each customers brings when a transaction is completed successfully.
Another other problem is that you can't calculate the value of a customer to your business in certain unique cases without an integrated tracking system. The value of a customer and a word should be decided by how much profit each keyword brings in, which means that customers who buys more than one product often leaves anomalies when it comes time to calculate PPC efficiency.
The Solution That Makes PPC 'Rinse and Repeat'
The solution to a more efficient PPC campaign lies in automating your PPC advertising altogether. You can't achieve the best return on your PPC investment if you rely on people simply because they will sometimes make mistakes and use less efficient pay-per-click strategies. Only by using computer software that firstly collects all your PPC data, can algorithmically sort it in the most appropriate way for your business model and finally can tweaks your PPC campaign on a per-value basis for each of your keywords will you be able to truly maximize your profits on a daily basis.
The best part of automating your pay-per-click campaign lies in the fact that it makes everything easier and more efficient. The only thing left for you to do is 'rinse and repeat'.
About the Author
James Patterson is Simple iD's lead online marketing consultant. Simple iD is a full service online marketing agency that offers clients everything that they need to succeed online, from web design and development to a complete tailor-made online marketing package. Come and check us out on Facebook.
The first time I went to an auto auction, I found what appeared to be the exact car I wanted. I was determined to win! The car looked like it was in perfect condition so I started bidding; ultimately winning! Full of excitement, I walked over to get my receipt and an elderly gentleman stopped me and asked if it was my first time at the auction. I knew he was just about to burst my bubble. “You didn’t bother looking at the other side of the car,” he said. I grimaced as I walked around and saw a huge dent in the other side of the car. My new car was going to cost several hundred dollars more in bodywork and it was too late for me to change my mind.
I had fallen victim to the “winner’s curse.” I didn’t have all of the information going into the bid and I had underestimated the total cost of acquiring this car. I paid more in the auction than the car was actually worth, after adding in the cost of bodywork. I could have easily avoided the “winner’s curse” by walking around the car and determining the actual value of the car before I bid on it. The more information you have, the more easily you can bid both accurately and aggressively.
Every day I talk to eCommerce companies who have unwittingly fallen victim to the “winner’s curse” in their PPC campaigns. Many online businesses are happy with their PPC campaigns performance because they hit a target CPA. If they take the time to calculate the revenue generated through PPC, they will find that they, too, are victims of the “winner’s curse.”
AdWords is a fully automated auction and millions of bids are won every day. Each time a user does a search on Google, AdWords holds a split-second auction. Your bid, Quality Score, and AdRank determine your likelihood of a click from a customer. But if you don’t know the true value of that keyword, you can easily fall victim to the “winner’s curse” by focusing on a metric like CPA, instead of bidding on revenue. Overpaying for some clicks and underpaying for others takes away from your ability to gain market share and manage costs.
The more information you have, the more accurately you can predetermine the value you expect out of the next click you buy on AdWords. Know the value of the keyword before you bid by tracking the right data (i.e. track the revenue from each keyword to determine how much you are willing to pay for a click from a search on that keyword).
At Finch we help you avoid the “winner’s curse” on a large scale, utilizing our technology and expert services. By leveraging exclusive campaign management strategies, creative services, and predictive bidding, we will help you bid aggressively and accurately every time. But don’t take my word for it, get your free AdWords audit today and we will show you exactly what we can do for you.
Last week Finch hosted a webinar on how to kill your competition using Google AdWords and we just published the recording. Head on over and check it out.
Bjorn Espenes led the webinar, sharing his insights on the most effective way for eCommerce companies to leverage AdWords for success. Using Google AdWords to generate revenue and edge out competition is certainly nothing new, but Bjorn presents a new way to approach AdWords that addresses the unique demands of eCommerce companies when using PPC.
Bjorn started the webinar with a very poignant question: What is your profit margin through Adwords? He related a conversation he had with the eCommerce manager at a large online retailer. This manager had been running campaigns that were viewed as successful and they were discussing the success rates of various channels. But when Bjorn asked him what his profit margin was on the traffic generated by AdWords, he had no answer. After several weeks of analysis and implementing the right tracking, they found that they were losing money on every AdWords customer.
All of the advice in this webinar centers on how you can avoid being in that situation. Instead of losing money through AdWords, you can generate real revenue and profit. Here's a quick summary of the presentation, but check out the recording for more details:
1. Define the right KPI to measure success - The first step in killing your competition on AdWords is to focus on the right KPI for success. For eCommerce companies this success metric is profit or revenue, not acquisitions. Once you focus on profit or revenue as your success metric it focuses all of your PPC activities on maximizing revenue or profit.
2. Bid on the outcome (profit), not the click - Armed with the right success metric from step 1, profit should now become what you bid on. When you are focused on maximizing profit or revenue generated by a click, you will bid aggressively on the keywords that perform the best and reduce bids on the keywords that generate less revenue.
3. Segment the clicks - There is a range of clicks that you can buy from Google: display, search, and now remarketing. This new feature gives you the insight you need to bid more accurately for your customers. Prior to remarketing, every customer looked the same, just another new customer. But with remarketing, now you know when a search is performed, you know whether that user has been to your site, had something in their cart or made a purchase. This gives you the insight you need to bid more aggressively and accurately for their repeat business.
4. Get complete keyword coverage - “Must be present to win” is a simple phrase, but certainly no more true than for businesses on AdWords. If your entire product catalog is not represented correctly and thoroughly on AdWords, it doesn’t matter what ads you have or how they are structured, your potential customers will never see them. Correct this problem by getting a thorough representation of your inventory into AdWords and continually growing your keyword inventory with the terms that your customers are actually using to search and find you.
5. Build ads that attract clicks - It’s all about the clicks! Optimizing your ads for the maximum clicks not only helps you get more customers, but it can also help raise your quality score and AdRank. Google has been busy releasing loads of new features that can give you more real estate on the users screen. Site links and parameters like price and quantity have proven to improve click through rates dramatically.
Beyond just providing guidance, Finch can help you execute on each of these strategies. But don’t take our word for it, go sign up for a free audit and we will show you exactly what we can do to improve your AdWords performance.
Every day at Finch we speak with many ecommerce business owners, executives and online marketing professionals about their AdWords programs. These discussions are driven by pain points and opportunities they feel exist in their programs which often leads the dialog here:
The problem with heading down this path is it’s like rearranging the deck chairs on the Titanic; it makes you feel good, but the inevitable is just ahead—losing sales to the competition; also known as failure!
It is mindboggling to me that companies continue to pay internal staff and agencies to move the deck chairs instead of investing in the radar and guidance systems to steer them through these dangerous waters. It is time to stop rearranging the chairs and focus on something that will change the outcome in a big way.
What if you could guide your AdWords efforts based on how much profit you make? What if you could tell Google, “I will pay $.50 for every $1 in profit I make”? It’s possible today and if you drive transactions with AdWords you should be doing it.
To be successful, you must change the way you think about and approach AdWords: you are not buying clicks, you are buying the outcome of the clicks. You need to bid on the resulting profits!
A guide is essential to navigating the waters toward maximum profitability. The amount you are willing to bid on AdWords for $1 in profit is your guide. Armed with this guide, every decision regarding campaign structures, branded terms, search funnels, keyword expansion, and any other feature will now be measured and prioritized against this guide.
Clearly defining success creates the guide, the guide enables prioritization of efforts, which naturally results in better performance.
Learn more about steering clear of ship-sinking icebergs by joining our webinar: 5 Surefire Ways to Kill Your Competition with Google AdWords.
Deck Chairs photo by Andrew Malone
Join us for a webinar as we discuss the 5 surefire ways to kill your competition using Google AdWords. Presented by Bjorn Espenes, a long time ecommerce veteran, we will walk through the right strategies to optimize profit from your AdWords spend.
AdWords is not new. Millions of businesses are using it to connect with their customers every day. But how does your organization use AdWords? Is it for brand awareness, profit, revenue, marketshare, leads or something entirely different?
After working with hundreds of companies, we have been a part of countless conversations about the role of AdWords within an organization. Every department has different goals and finding alignment can be a challenge. The CEO wants to be #1, the CFO is concerned about the budget and returns, the CMO seeks branding and attention on the latest campaign, while the COO is focused on inventory and keeping everything up to date.
But there’s one metric that is indisputable. One metric every department can get behind: profit. When you shift the conversation about AdWords away from conversions, leads and clicks to profit suddenly you get more budget, more support and Adwords becomes a sales commission instead of simply an advertising cost.
In this webinar we will cover the 5 strategies that will help you get the most profit out of AdWords, including:
Register for the webinar today and join us on October 16th (US) or October 17th (EU).
Last week’s Google AdWords blog article ‘Measure & Optimize for Offline Sales with AdWords Conversion Import’ highlights the crux of the biggest challenge for online advertising - the bulk of the industry is still using CPA as their measurement of success and as their guideline for managing advertising budgets.
Finch divides the Google AdWords market into two segments:
Those companies in segment #1 enjoy treating Google AdWords payments as commission on sales, while those in segment #2 treat it like an advertising expense. The difference? Everything! In online advertising the person with the best information wins. The more you know the more aggressive you can be when competing for the best clicks because you know which clicks are the best for your financial gain.
Historically segment #1 is made up of companies whose conversion path results in an online transaction: eCommerce sites, travel sites, online ticketing sites, and subscription sites. Segment #2 typically consists of lead generation-type businesses where a web form is filled out or a phone call is generated and follow up contact from a sales rep is required to convert the lead into a paid transaction.
Connecting ad spend to revenue is how all segment #1 companies should be operating in order to operate profitably. However, until now the complete expense-to-revenue workflow was missing for segment #2. This is what last week’s Google AdWords announcement is all about. It is important for an advertiser for two reasons:
One can argue that you were always able to measure the return on ad spend (ROAS) if you had tracking setup correctly, which is in some cases true. However, measuring is only moderately interesting unless you can use it to improve and leverage future performance.
At Finch we have been tracking and measuring success through cost-per-value or cost-per-profit optimization models for the past 3 years using a high-performance bidding engine to replicate and leverage success automatically. The key is to tie the session data of the click (keyword, ad group, etc...) to the amount of the transaction (revenue or profit).
To do this for a #2 segment client, the click session data needs to be tied to the financial outcome without the luxury of a shopping cart. Instead of a shopping cart, a lead is created for the sales team through a web form. In order for this lead to be tracked through the full sales cycle, we need to tie the session data (keyword, ad group, etc) to the record that is created in the CRM system so that when a deal closes it can be tied back to the keyword and ad group that initiated the lead. That way you can track at a keyword level if a click is performing above or below your financial requirements… and make bid adjustments accordingly. Here is a video on why this is game changing for most advertisers:
Being able to close the cost/profit loop for #2 segment advertisers is the holy grail for financial gains and provides huge competitive advantages for advertisers. Combined with Google’s recent remarketing for search announcement, you can gain huge insights to where the industry is going: Closed loop bidding for clicks inside your sales funnel!
The fun is about to begin, but you may want to start thinking about how you are going take advantage of this before you get left behind. The AdWords game is about to change in a way much bigger than the market is prepared for. Finch is ready because we have been working on this for the past 4 years! Sign up for a free audit of your Adwords today and we’ll show you how!
What if you knew that for every dollar you spend on AdWords you could earn five dollars back? Being successful at PPC for eCommerce requires a change in thinking. It requires bidding for expected revenue, versus bidding for clicks or conversions. Bidding for revenue sounds complex, but it’s pretty simple if we draw it out.
First, here’s how you might assume selling with AdWords works...
Therefore, you may mistakenly believe that there is a firm relationship between the keyword you bid on and the product that is sold. Additionally, you may mistakenly believe that the keyword that sells the most products is the most valuable keyword and set your bid according to the number of conversions, not the value of the conversions.
The source of all of this confusion is how AdWords reporting works. The only information you get is keywords, costs, and conversions. You get value (revenue) per keyword in Adwords and the products that sold are never reported! Keywords are NOT products!
Here’s how it really works:
You cannot control what people purchase in AdWords based on keywords, ads, or campaign structure. You can certainly influence it, but you can’t control it. Why? Because Google AdWords is built around keywords, not products. There is no measurable link between keywords and products in AdWords.
In reality, someone searches for a keyword, clicks your ad, comes to your site, and then they can browse your site. They may end up buying the product on the product landing page, or something else may catch their eye, or they may read reviews and buy something else. But when they purchase something, you now have a strong, measurable link between the keyword and the amount of revenue that the keyword generated.
Therefore, you must bid on a keyword’s ability to generate revenue and NOT on which products you expect to sell.
Here’s a quick example to demonstrate my point: Let’s say you are an electronics seller and have the keyword for “Samsung Smartphone.” Out of 100 conversions you may actually sell 40 Galaxy s3’s, 30 Galaxy s4’s, 20 phone covers, and 10 iphones. So, you were able to influence what someone bought, but not control it. You are then able to measure that “Samsung Smartphone” resulted in $10,000 of revenue. And if you can measure it, then you can improve it!
So, armed with this new knowledge you are able to bid on keywords with confidence, knowing how much revenue you can expect them to generate. If you are willing to spend 20% Cost per Value (CPV), then you now know that for every dollar spent you’ll earn five dollars back. Cha-ching!
Why else should you care? Because your competition is still bidding for conversions, not revenue expectations. You’re willing to bid more for the keywords you know will make you more money. Meanwhile, you’ll pass on the keywords that don’t earn you money. Double Cha-Ching!
Google AdWords recently released Remarketing Lists for Search Ads, and here is what it means for you: From now on you will classify the clicks you buy based on these criteria:
Remarketing for Search will change everything about how you manage Search campaigns! When I learned about Google’s Remarketing for Search a few months ago, my first thought was, “This is the last nail in the search funnel coffin.”
I have written about what I called the lies of the search funnel in the past, claiming it is something invented by consultants and those not accountable for producing results from the ad budget. Remarketing for Search is the marketer’s dream and something we have been waiting for. Now the search funnel can be quantified, and it has become repeatable.
You are used to thinking about the clicks you are buying from Google as isolated keywords. What remarketing for Search allows you to do is to buy clicks based on the buyer behavior. This may be the biggest advancement for marketers yet. The Google tagging system allows you to create profiles of the people that come to your site, and the graphic below is an example for a typical eCommerce company. There are 7 stages from start to being a repeat customer, albeit some of the steps can be by-passed (which is irrelevant for this discussion).
Why is this a big deal? Because you can quantify the search funnel. Each profile in the above graphic most likely has a different conversion rate and revenue probability. This enables you to bid differently for clicks on users in each phase of the buying funnel.
You can bid by stage in the sales funnel with perfect data vs. bidding on assisted clicks where you have almost no useful data to base click purchase decisions on. All you need to do is create the different profiles, collect the data, and buy clicks based on the conversion rates and revenues/profit for each stage, and then you have given yourself a way to bid more aggressively on the clicks that yield more financial gain for your business.
How ever you manage your AdWords search campaigns, unless you act on this new feature aggressively, your competitors will leave you in the dust. Google has released more useful features in AdWords the past year+ than in the past decade combined. This complexity can be your friend or your enemy depending on how you manage it.
To learn more about how Finch enables our clients to take full advantage of Remarketing for Search and all other Google AdWords features, please visit us at www.finch.com. Start with a free analysis showing how we can improve your AdWords performance and save you time.