The Finch Blog

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Published on Tuesday, 14 May 2013 19:59

Written by Bjorn Espenes

There is a new era of AdWords developing in front of us. The increasing speed of enhancements from Google combined with more available data are creating opportunities to separate you from the competition. Most advertisers on Google have limited technology access, limited quantitative tools, some access to best (manual) practices, and depend on people for their success. People are critical; however with technology, tools and best practices create miracles in the AdWords arena.

There has been more innovation and change in Google AdWords over the past year+ than over the previous 10 years combined. I am talking about everything from Ad Extensions, Ad Params, Remarketing, to Enhanced campaign features, etc. These are all new features that, depending on how well implemented, can have tremendous positive impact on the performance of an account. Google has done a great job educating the market about the benefits, and the adoption of them has been great, albeit leveraging best practices and being more metrics-focused when evaluating success could capture much more benefit.

In numerous ways the changes have given many sophisticated advertisers a big advantage. I.e. using price and quantity inside your Ads drives click-through-rates up dramatically, but you need technology to be able to do it practically. The same goes for Remarketing; creating profiles that enable you to target repeat visitors is only helpful if you track and capture data that allows you to bid differently (more aggressively) depending on the expected outcome (predictive bidding).

Maybe the biggest opportunity to compete more effectively is the one most often overlooked. The measurement for success over the past 7-8 years for most companies using Google AdWords to source customers is CPA (cost per acquisition). It is the cost per acquisition that matters the most, simply because if this goes out of control, it makes the advertiser lose money. The number of acquisitions (conversions) of course matters as well, but only if they are “profitable.”

For an eCommerce site, most conversions on the site have different values. Furthermore, most keywords (that trigger the Ads) drive a different value for each transaction they trigger. However, there are strong trends in the cost/revenue (or profit) history for each keyword; some tend to drive higher revenue transactions while others tend to drive lower revenue transactions. If you knew this on a keyword-by-keyword basis, would you bid differently for those clicks?

Here is the crazy thing: This information already exists (or can easily be captured) in your AdWords account, yet hardly anyone uses the information to bid more accurately for the clicks depending on how much they are worth. If you knew that the probability of the resulting revenues from buying click A over click B was 10x greater, would you bid more for click A? Are you? Why not?

Each enhancement from Google over the past year+ represents great opportunities to differentiate you from the competition. Bidding based on revenue (or profit) outcome can supercharge each of those features and your entire account. That is the BIG picture.

 

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Published on Thursday, 11 April 2013 17:08

Written by Jason Lowry

I think the primary difference between Finch and most other tools is just that; they are tools that somebody has to learn. In the hands of someone skillful, they can be very powerful. However, we find that for SMB businesses - especially eCommerce - they don't have the time nor want to make the effort on learning a new tool and will never have the time to master it. Finch doesn’t require you to master a new tool, and our automated approach will save you time.

As an example, I’m sharing some selected material from the 2012 edition of a very reputable publisher’s PPC Technology Buyer’s Guide. As this material is copyrighted, I’ve recreated the chart below for illustrative purposes and won’t use the company’s actual names.

In the guide, they answer the question “What type of technology are you?” with each company placed on the matrix, as shown below:

You'll see that for Company K training is essential in order to use their tool. For Company M, manual intervention is required. Furthermore, both of them answered that they are moving towards less training and more automation.

Why is there such a push towards more automation? It’s because of the massive amount of data that have to be collected and calculated daily. It’s because automation is less error prone and less emotional than humans. Using a tool that requires training means someone in your organization has to be a master of that tool. What happens when that person is busy, sick, on vacation, or leaves to work for your competitor?

Finch is different in that we're a service that you sign up for, and it "just happens" -- typically launching clients in 1-2 business days.

Adding Finch to the same matrix, you see that we are already in the bottom-left square where minimal training is required, and we're already fully automated. In fact, I recently wrote a blog post talking about how many PPC tools have hundreds of buttons, knobs, dials and options in order to maximize your results. Finch has two options: The cost goal (the amount you're willing to spend to make a sale) and budget (which is set in Google). Before launching, you also have a choice of CPA, CPV (optimize for revenue), and now CPP (optimize for Profit or another KPI). It's perfect for in-house teams who have been successfully managing their account but want to improve without starting over by learning a new tool.

Finch is far more automated, from on-ramping to account management, than our competition, therefore we provide our software as a managed service where we are accountable for the results! Get an idea of Finch’s speed and power by signing up for your own free AdWords audit from Finch.

 

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Published on Wednesday, 03 April 2013 18:43

Written by Jason Lowry

When people first learn about Finch, they commonly ask, “Is Finch an Agency or a Tool?” Simply put, we’re neither! We're a managed solution.

It's easier to think about Finch as a SaaS plugin to AdWords that always knows how much to bid for each keyword. You sign up for our service, we download what we need from the Google AdWords API, crunch the numbers on our side, and then do optimization through the API. We’re very data-driven and automated. That does not mean that there is no human oversight! Our team consists only of very senior people who are uniquely qualified to make decisions about adjustments to your account and to ensure everything is working; from tracking and data collections, to trending and finding new opportunities.

We do a lot to create new campaigns using feeds, remarketing, etc., yet what makes us different from an agency is that we do not work with companies new to AdWords (you can't optimize when there isn't data). We believe that you are uniquely suited to write the ad copy for your business. To help you with that Creative work, we provide structure in our campaigns and ideas via article, blogs, and video tutorials. We want you to make the most of the two lines of 35 characters to help your potential customers understand the benefits, differentiators, and calls-to-actions that are unique to your business. We also provide some services via ex-Google account managers to help fully optimize your account and to keep up to date with Google's latest features and policies. Additionally, the Finch Client Performance Program has the industry’s most comprehensive periodic reviews for fine-tuning settings, data quality, performance to keep inline with the competition, and for introducing new technology and features, and more.

We’re different from a tool, because there is nothing new to learn, no user manual, and no training required. There are no buttons, knobs, dials - and very few settings. You set the targets and strategy, we run the account, and our software optimizes continuously. In the end, that makes us accountable for the results, which gives you control in our transparent performance business model.

We've found that our approach works best with in-house teams who are already managing AdWords successfully but are ready to take it to the next level. By offloading the tedious, quantitative portion to Finch, it allows them to focus more on strategy; and through our structure, it is easier to manage the creative parts (Ad copy and Landing Pages).

We start everyone with a Free Audit of their account that shows them the changes we would make up front - if they like what they see, then they sign up for the service. Unlike a tool or agency, we typically launch your account within 1-2 business days, and you typically see very positive results within 2-4 weeks.

 

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Published on Tuesday, 26 March 2013 13:35

Written by Jon Oler

So, you’re responsible for the marketing budget for an e-commerce site. You and all of your competitors are almost certainly allocating a portion of that budget to Google AdWords. Unless you are only selling a very small number of things on your site, you are probably bidding on hundreds, if not thousands, of keywords in an attempt to have your ads displayed on the first page of a google search. How do you decide just what portion of your precious marketing budget to spend on each of these keywords? In this article, we will review several techniques that you might use in increasing order of sophistication.

Optimize for Visits: “The Old Days”

In “the old days,” many sites focused on increasing internet traffic to their site. For some sites, this is still a perfectly valid measure of success. However, for e-commerce sites, while increased traffic usually translates into more sales, it is not always optimal. For example, suppose you are running a speciality site selling running shoes and apparel. If you spend your AdWords budget on keywords like “tennis shoes” or “walking shoes,” you may increase visits to your site, but the conversion rate on those keywords may be very low. Your AdWords budget would probably be better spent by focusing on more relevant keywords.

Optimize for Orders: Cost Per Acquisition (CPA)

You’ve decided that you no longer want to spend your AdWords budget based purely on the amount of traffic it drives. Instead, you’d like to focus your AdWords spending on keywords that actually result in orders placed on your website. You decide that you’re willing to pay Google 5 dollars for every order placed. In other words, your cost per acquisition, or CPA, is 5 dollars. For better or worse, AdWords customers pay Google for clicks, not orders placed. That means that you will need to somehow determine what you should bid for each click. You will need to do this for each of the keywords you are managing, and you will have to continue to do this periodically as the optimal bid will change over time. If that seems like a lot of work, then you’re right. Finch can manage all of this for you automatically.

CPA might be the perfect way to manage an AdWords budget for some kinds of sites, but you have an e-commerce site with many products. You previously determined that you’d be willing to pay Google $5 for each order placed on your site. That might be reasonable for an order for a pair of $100 running shoes. However, would you still be willing to pay $5 for an order for a pair of $5 running socks? Probably not. The fundamental problem is that CPA assigns the same value to each order. We can do better.

Optimize for Revenue: Cost Per Value (CPV)

You’ve decided that CPA is better than just optimizing for visits, but since the orders placed on your site have a wide range of values, you’d like to increase your AdWords bids for keywords resulting in orders that are more valuable to you, and decrease your bids on less valuable keywords. One good way to do this is to decide how much you are willing to spend on AdWords for each dollar spent on your site. For example, you may decide that you are willing to pay Google 5 cents for every dollar spent on your site. In other words, your “cost per value,” or CPV, is 5 cents of AdWords spend for each dollar of revenue earned. Using CPV, for an order of a $100 pair of running shoes, you would be willing to pay Google $5 for clicks on your ads. Likewise, for a $5 pair of socks, CPV would only have you pay $0.25. This is a huge improvement over the CPA model which had you spending $5 per order, regardless of the value of the order. Calculating the correct AdWords bids to achieve the desired CPV for each of the hundreds or thousands of keywords used by a typical e-commerce site is very time consuming. It can’t be done just once -- bids must change in response to changes in the AdWords marketplace, and new bids must be computed as keywords are added. Finch provides a service that does just this.

Optimize for Profit: Cost Per Profit (CPP)

CPV is a very effective way to optimize your AdWords spending. However, CPV optimizes AdWords bids in an attempt to maximize revenue. It doesn’t take an MBA to know that businesses generally want to maximize profits, not revenue. For an e-commerce site in which the percentage of profit generated for the sale of any item is fairly constant, then CPV will work well for maximizing profits. However, if the percentage of profit generated by different products varies widely, then CPV may not be optimal.

Suppose your running shoe e-commerce site sells shoes of model A for $100 and makes $30 profit for each sale. You also sell shoes of model B for $100 and make $10 profit for each sale. The CPV model considers the sales of model A and model B to be equivalent since they both generate $100 in revenue. However, you’d really probably be willing pay Google more for each sale of model A than you would for model B.

Finch is excited to announce the early access release of a new feature that allows our customers to optimize their AdWords bids for profit. We’re calling optimizing this way “cost-per-profit” or “CPP.” It works much the same way as CPV does. Instead of setting a CPV target, you set a CPP target. For example, for your running shoe site, you might decide that you’re willing to spend 30 cents for every dollar of profit your site generates. Once you set this target, the Finch engine does the hard work of determining what to bid on each of your keywords in order to achieve this CPP target and updates your bids on a daily basis in response to the constantly changing AdWords marketplace.

Returning to our running shoe e-commerce site example, when using CPV with a target of 5 cents of Adwords spend for every dollar of revenue generated, this means that you are willing to spend up to $5 for each sale of model A and model B shoes since they each sell for $100 each. However, if you switch to CPP with a target of 30 cents of AdWords spend for each dollar of profit, then you’re telling the Finch engine that you’re willing to spend $9 for each sale of model A, but only $3 for each sale of model B. With CPP, the Finch engine is able to optimize profits. It will be more aggressive when setting bids for keywords that lead to sales of model A and less aggressive when setting bids for keywords that lead to sales of model B; even choosing not to bid on keywords that it sees are simply not profitable (but might have been viewed by the Finch engine as profitable when using CPV).

CPV is still a very good choice for many e-commerce sites. One of the big things that CPV has going for it is that it is very simple to implement with Finch. All you have to do is:

1. Implement AdWords conversion tracking on your site.
2. Grant Finch access to your AdWords account.
3. Set a CPV target for your site.

That’s really all there is to it. You can literally be up in running with a few minutes of effort on your part. CPP, on the other hand, takes a little more work. For CPP, you must:

1. Install the Google Analytics tracking code across your entire site.
2. Implement Google Analytics conversion tracking.
3. Grant Finch access to your AdWords and Google Analytics accounts.
4. Set a CPP target for your site.
5. Send a daily xml feed containing a set of order IDs for the orders processed that day and the profit value that Finch should assign to each of these orders.

Many sites have already implemented Google Analytics these days, so there may not be any extra work there. However, there will be a bit of development work required to generate and send the daily CPP xml feed to Finch. Because of this, many sites may want to start with Finch using the CPV model. This nearly always results in very significant increases in revenue and/or decreases in AdWords spend. Once this is up and running, and you have a site you feel could benefit from CPP optimization, then you may consider implementing the CPP xml feed and switching to CPP.

Many people wonder why the xml feed is necessary for CPP and not for CPV. The answer is that AdWords and Google Analytics already allow Google to track the revenue for each order, and that’s why starting with CPV is so easy with Finch. Couldn’t a site just insert the profit of an order in the AdWords or Google Analytics tracking code instead of revenue so that CPV just becomes CPP? That would, in fact, work. However, there are a number of problems with this:

1. If you expect to use AdWords reporting or Google Analytics reports for tracking revenue, those reports will now be reporting profit instead of revenue which might not be what you want.
2. If you decide you would like to switch from CPP to CPV, then that is not immediately possible since the data available in AdWords is profit, not revenue.
3. The value of the order tracked by AdWords and Google Analytics is included in the html of the page where the conversion tracking javascript code is included. This is fine when the value is revenue since revenue is simply what customers are paying for an order, and they are obviously already very aware of this value. However, if revenue is replaced by profit, then you’re bound to eventually get a customer who figures this out, sees how much profit you’re making for each order you’re placing, and blogs about his finding for the whole world to see. Most e-commerce sites prefer not to let their customers know how much profit they are generating from them. By sending the profit data in a separate xml feed, profit values remain hidden from your customers.
4. Many e-commerce sites don’t track profit within their e-commerce systems. Profit values may need to come from a separate accounting system and may not be readily available when an order is placed online. By sending the profit feed separately from when an order is placed through the e-commerce system, the e-commerce system doesn’t need to be modified or have access to a backend accounting system.

Finch is very excited to be launching this new CPP option. Our Early Access Program for this feature is now open for existing Finch customers. We intend to limit the number of Early Access Program participants before a public release later this year. If you are currently using CPV and feel like your site could benefit from CPP, please contact your Finch representative for more details on how to register for the Early Access Program.