Sometimes the ideal AdWords strategies are counterintuitive. If you’re in a competitive market, you need to use every optimization tactic you can. The following tips will give you an edge in profitability.
Look at conversions per impression instead of click-through or conversion rate
The big beef most people have with Google’s “Optimize Ad Rotation” option is that it optimizes for CTR instead of for conversions. Google gets paid from clicks, so they are naturally more interested in maximizing clicks. Since conversions are more important for advertisers than clicks, many professionals set ads to rotate evenly so they can manually pause under-performing ads based on conversion rate.
There are three possible dangers with choosing winning ads based on conversion rate:
1. If you don’t make it a regular habit to actually pause the losing ads, you’re better off letting Google optimize for you. It is better to optimize based on a suboptimal factor than not optimize at all. I’ve seen too many accounts where an ad losing on both CTR and conversion rate was rotating evenly for months all because the advertiser wanted more control.
2. Even if you are diligently optimizing ads for conversion rate, you may be missing out on profit. For example, which of these two ads is better:
1.5% CTR and 5% Conv. Rate
3% CTR and 3% Conv. Rate
If you are “smart” and picked winning ads based on conversion rate instead of CTR, you would have missed out on additional conversions. Even with the lower conversion rate, the second ad is bringing in more conversions due to the higher CTR.
3. Google makes money based on effective cost per thousand impressions (eCPM). The more clicks you get per thousand impressions, the less you’ll pay per click. That being the case, choosing an ad with a lower CTR and higher conversion rate will increase your bid prices and could lower your profitability. Once you pause the ad with the higher CTR, your bid prices (and CPA) will start to increase.
The ultimate advice: Look at conversions per impression (# Conv / # Imp) to pick winning ads. This metric factors in CTR and conversion rate and will tell you which ad will give you the most conversions over time. If the losing ad has a much higher CTR and is only slightly losing based on conversions per impression, make it the winner since the clicks will be cheaper. All things being equal, doubling your CTR will halve your cost per click.
Watch your conversion rate as you raise bids
What happens when you raise bids? Your ad moves up higher on the page, right? Yes, but there are often unintended consequences if you are bidding on broad match terms. By raising your bids, you will start to show higher for an increasing number (and decreasing relevance) of broad match keywords. Essentially, the more you bid, the worse your traffic can become if you’re not careful.
As you raise bids, keep an eye on your search query report and/or automatic placements. Add irrelevant non-converting keywords and sites as negatives to clean up your traffic. If the profitability of your broad match keywords is becoming a problem, you may also consider bidding separately for broad matches.
Bid by match type within ad groups
By default, Google allows you to set a bid on either the entire ad group or on individual keywords. You should bid at the keyword level when individual keywords have enough traffic for you to make reasonable bid decisions. Most keywords in an ad group, however, likely won’t have enough clicks to make a statistically sound bid decision in a reasonable time frame.
While Google only provides tools to manage at the keyword or ad group level, there is an “in-between” level where it often makes sense to manage bids: match type. The idea is to group keywords within your ad groups by match type and manage bids based on how that match type is performing. Typically broad match keywords do the worst, phrase match performs adequately, and exact match delivers exceptional performance.
I am not suggesting that you create separate ad groups for each match type. Instead I am suggesting that you recognize match type subgroups of low-volume keywords within your ad groups that perform similarly. Then change the keyword level bids together for keywords in each subgroup.
If you manage at the ad group level, you are managing the average of the match types. By bidding according to match type performance within an ad group, you will often gain a profitability boost. It takes some extra work to find keywords stats by match type (think pivot tables in Excel), but it is worth the effort when competition is high and profitability is a moving target.
Again, keep in mind that if a keyword has enough click data to manage individually, you’ll do just that.
Don’t launch campaigns until they’re fully optimized
Both your quality score and competitor bids are factored into the price of your AdWords clicks. Once your keywords and ads have a good history, CTR is the biggest factor in quality score. Before you have any clicks, however, your quality score will be hugely impacted by how Google predicts you will perform. First impressions can be hard to overcome. Here’s a checklist for getting good initial quality scores.
Have any other non-obvious AdWords tips? Let’s hear ‘em in the comments below.
Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.