• The more specific keyword had a higher bid, hence we ended up paying more for the traffic than it was worth to us.
• The landing page was less targeted, so we were taking bad traffic and landing it on the wrong page, making it even less valuable traffic.
• Because of the poor quality traffic pouring in on what had been a high quality term, we bid that term down, meaning we also get less of the high quality traffic that the term normally draws.

Our reps at Google at the time told us that this couldn’t happen, that the exact matched keyword would always get precedence over the broad mis-match so what we were seeing… er… “wasn’t happening.”

We knew we were right about the phenomena and given their protestations that exact matches always won we suspected it was a mistake on Google’s part. We asked them if there was logic that makes exceptions to the exact match precedence if the ad is paused. They said “yes.” We then suggested that back in the day when there was a minimum bid, that an ad bid below that minimum might also be considered paused. They concurred. Then we suggested that when the minimum bid was replaced by the first page minimum bid perhaps the code wasn’t updated and any ad that didn’t meet that minimum would be treated as “paused.” They said at the time “That shouldn’t be the case; that isn’t what we intended; if it’s a mistake we’ll fix it.”

Googlers in good authority now tell me that that bug doesn’t exist—there’s no reference to the first page minimum in the code that drives the rankings. Instead the explanation is simply that the more specific keyword must have a higher Quality Score than the exact matched more general keyword… or that its combination of bid and Quality Score are higher than the exact matched term. We’re told that this shouldn’t really happen if the Quality Score of the generic ad is good, but our data suggests otherwise. Just a cursory look at our data showed plenty of instances where an exact match ad with a Quality Score of 10 was passed over for a broad matched ad with a higher bid.

Managing this self-competition with the current tool set is not just cumbersome, it’s impossible to do well. Adding every keyword as an exact matched negative for every other keyword in the account is unworkable. Bombing in all the general keywords as exact match negatives for all the more specific keywords is doable but time intensive and therefore costly.

Some advertisers simply give up on broad match to prevent the shenanigans. We’d say that’s throwing out the baby with the bathwater, but understand the frustration. We do what we can, but anyone claiming to have this problem solved is either delusional or deceptive.

As I noted a couple of years back, one way Google could effectively self-destruct would be to go too far down the path of allowing higher bid/lower CTR keywords to take precedence over the right keywords. As described above, not only does spraying the traffic around unpredictably make all bidding systems less efficient and hence spend less money to reach the same efficiency target, the bigger danger is in alienating the shoppers who use the ads.

Advertisers bid ads down for good reason, like when inventory is thin, and if other ads take their place and continue drawing in traffic that won’t convert it is a disservice to the user as well as the advertiser.

Sometimes I rant around the office saying things like: “Advertisers should sue! Here we’ve given Google instructions as to how much we’re willing to pay for people who type in “Foo Bar,” but when someone types in “Foo Bar” Google decides to serve my ad for “Left-handed steel foo bar” which has a much higher bid! That should be illegal!!!”

Important note: I should be ignored when I rant on like this—other times, too, but particularly when I rant. Anyone looking at the AdWords terms of use for ten seconds would realize that Google can serve whatever ad it wants so there’s no point in calling a lawyer.

Google’s engineers genuinely believe they can algorithmically pick better ads to serve than the advertisers can. This may be true for badly managed accounts, but is not true for well-managed campaigns. If this notion that sometimes humans are smarter than the machines is offensive to engineers, perhaps it could be framed in the language of “crowd sourcing.”

If the engineering team is willing to acknowledge that some folks might actually choose ads, landing pages and bids rationally, there may be a profit maximization angle as well. Google is not “evil;” it is a publicly traded company looking to grow its top and bottom line just like us. My argument here isn’t that they can’t do this legally, nor is it that they shouldn’t do it ethically. The argument is that this isn’t a good business decision on their part.

Bing’s path to victory lies not in stealing Google’s organic traffic, but in taking Google’s shopping traffic. That’s what Cashback is about, and if Google places short term revenue maximization over long-term ad relevance they’re opening the door for Bing to step through.

If average users decide that “Google is great for research, but go to Bing for shopping” Microsoft’s big investment might just pay off.

It was great fun to see these beautiful canines compete to become top dog, but there’s an unfortunate downside to this sort of competition. Evidence suggests that selective breeding of dogs for looks alone can lead to a thinning of their genetic diversity and the emergence of genetically-inherited defects. The purest of the purebreds are often less healthy and don’t age as well as their more genetically diverse cousin, the less attractive, but very lovable, mutt.

As I turned off the TV and got back to writing ad copy for PPC A/B testing, a question popped into my mind. Is it possible that we are over breeding, or in our PPC vernacular, over-optimizing our text ads to the detriment of the overall health of our campaigns?

The answer, surprisingly enough, is yes! A/B testing, taken to its extreme, can actually cause PPC campaign performance to degrade.

Creating best of breed ads through testing

A/B ad testing seems simple enough.

You run two ads in an ad group, let them rotate evenly so ad impressions are split evenly between the two ads. After a while, you evaluate the results and declare a winner based on highest click-through rate (CTR), conversion rate (CVR) or the blended ratio of those two metrics, CTR times CVR. The losing ad is tossed out and the winning ad moves on to the next round of testing.

The next round in the A/B ad testing process looks a lot like the first, except that it involves testing the current champion ad against a new challenger ad, letting those two ads battle it out for the best CTR and CVR, until a winner emerges. This process is repeated, ad infinitum, if you’ll pardon the pun, with the hope that eventually you will end up with the best PPC ad ever written in the history of online advertising. In reality, what usually happens is that you get bored with the test or run out of copywriting ideas, and so you just end the test, set the champion ad as the default, and then move on to optimize other parts of your PPC campaigns.

No one will deny that A/B ad testing is valuable and that it enables a rational, scientific approach to campaign optimization that can yield practical improvements in your PPC campaigns, especially early on in the testing cycle.

A/B Testing is so simple and easy to understand that it’s hard not to like it and use it all the time. It has become somewhat of a sacred cow in that regard. But as with many other PPC campaign optimization tactics, A/B ad split testing can be misapplied. What’s worse, it can actually degrade your campaign performance over time. Why?

Simply put, the over optimization of ads and the resulting potential decline in ad group performance.

To understand how and why A/B testing can cause performance declines, let’s assume you own the Blue Widgets store down on Main Street and a customer walks in the front door. You know nothing about the customer except the fact that they just walked into your store.

Here are the unique selling features and benefits of your store:

• Selection: Blue widgets available in any shade of blue
• Savings: Save 20% on blue widgets this month
• Quality: Eco-friendly blue widgets
• Availability: Blue widgets in stock for fast delivery
• Brand: We carry ACME blue widgets

Of these benefits, you know that saving money is on most people’s minds, and generally appeals to a wide cross-section of people.

So the key question: Will you have a better chance of selling to this person if you help them understand all of your store’s unique selling features and benefits, or tell them about the 20% off sale, repeating yourself five times.?

Subjectively, I think most of us would say that you’d have a better chance of connecting with a customer if you used all five benefits, since you have 5x greater chance of hitting one of your potential customer’s hot buttons.

In a PPC campaign an ad is your sales pitch. It is what brings customers in the door. The challenge for PPC ads, however, is that you can’t fit all of your top benefits into a single ad. Instead, you break the messages up individually, or group a few together, and then start the process of A/B testing (or multivariate testing if you are advanced) to determine the best message.

After a few rounds of testing, you find out that the “Save 20%” is your best ad and so you pause all the other lower-performing ads, and congratulate yourself on optimizing your campaign.

However, this is where A/B ad testing can lead to erroneous conclusions. The tests do not optimize your ad groups; they simply identify your best ad. While A/B testing can do a great job of identifying your best ad, narrowing your ad groups to a single lone winner can be a huge mistake. Your most effective optimized ad group sometimes requires two, three or more ads to perform optimally, not just the champ from your A/B testing.

Here’s why. When people are looking for products and services they make multiple searches. Sometimes they refine their queries, but often times they type the same or nearly identical search query over and over again.

What this means is that someone searching on “blue widgets” five times, will see “save 20%” ad five times. If they search ten times, they’ll see it ten times. The only thing they will know about your blue widgets is that it will save them money.

Just like in our example above of a person walking into your store and getting touched by five great selling benefits, PPC ad groups that offer more than one great ad should outperform ad groups that are limited to a single “best of breed” ad.

When it comes to optimizing ad groups, give me five lovable mutts over one blue ribbon winner anytime.

Next month, I’ll take a look at the math behind A/B testing and demonstrate how an ad group can outperform the best single ad in that ad group that emerges from A/B tests. I’ll also take a look at the challenges of A/B testing at the ad group level, and how to maintain healthy message diversity in your ad campaigns.

It’s always better in a paid search world to rely on math instead of guessing to help you make good decisions about your CPC and conversion rates.

The first step is to determine how people buy from your company and the decisions they make along the way. This knowledge is essential for any business who wishes to optimize not just their paid search campaigns, but their entire business processes. If your sales process is to buy a click to your website and then hope the prospect calls you within three to six months, there’s definitely a better way: add touch points all along the sales process. You will also hear touch points referred to as mini, micro or intermediate conversion events.

These intermediate conversions steps do not generate revenue but help your prospect continue through the sales cycle to make a final purchase. In addition, these steps allow you to track behavioral data so that you can optimize these touch points.

Consider a scenario where the entire conversion process is:

• Advertiser buys clicks to website
• A whitepaper download is offered on the landing page. Customer must enter name and email address to receive the whitepaper.
• An email is sent out inviting registered customers to attend a free webinar. To attend the webinar the customer must add a phone number as well as some additional data about their company.
• After the webinar, a sales person calls every customer who attended and attempts to sell them a product.
• If a sale occurs, then revenue is generated.

While tracking these intermediate steps might seem like more work, the additional data you receive will allow you to optimize not only your PPC account, but also your own business processes.

In this example, if you spent $1000 on PPC to generate 1000 clicks and manage to track the conversion rates from each touch point to the next, here’s how the data might look:

Once you have tracked this entire process, you have a clear picture of how the sales cycle relates to the conversion process, you can identify touch-points to optimize and test. These include:

• Test whitepaper download landing pages
• Test different invitation messages to see if it increases webinar signups
• Test webinar reminder system to increase webinar attendees
• Test webinar benefit messages to increase webinar show rate
• Test phone scripts to determine close rates

In fact, if this was my company I wouldn’t even look at click cost first. There is a much bigger issue to fix. The sales team is contacting individuals who have both downloaded a whitepaper and attended a webinar. These consumers have had multiple touch points with the company. The sales team’s 10% contact rate seems exceptionally low in this case. I would first look to examine the sales contact process and see where it can be optimized. If you could double that contact ratio, then you could double your sales.

You do not need sophisticated systems to build this type of tracking. Even if each system you used is not integrated, by combining the information into a single spreadsheet, you will have the necessary data to being optimizing not just your PPC process, but your entire marketing process.

Sometimes the best optimization occurs outside of your PPC account. Marketing optimization is just as fundamental as PPC optimization. Only be building a picture your entire marketing process can you see where you can improve conversion rates and continue moving searchers through the buying cycle to become customers.

New ad copy discoveries aren’t over yet

In mature accounts, you obviously don’t want to disregard experiments (and possibly many of them!) that contributed to the success of your account. Often, in mature accounts, advertisers have hammered out what works in ad copy in terms of features, benefits, unique selling propositions, product or service differentiators, etc. and often have piles of data to back up claims. It makes no sense to throw the baby out with the bath water but it does make sense to make slight modifications to copy and assess if changes have an impact on overall conversions. A good way is to do this is by adding short words to ad copy. Here are some examples of words you can try folding into in ad copy: “online,” “get,” “try,” “buy,” “fast,” “now,” “today,” etc. Words can be incorporated into the body copy of the ad, the headline of the ad or both the body copy and the headline of the ad. Take a look at the following headline examples:

• Headline #1: MP4 Player Online
• Headline #2: Get MP4 Player Fast
• Headline #3: MP4 Player Today

Here’s an example from a test we ran with the words “fast” and “get” into ad copy (one ad contained the word “fast” and the other ad contained the word “get”). Data is from Jan 1 2010 to Jan 31 2010:

Ad Copy #1 (Fast):

• Conversions = 258
• Cost per conversion = $11.17
• Conversion rate = 7.37%
• CTR = 6.34%
• Ad position = 3.1

Ad Copy #2 (Get):

• Conversions = 133
• Cost per conversion = $12.77
• Conversion rate = 6.62%
• CTR = 5.35%
• Ad position = 3.5

Difference between ad copy 1 and ad copy 2:

• Conversions = 94% increase
• Cost per conversion = 13% increase
• Conversion rate = 11% increase
• CTR = 18% increase
• Ad position = 11% increase

A big part of the difference between the two is explained by an increase in CTR. This led not only to more clicks but to a higher ad position and yet another increase in click volume. The end result was a dramatic improvement in profitable volume.

Why do these short additional words sometimes work? In short, the reason boils down to response psychology. As always, your offer competes with others on the page. Some short words are very powerful.

Try new product ideas

It’s always a good idea to sweep accounts to ensure all keyword phrases have been included in the account. Sounds like a simple tip but can be hard to keep up with especially with clients who have large product lines and/or product lines that are constantly being updated or are constantly changing. In one of our accounts, we discovered (through a regular monthly sweep of the account) that one of our client’s main products was being under-advertised as there were too few terms in the account. We added the terms to the account, and here’s the difference we saw:

• Account before: Conversions = 13,295
• Account after: Conversions = 14,800
• Difference between before and after: Conversions = 11% increase

Conduct landing page tests

Time and time again, you’ll hear people say that specific product pages convert better than generic pages. But this “truism” is worth testing as sometimes we’ve found the exact opposite to be the case. Take a look at the following example for a company that sells electronic parts. In this case, people prefer to conduct a search on the site than to be directed to a specific product page:

General search page:

• Conversions = 412
• Cost per conversion = $9.83
• Conversion rate = 8.05%

Specific product page:

• Conversions = 379
• Cost per conversion = $10.46
• Conversion rate = 7.58%

Difference between general and specific pages:

• Conversions = 9% increase
• Cost per conversion = 6% increase
• Conversion rate = 6% increase

The lesson here: Don’t always go with what others say. Be sure to run your own tests and to gauge appropriately what pages are converting best for you.

Use advanced account techniques

Rather than looking at ad tests by ad group, for example, discover account-wide patterns. More data will allow you to move on trends that you can’t see in specific ad groups. Here are a couple of examples from one of our accounts:

• We noticed there were very few buyers for all products from 12 to 4am so we implemented ad scheduling to run ads only during peak hours.
• We noticed that more women than men were shopping for a given product (this product was typically purchased by men). With this insight, we tweaked advertising and geared it more to female buyers.
• Our assessment of the search query reports on broad terms unearthed some specific product numbers that were converting well. As such, we added more terms to the account to capitalize on these opportunities.

It’s rewarding to work on newer accounts, because you may see relatively rapid improvements from a low base. With mature, successful accounts, you need to push yourself a little more to uncover additional areas for improvement. Good luck!

Well, no.

Volume and efficiency are always at tension and how that tension is balanced is highly revealing.

There are two fundamental approaches to this problem:

• Spend the budget and “maximize the ROI.”
• Hit the efficiency target and maximize the budget within that constraint.

We have always believed that the ROI target should take precedence. Let’s say Acme has a budget of $100,000 and an ROI target of 4 to 1. The first approach: Spend the $100K and maximize the ROI.

Scenario 1: Spending $100K leads to significantly lower than 4 to 1 ROI:

Does it make sense to keep spending when the ROI turns south? The law of diminishing marginal returns tells us that next dollar of additional advertising wisely spent will always return less than the previous dollar. When we hit the point that the next dollar returns less than the target efficiency, or less than break even, why would we keep spending? If the returns are poor it’s like feeding money into a shredder simply because the goal was to “get rid of” some fixed amount of money.

Scenario 2: Spending $100K leads to significantly higher than 4 to 1 ROI:

Does it make sense to stop spending money if the ROI is great? When the delay between investment and return is long or uncertain, budgets are essential. For advertisers taking direct sales the paid search returns happen before the media expense is billed, so the cash flow argument doesn’t carry much weight. And, when the returns are cash rather than leads, there isn’t even uncertainty as to the value of those returns.

It’s like having a commissioned sales force but telling them to go home when they’ve hit some salary cap. If the commission rates make sense, why would anyone apply the brakes?

“Maximizing ROI” implies exactly this kind of budget first mentality.

When client prospects approach us with budgets that are inconsistent with their ROI objectives we tell them that up front. Imagine a company selling all varieties of bungee cords and hoping to spend $250K a month at a 5 to 1 ROI. We’d tell them that given the market opportunity we can only do one or the other, and would recommend pursuing the 5 to 1 ROI as far as the market will allow.

Most other agencies would say: “Those are aggressive goals, but we’re up for the challenge. We’ll spend the budget and see what we can do about the ROI.” Next month, the discussion will center on how they can “maximize the ROI” while still spending like a drunken sailor. That’s good for the agency’s revenue, and good for the engines, but I’m not sure it’s in the advertiser’s best interest.

Maximizing ROI isn’t necessarily even the most profitable approach. By definition ROI is a ratio. A 5 to 1 ratio seems better than a 4 to 1, but looks can be deceiving. Let’s say the advertiser has 40 points of margin on a sale. On $10K in advertising the advertiser generates $50K in sales. $50K in sales yields $20K in margin, less the advertising means $10K in marketing income. Cool.

But if the additional aggressiveness of a 4 to 1 target gets them significantly higher on the page and hence more top line, the extra volume may generate more marketing income. Depending on the bidding landscape, perhaps $20K in advertising well-spent generates $80K. That 4 to 1 ratio, generates $32K in margin and $12K in marking income. A smaller ratio, but more money, and as every banker knows, you don’t put percentages in the bank.

According to the square root rule, profit is maximized when the ratio of margin generated to advertising spend is 2 to 1. In practice we find running that lean cuts the top line too much for dollar maximization. Instead, we’ve found that a ratio of margin to advertising of 1.4 – 1.7 tends to maximize marketing income.

The “spend the budget first” mentality does make sense in some contexts. When the return on investment is uncertain (brand building) or delayed (lead generation), budgeting is wise. Too often, though, budgets are used simply because they are customary.

For this channel, any company with measured, immediate ROI goals should place those goals first and let the ad spend rise and fall with the market opportunities.

Language matters in paid search. The language agencies use in describing themselves can reveal a great deal. “We’ll maximize your ROI” screams: “We think about spending your budget first and hitting your efficiency targets last.”

In spite of all that, Toyota’s quality problems are now the subject of congressional hearings, lawsuits and blogs and everyone demands answers! Did they fix the right problem? How do they know the recall repair will work? What took them so long to figure this all out?

And, what does this have to do with paid search?

When things go wrong in PPC campaigns

All of us who manage PPC campaigns know that things go wrong for from time to time even within our best campaigns. There are times when CTRs inexplicably plummet, ad spend goes through the roof, conversion rates tank or CPA doubles overnight.

When things go wrong with PPC campaigns, our clients demand answers, too.

While not life-threatening, these problems can certainly be career-limiting and in severe cases, cause business failure. As PPC campaign managers we need to get out in front of emerging problems when campaigns go haywire, diagnose and remedy the problem, and then put procedures into place to prevent the same problem from happening again.

Identify problems early

It is always more pleasant to discover critical PPC problems before clients bring them to our attention.

One way to head off emerging problems early is to set up alert notifications in both your PPC and analytics accounts. All of the search engines offer email alerts for critical campaign failures, with Google currently offering the most robust set of notification options in their AdWords and Analytics consoles. In AdWords, you can define custom alerts that notify you whenever any key metric, such as clicks, impressions, CTR, CPA, conversions, conversion rates, or ad spend, hits a minimum or maximum threshold that tells you something is not working right and needs your immediate attention.

With Google, you can define alerts for just about any performance condition you can imagine at any level of your account. Microsoft and Yahoo offer a more limited suite of alert options, but can be used to alert you to a complete failure such as your account going offline.

We don’t go overboard with our alert notifications. We use them sparingly only to signal critical campaign failures, such as daily click or conversion counts dropping to zero. If your inbox gets too cluttered with less critical alerts it’s easy to miss a truly critical one.

Although the alert notifications may have a few hours lag time, in most cases, you will get a jump-start on diagnosing and fixing the problem long before you get a call from an agitated client. For extremely time-critical applications, we recommend Hitslink from Net Applications, because the notifications are closer to real-time.

Diagnose and correct problems quickly

Sometimes we get lucky and the problem turns out to be something easy like a credit card payment problem that has taken the campaign offline. Most problems aren’t as easy to diagnose, however, and the longer it takes, the more heat we get from increasingly nervous managers and clients.

One of our favorite ways to home in on a diagnosis more quickly is to round up everyone involved with the site and the campaigns and ask them this simple question, “Have you made any changes?”

The reason this is so effective is because most campaign crises are self-inflicted and caused by recent changes to the website or the campaigns. It is amazing how a quick five-minute conversation can help pinpoint a cause and allow you to develop a solution immediately. For example, if the web team says, “Yes, but we only made some minor cleanups of page and directory names” that would certainly explain why your conversions have completely dried up. Your PPC ads have been sending visitors to non-existent pages.

Changes made by your PPC team can be tougher to sort out. Even if everyone keeps good notes on what they’ve changed, inadvertent keyboarding errors, such as typos, forgetting to put a minus sign in front of a negative keyword, or misplaced decimal points can tank your campaigns quickly and effectively.

We do our best to document our changes in a simple, plain text document, jotting down date and time, what the changes were and why we made them. Unfortunately, this is a painfully time-consuming and imperfect manual process and often gets shunted aside, especially during very busy weeks (which of course is when we really need the documentation!).

Thankfully, Google offers a change history report that not only details what changes you made, but also charts those changes against campaign performance run-charts, making it so much easier to see the impact of your changes:

Interestingly, only Google and Ask currently offer change history reports, which we believe should be standard fare for all paid search engines. We hope that Microsoft and Yahoo will follow Google and Ask’s lead and implement change history reporting sometime soon.

Once you’ve eliminated self-inflicted wounds as the cause for your campaign crisis, you’ll need to look at factors external to your campaigns and think outside the box. In some cases, you’ll find that you don’t actually have a performance issue, but instead have a reporting problem. In other rare cases, the problem miraculously fixes itself, which is always nice, and usually points to a network or search engine outage or other transient condition that has come and gone even before you started investigating. Here are a few symptoms and odd causes we’ve encountered over the years:

Problem: Not getting clicks and conversions. Potential causes:

• Search engine reporting or ad delivery problems
• URL tracking variables have been stripped from destination URLs when traversing contextual ad networks
• Tracking scripts accidentally removed from landing pages

Problem: Conversions and Conversion rates drop way off. Potential causes:

• Shopping cart is not working or inventory outages
• Website is down
• Really bad news about your company just hit the wires
• Selling season ended
• Affiliates poaching your branded terms

Key to success: Avoid repeating the same problem

Nothing is more painful than reliving the same dumb mistakes time and time again.

After a campaign crisis has passed, it is always a good idea to take time to understand who or what created the problem and exactly how it happened. The idea is not to assign blame and dish out punishments, but rather to calmly and dispassionately take stock, fix what needs to be fixed, change processes for editing campaigns and websites, open better lines of communications and provide additional training to PPC managers as needed to prevent the same thing from happening again.

As a safeguard, we backup our Google and Microsoft campaigns on a regular basis using their desktop editing tools. Taking backups, especially before we lay in a major set of edits, allows us to “roll-back” should we do encounter unexpected problems. Yahoo has recently announced they will be releasing a desktop editor this year, too, which we will use for the same purpose.

No PPC manager ever plans for failure, but just as the great automaker, Toyota, knows all too well, failures can occur whether they are of our own making or they are caused by random, external events. Taking time now to assess our own preparedness for PPC campaigns disasters can help us identify and deal with emerging problems before they become painfully big and costly.

In the coming months, I’ll get into the more positive aspects of managing paid search campaigns and advanced optimization techniques based on statistical process control and continuous process improvement methodologies.

The problem is that often these two pieces of advice can be contradictory.

If you start using keyword phrases with exact and phrase match that are five, six or even seven keywords in length, you can start to either run out of possible keywords you are allowed to have in your account or you can miss a large number of impressions due to the vast number of ways that people search.

This quote from a Google blog post says it all:

Did you know that 20% of the queries Google receives each day are ones we haven’t seen in at least 90 days, if at all?

When you couple that Google fact with Hitwise’s latest numbers that more than 18% of searches contain five or more keywords, it can be a daunting task to try finding all of these keywords. After all, if you have a basic AdWords account you are limited to 50,000 active keywords.

How can you use long tail keywords and constrain broad match? The answer is easy: use negative keywords.

Introducing negative keywords

Negative keywords are filtering words that stop your ads from showing.

Let’s say you sell coffee mugs and you have tens of thousands of words pertaining to coffee mugs in multiple match types. You then run a search query report (a report that allows you to see the actual search query that caused your ad to be displayed) and find that when the search query contains the word “Starbucks,” such as “Starbucks personalized picture blue coffee mug,” your conversion rate is 0%. All those clicks you are paying for are a waste of money. However, “personalized picture blue coffee mug” is already a long tail keyword, and you have thousands of these words, so how do you still use these word in phrase or broad match yet not pay for the clicks when the search query contains “Starbucks?”

The answer is simple: add the negative keyword “Starbucks.” Now, when someone types a search query that contains “Starbucks,” your ad will no longer be displayed. You will not accrue any impressions or pay for any clicks. Your ad simply will not be displayed.

Negative keyword match types

Just like regular keywords, negative keywords also have match types. Exact match and phrase match keywords work just like their regular keyword counterparts. If you use an exact match negative, the search query must be the exact same as your negative keyword for your ad not to be displayed.

However, broad match negatives are different than broad match keywords. Broad match negative keywords do not match to misspellings, plurals, or similar words. Therefore, if you found that your ad was being displayed for both search queries that contained the word “Starbucks” and “Starbuck,” you would need to use both negative keywords.

Negative keyword reach

You can add negative keywords to either an ad group or to a campaign in AdWords.

In Yahoo Search Marketing accounts negative keywords are called excluded words and can be at the account or ad group level (here are instructions for adding negative keywords to your Yahoo account).

At Microsoft adCenter, they are called negative keywords and can be added to an ad group or campaign (here are instructions for adding negative keywords to your Microsoft adCenter account).

When you add a negative keyword, it will affect all settings below the level you add it. For instance, in Yahoo, if you include a negative keyword at the account level, it will affect every campaign and ad group in the account.

At adCenter and AdWords, if you add a campaign level negative keyword it will only affect the ad groups in that campaign.

At all the engines, if you add a negative keyword at the ad group level, it will only affect the keywords in that ad group.

To continue the Starbucks example, since the word “Starbucks” does not convert anywhere in the account, you would add this negative keyword to each campaign. However, if you happened to have one ad group that was focused around “Starbucks Coffee Cups” then you would add the negative keyword “Starbucks” to all the ad groups except the one focused on selling Starbucks coffee cups.

Conclusion

Before I get flamed for advocating broad match, let me just say that as with most things, moderation is your friend. Broad matching a keyword that only contains one, two or three words can lead to very poor results and should be approached cautiously. However, broad match is not inherently bad, especially when applied to the long tail and controlled with negative keywords.

Follow these 3 simple steps to use broad match effectively:

• Measure broad match using the search query report
• Refine broad match terms by adding exact and phrase match equivalents to higher search volume terms and higher priced terms
• Control broad match by adding negative keywords.

You should spend time on negative keyword research just like you do on regular keyword research. By growing your negative keyword list, you can refine your ads and keep them from being shown on irrelevant queries. This will help raise your CTR, increase your conversion rate, lower your cost per action and ultimately save you money by not paying for irrelevant clicks.

One of the reasons for this is that Google has continued to implement measures for quality control in the network. This overall improvement in the offering available to advertisers is made up of four pillars:

• Continued proactive click fraud filtering
• Smart pricing, which automatically lowers the prices on clicks from sources that do not typically perform well for advertisers
• Improved ease of use in the interface to allow advertisers to access reporting breakdowns so they can catch trouble spots more readily
• New specific targeting features that allow advertisers to fine-tune campaigns and generate better conversions from content.

There are three ways to advertise on the content network:

Keyword-targeted campaigns. Here, advertisers specify keywords and ads are placed based on the keywords in ad groups. This was the first version of content targeting that Google rolled out, and it’s also called “automatic matching.” Based on keywords in your ad groups and other relevant cues, Google’s ad serving system tries to serve the most relevant ads in the ad units accepted by AdSense publishers.

Placement-targeted campaigns. With this type of targeting, also known as managed placements, advertisers specify specific sites they want to advertise on and the ads are placed just on those sites. To a degree, there’s still an opaque auction but advertisers are much more in control. You may find that many advertisers focus in on the same high-quality sites so don’t be surprised if you need to bid significantly higher to see clicks.

Enhanced campaigns. With this type of advertising, advertisers specify both site(s) and keywords and ads are triggered if keywords are found in content on the site(s) specified.

If you’re not advertising on the content network, you should be. And if you are, here are five quick tips to get the most out of your content campaigns.

Separate search and content campaigns. Algorithms on the search side and the content side work very differently. On the search side, Google attempts to match keywords in your account to queries users are searching for. On the content side, Google’s semantic technology tries to match the intent of the advertiser with the potential intent of the reader. For simplicity’s sake this could be called a “theme,” but it’s no doubt multi-faceted. It’s based not only on the keywords placed in your account, but on past behavior patterns across many other accounts and websites. The fact that Google has so much data to help their system fine-tune targeting is precisely why content channel has been increasingly robust for many advertisers.

This makes it important to create separate campaigns for your search and your content advertising. Separate accounts make it easier for each type of advertising to “do its thing” and find the most relevant ads for your account.

Focus on tightly themed groups. With content network campaigns, choose terms that will allow Google to adequately determine a theme for your campaigns. In content campaigns, it makes sense to be very specific (just as it does on the search side). In many cases, it makes sense to have more ad groups with fewer terms than fewer ad groups with lots of keywords. Our content campaigns are very specific and tend to perform well with about ten keywords per ad group. Here’s example, with a group of keywords organized around the theme of teaching in Thailand:

• Teach Thailand
• Teaching jobs Thailand
• Teach English Thailand
• Teaching English Thailand
• Teaching Thailand
• Teaching job Thailand
• Teaching English Bangkok
• Teach English Bangkok
• Teaching jobs Bangkok
• Teach Bangkok
• Teaching Bangkok

Create separate ad copy. People who are searching have very different motivation than people who are “consuming” content, so it makes sense to gear ads to different types of intent. If you’re advertising a product for sale, it’s important to take the buy cycle into consideration when creating ad copy. Many people who see content ads are typically at an earlier stage in the consideration cycle, so ads geared to the awareness and information search stages are usually the most effective.

With higher consideration products, it may make sense to create awareness and draw people in with information (geared to information search stage) rather than jumping right into very specific product details and “buy now” calls to actions (typically associated with alternative evaluation and purchase decision buy stages). For example, for a well-known management consulting firm seeking awareness, this inexpensive ad might appear in content related to financial controls, human resources, and other corporate management topics:

Is Downsizing the Answer?
Consider these 7 cost-cutting tips
before laying off staff. Free PDF.
JKLMN-Partners.com/Costs-White-Paper

A year later, when it comes time for a prospect to consider JKLMN Partners among several prospective vendors for high-ticket services, the ad which created a connection earlier may give JKLMN Partners a serious edge. What’s better, the cost per PDF download may compare very favorably to other business development channels.

If you’re gunning for a mass consumer audience, there is more incentive to draw attention to your ad with catchier messaging. Unlike search ads, which are relatively effective in any case due to the user’s intent, you’ll find content volume may suffer unless you tweak offers and headlines. Catchier ads can be effective as people are not actively looking for what you’re “selling” when they come across your ad in the content of a website. Catchy ads also tie in nicely to the awareness stage of the buy cycle.

Understand your audience and tailor ads to them. This relates specifically to enhanced targeting. If you’re going to advertise in a specific place, gear your ad copy to the audience of the specific place you’re advertising. For example, advertising that geared towards someone watching a YouTube video will be very different than advertising that appears on a site like About.com.

Also, take into consideration the demographic profiles of users of the sites you’re targeting. Ads will be very different if you’re targeting the NewYorkTimes.com as opposed to a children’s website.

Create different landing pages for content and search. Try different landing pages. With one of our clients, we had more success with whitepaper downloads on the content side than the search side. Don’t be afraid to experiment with different offers on the search and content sides of your advertising campaigns.

So, just because the wide reach of the content targeting program reminds you of the old days of display, are you relegated to “spray and pray?” No way. Take advantage of the targeting opportunities that are bringing today’s contextual advertising into a new era of customization and accountability.

How many marketers think sending an identical email to everyone on a mailing list will perform better than individually tailored emails based on each recipient’s past behavior?

How many think sending non-personalized direct mail pieces will outperform personalized outreaches?

Anybody? Anybody? Bueller?

If no one thinks the monolithic approach would ever beat the segmentation approach, why is it that some PPC professionals advocate ditching long tail keywords and letting broad match catch the tail?

The benefits of the long tail search advertising are exactly like the benefits of email segmentation. Consider:

The more targeted ad is served having better ad copy which raises CTR and therefore Quality Score. This leads to more traffic from the same number of user searches.

A more targeted user search necessitates a more targeted landing page. Not the somewhat generic “Fender Guitar” page, but rather the “Fender 4 String Bass” page. That more targeted page will likely deliver a higher conversion rate, hence more sales from the traffic generated by the ad.

Folks looking for “Fender 4 String Bass” will have a much higher conversion rate than those searching for “Fender guitars.” That fact means you can bid higher on the more targeted ads, putting the ads for the most targeted traffic higher on the page than the more general terms which could be yielding more impressions and higher CTR.

With more of the highly targeted traffic going to the tail keywords the less targeted, more general keywords will be bid down to more accurately reflect the value of the traffic. As I mentioned in my post on syndication partners, better resource allocation leads to a bigger program at the same rate of efficiency.

The advantages of a thoroughly developed keyword list are obvious in principle, but does this really matter in practice?

The answer is an emphatic “YES!”

In a recent empirical study, we took apart campaigns from a number of our clients ranging in size, product types, price points and more, to see the degree to which the “long tail” matters. We found that the importance of those targeted searches varied tremendously from a low of 8% of the total business to a high of an amazing 83% of the total. The median of the study group was 31%.

Obviously if the program is tiny, and the tail is only 30% of the game, it might not be worth the attention, but for large programs even 8% is worth chasing. In the case above that 8% represented over $200K in sales per month.

Nevertheless, some argue that those targeted searches would be captured by broad match anyway, so there’s no real advantage gained by building out and maintaining a comprehensive keyword list.

Not so.

As a test case, we took a client in the consumer electronics space who carries products from more than 1,000 different vendors. We then asked the question: what’s the traffic value differential between the highest traffic keyword for each vendor brand, and the rest of the keywords associated with that brand? In other words, if we just ran the highest traffic term for each brand on broad match to what degree would we be blending together traffic of vastly different quality?

The answer: “We’d be mixing apples and oranges.” In the test case and for vendor brands with enough traffic to have a tolerable signal to noise ratio the median variance in traffic quality (margin dollars per click) between the brand-specific “head” and the brand-specific “tail” was 84%! And not always in the direction expected.

Throwing all the granular data into the head keyword performance will very often result in significant over spending on one cohort of user searches and significant opportunity lost by under spending on the other cohort(s) of traffic.

So, there isn’t much question that for a substantial program the tail matters, and treating the head keywords the same as the tail keywords leads to significant mishandling of the bids.

The other rationale for ignoring the tail relates to the cost of building and maintaining long tail campaigns. “The time is better spent elsewhere.” Well, that could be true if either of the following is true: 1) it’s a small program with an insignificant tail, not worth the management cost to go after, or 2) you lack the power tools and algorithms necessary to build and manage the tail comprehensively with cost-effective human effort.

There is no solution for the first issue. If the whole program isn’t worth spending much time on, then certainly the tail isn’t worth it.

The second issue however is simply a resource and know-how constraint, which for a professional paid search manager should not be there. Telling folks “we don’t have the tools to manage your program effectively” is a hard message to deliver, but it’s the right message if it’s true. Telling clients: “The tail is unimportant,” or “The tail is effectively handled by broad match” simply isn’t honest for most sizable programs.

Here are my PPC resolutions for the upcoming year.

Track everything

We all know we should track everything, but are you really tracking all the conversion signals and conversion types across your website? The most overlooked leakage is call tracking. But really, you can track just about anything. Do you know the average profit received from someone who signed up for your newsletter via a PPC click? Are those email subscriptions valuable or a waste of marketing dollars?

This year, I will segment traffic to learn what is making money after non-revenue conversions occur.

Lose the long tail weight

It is easy to run a report for the previous year and note that a keyword has received 300 impressions, 2 clicks, $2 spent, and no conversions. Due to the lack of data, you just let the keyword continue to run.

If you have 10,000 keywords with the same metrics, then you haven’t lost just $2, but $20,000. Find ways of combining the data from long tail keywords to ensure that the tactic is still brining in revenue. Those keyword groups that are not converting? Delete them.

This year, I will combine and manage more long tail keywords to ensure they are making money.

Try more rich media ads across the content network

Over the past three years, I’ve found a lot of success across the content network. I’ve also found that on a global basis, rich media outperforms text ads. However, it takes more time to create a video ad than a text ad, and hence these ads are often relegated to the “some day” list of things to do.

This year, I’m going to create more video and image ads, especially for placement targeted campaigns that I wrote about earlier this year.

Increase mobile reach

Mobile usage has been steadily increasing for several years. However, ecommerce transactions have lagged behind traffic. This year eBay reported that 1.5 million items were purchased on their mobile site over the holiday season, triple what they sold last holiday season via mobile devices. Creating a mobile campaign is not difficult, and with a little WordPress hacking its easy to test whether a site is mobile compliant.

This year, I will create more mobile ads and landing pages.

Focus on post conversion communication

I walked into an Austin restaurant last year and the first question the waiter asked was, “have you been here before?” I said no, expecting to have the menu explained to me. About five minutes later the manager walked over and thanked me for coming, offered to buy me coffee and desert, and then informed me that if I knew anyone who might like the restaurant to just let her know that it was their first visit and she’d do the same for them. I told this story to over a hundred people at an AdWords Seminar across the street and the next evening they were flooded with new customers.

Hand written notes tucked into packages, personalized welcome messages, a free gift for a friend and even the typical newsletter subscriptions can help increase not just word of mouth marketing, but lifetime visitor values from your PPC clicks. If you can increase your lifetime visitor values, then you can significantly increase your bids while maintaining the same margins. This is an important consideration in today’s economy.

This year, I will reach out to more customers to offer my thanks and incentivize them to become repeat customers.

Be more creative

Doing PPC by-the-book is not difficult. However, being creative by using demographic targeting, day parting, testing CPM with placement targeting, or anticipating changes can have dramatic effects on the returns from your account. With paid search, if you ever wonder if something can be done or what effect it would have on whatever variables you’re measuring, test it. PPC makes it easy to test new ideas and then apply those ideas to other marketing channels.

This year, if I have a new idea, I won’t procrastinate: I’ll just test it.

Remember, before you start to focus on 2010’s goals, it is a good idea to clean up your account from the previous year.

Welcome to 2010. Happy New Year!