Unlike any other area of marketing, Ecommerce PPC management is unique in that all of your decisions can be driven by math and statistics, not by intuition. In saying that, if you were not too strong in statistics at school there´s no need to worry; this guide will give you enough info for a quick decision-making process.
If you would like to improve in the art of statistics itself, there are tons of excellent books available for example, Naked Statistics by Charles Wheelan, which can help you to understand just how sexy it is.
The goal of this small guide is to cover the main Pay Per Click principles which would help you to get higher ROI. When you fully understand them, you can get a much better understanding of what Pay Per Click marketing is really about.
Sometimes you can achieve your monthly goal just spending 15 minutes a week focusing on the highest frequency actions, which have the biggest impact on your Pay Per Click campaigns.
So let's uncover these key components that will help you to get higher ROI from PPC this week.
You may look on Pay Per Click marketing as a puzzle - you will not see the full picture unless you have all 7 elements:
1. If you need more relevant traffic, you will have to pay more for it.
This may not sound logical, as we've gotten used to a totally opposite approach. The wholesale price for potatoes is much lower compared to market price. So why do we have opposite situation when it comes to PPC marketing?
- A volume of relevant traffic is always limited; there may be only 100 people who are searching for your products or services.
All people are different and on a different step of a sales funnel. Person A is ready to buy your product straight away while Person B needs time to think. Person C is just performing research and, probably he is never going to buy your product.
What comes from that, then? The more clients you need, the more you have to pay for every additional client you will get. For example, let's take the keyword "PPC management." On average, there are 1,300 monthly searches for it.
If you are ready to pay only $10 per click, you will be displayed on low position and, as a result, you may participate only in 400 auctions, getting 8 clicks ( assuming that your CTR is 2%). If you are ready to pay $70 per click, you can participate in a higher number of auctions and as a result, CTR will grow. If you participate in 1000 auctions, you will get 50 clicks, assuming that your CTR would be 5%.
Make the most of the traffic you already have: PPC management is very closely connected to landing page optimization, so you might have to become an expert in that too, or hire someone who can increase the conversion rate of your website.
2. Reach is very important.
By definition, CTR = Clicks/Impressions
So Clicks = CTR x Impressions.
That's why if you want to get more clicks, you just need to grow impressions.
For example, you have a Search campaign on AdWords. The campaign is not limited by budget, but you are getting only a 60% search impression share, or in other words, you are losing 40% of impressions due to low bids. Perhaps campaigns are profitable, however you would like to increase sales. Here are some options to increase the number of impressions:
- Increase CPC
- Add remarketing or other types of campaign such as DSA
- Perform further keyword research
- Add DSA
- Add additional relevant ads and extensions in rotation to increase CTR
- Import campaigns to Bing or set up Facebook Ads
If you increase CPC your cost per conversion will grow, so it's the last option to consider, as you can get relevant impressions from other keywords and placements on Google Display Network, or via other platforms as Facebook or Bing. So you can get many more conversions by just increasing the impressions volume from new sources of traffic.
Another example: What will happen if you will decide to cut down the scope of your traffic? For example, adding a schedule to show ads only on even days. Your impression share will drop from 60% to 30% and, as a result you will get fewer sales and lose money. So cutting down the scope of relevant traffic will almost in all situations lead to decreased profit.
Let's take another example: Your budget is $7000 and you are getting 1000 AdWords clicks a day (average CPC is $7). What if you decrease your CPC to $5 and import campaigns from Bing? The conversion rate from Bing may be slightly different, however most likely, you will get more orders within $7000.
So increasing CPC should be your main strategy to get more traffic. Due to the auction system in this situation there would be only a few winners - usually Google, Facebook or Microsoft.
3. Use the correct PPC Key Performance Indicators.
To compare how effective different optimization methods are, you need to use some Key Performance Indicators. But in most cases it's not easy. All KPI's such as CTR, ROI, CPA can provide misleading information.
Most likely, you have also read a lot of case studies, such as: "How we achieved 800% higher ROI in 2 weeks from PPC." It's a very misleading headline - to achieve 1000% higher ROI you can just make your bid 10x lower, but you will also get far less in profit. So the correct headline should be "How we achieved 800% ROI and 2x profit from PPC."
The same situation can happen with any other KPI. It's funny when some people take CTR as KPI. CTR is directly influenced by your position: You can write nonsense in your ad, but having dynamic keyword insertion can get you awesome CTR. Also, you can increase CTR just by changing your match types. But at the same time, you can get less profit.
For me personally, CTR is a great indicator of traffic relevance. One of my weekly PPC management routines is to check CTR + average position. If any of my search keywords, which have an ad position better than 3, have CTR of 1% or less, I check the search report to see something like this:
The best KPI we can use is profit, but it's directly influenced by cost per click. Also we can't calculate all marketing expenses such as salaries, taxes etc. That's why it's impossible to measure success using just one key performance indicator.
Combine different KPIs to have clear picture, for example cost per lead + lead volume or ROAS + revenue.
4. Never make decisions based on a small set of data.
Most of my new clients can call me on Monday and say, "Oh, we had terrible results over the weekend!" I reply, "It's ok, don't worry." Then, on Wednesday I receive another call: "Wow, we had such an amazing day yesterday!" My answer would be, "It's not as good as it looks, let's wait 'til the weekend." What I mean by this is that most people tend to evaluate the results by checking across a one day period. It's the wrong approach. Let me explain why...
Based on the law of small numbers, written by Daniel Kahneman, who was awarded the Nobel Memorial Prize in Economics, if you analyze a very small percentage of data you will get misleading results. Your results would be different every day due to multiple reasons, which you can't influence.
But if you check the data individually, on different days, you can see that very often you will have a 6% conversion rate, or 20%:
So, this Monday I get terrible results, but next Monday everything is amazing. In PPC management it's often very easy to make quick but detrimental decisions, for example, increasing CPC based on observing just a few days, or a few clicks. Please don't do that - you will just waste your time.
So be patient before making any pay per click management decisions.
5. Focus on the highest frequency actions.
Following the Pareto Principle, 20% of your targeting methods will provide you with 80% of your profit; 20% of your ads will give you 80% of clicks, etc. That's actually great news - you don't need to optimize thousands of keywords - by just focusing on the top 20-100 you will achieve the required results. Sometimes, I've achieved a client's monthly goal just by one action alone: Reallocating budgets to the segment of his traffic which was bringing the best results, so I had plenty of time to experiment with new and interesting strategies.
Highest frequency actions are often different from account to account, but I will list some of my favorite routines:
- Maximize volumes of relevant traffic by collecting as many keywords as possible and using all types of PPC campaigns and additional PPC channels such as: Facebook, Bing, Amazon, Twitter, Yandex, etc.
- Dynamically change the website content based on the target keywords.
- Add in rotation all possible extensions.
- Ad copy optimization using the SKAG structure: 5-7 ads in rotation for each of my top 20% keywords.
- Price in ad copies.
- Automation with AdWords scripts.
I am not covering bid management techniques in this article; that topic will be covered in greater depth in a different guide!
So, to sum up, always think about the highest frequency actions that will help you to achieve your goals with minimum effort.
6. Provide a more relevant website user experience.
Nearly 15-25 of search queries have never been asked before, which means it's impossible to collect all possible keywords. You will have to use broad match keywords at some point and it's impossible to have website content that will match with all user expectations. We have great news here - you don't have to create 500 landing pages for each of your search terms, but you can dynamically change the website content for each visitor. This is possible via AdWords and Facebook API and we do that using our own scripts. I will cover this point in greater depth in a separate article.
The other interesting thing to consider is price segmentation. First of all, you may segment customers who are using words such as 'cheap' and its synonyms, which indicate decreased price as a requirement for such customers. Price segmentation is actively used by companies that are selling flight tickets, for example.
Take the most from each click.
7 . Keep track of your experiments.
There are hundreds of Pay Per Click management methods and sometimes it becomes hard to measure the impact of the specific actions that you have performed. So you need to carefully track all of the important actions that you have performed. To increase your conversion rate, you can reduce the amount of irrelevant clicks by adding negatives or by adding the price to ad copies. In this case you will not get more conversions, but you will decrease the cost per conversion, yet quite often, you will also exclude those clicks which might lead to conversion. I've seen so many times that "bad" keywords which contain "free" have a really good conversion rate, but blindly adding negatives is not the best long term strategy, because your profit may decrease. I prefer to add negatives which are 100% irrelevant, or which have some statistics behind them. Another option is to improve your website content, so with the same amount of clicks you will get more conversions. As a result, you will get many more conversions within the same AdWords budget.
Always measure your actions!