The Profit Maximising Approach to AdWords
Google AdWords and other search engine marketing (SEM) platforms afford advertisers a great degree of control over the cost of their media placements.
By being able to control the maximum cost-per-click for every keyword, this puts advertisers in a position where they are able to monitor the profitability of every keyword they are targeting.
Search engine ads are one of the most trackable marketing activities available, and if you’re running some sort of eCommerce environment then you have the potential to track the exact return on investment (ROI) each keyword is bringing.
However, this degree of reporting can lead to misinterpretation of what is a “good” keyword and what is a poor keyword.
At the basic level, a decent Analytics setup will allow you to determine that for every $1 you put into AdWords, you are getting $X back. Clever operators will have this set up for each individual keyword.
However, relying just on ROI can be a big mistake. Let’s take the following example.
Keyword #1 – “widgets brisbane”
- ROI = $4.50
- Monthly Spend = $300
Keyword #2 – “widgets sydney”
- ROI = $2.80
- Monthly Spend = $700
From the above example, we can see that “widgets brisbane” is a better performing keyword. Therefore, if you only had $1000 in total monthly budget, you would spend all of it on Brisbane (presuming of course there’s enough traffic to use that much). However, if your budgets are flexible and you can spend more if you want, then would you turn off the Sydney keyword?
The answer is no. ROI is just one factor you need to consider. The other is profit. The Brisbane keyword makes $1,050 profit per month (300 x 4.50 – 300) while the Sydney keyword makes $1,260 profit (700 x 2.8 – 700).
Turning off the Sydney keyword would make your business worse off. Obviously you should also consider the profit-margin on the actual widget itself when calculating these figures.
Now most people when faced with the above scenario, would obviously choose to leave both keywords turned on, but for some reason when this scenario is expanded to hundreds of keywords, rational profit-maximising thinking tends to go out the window.
Let’s say an AdWords’ advertiser is spending $1000 per month across hundreds of keywords, and is getting about $5000 back (a $5 ROI). Based on this good performance, the advertiser decides to increase their budget to $2000 per month, which in turn lifts the revenue to about $9000 (a $4.50 ROI).
Looking purely at the ROI figures would lead an advertiser to incorrectly assume the increase in budget has not worked, and they might drop it back. However, looking at the profit figure clearly shows monthly profit rising from $4000 to $7000.
One of the questions we are commonly asked is “why does my ROI drop when I increase my budget?”
The reason behind this is actually tied to the economic principle of the low-hanging-fruit. The low-hanging-fruit principle basically explains that in business, there are some sales that are easier to get than others, like the low hanging fruit on a fruit tree is easier to reach.
In an AdWords context, a low-hanging-fruit keyword would be something like “buy online widgets now.” If a user types this into Google, it’s likely that they already have their credit card out of their wallet and are ready to purchase. These longer, more specific keywords are also often cheaper to bid on than generic terms.
By contrast, a user searching “widgets” is not a low-hanging-fruit. This term is highly generic and it’s going to take a good salesperson (in this case a website) to convince this person that now is the right time to buy.
Essentially, this is why ROI drops when you increase your budget. The AdWords’ algorithm has a built in “low-hanging-fruit” factor that shows higher performing keywords more often, meaning when you increase your budget, you’re starting to reach for the fruit higher up on the tree.
The lesson here is that the way to assess how your AdWords’ campaigns are performing is to find the point (budget amount) where total profit is maximised, not where ROI is maximised. This simple mistake could be costing your business thousands in lost sales.
Popularity: 17%
Read MoreBidding on Your Own Company Name in AdWords
One PPC strategy that often causes some trepidation amongst advertisers is the decision about whether or not to bid on their own company name and other related brand terms. It is a common argument that if a user is typing in a specific company name, then they will already be able to find this business at the top of the organic search results.
So why do you need to advertise on these terms as well?
Consider this – What if by relying solely on your organic search listing, you may in fact be turning some of your potential customers away?
Below are our top 8 reasons why bidding on your company name is an effective search engine marketing strategy that can help increase conversions, ROI and your brand presence on the web.
1. Attention, Interest, Desire, AdWords
It is important to remember that Google AdWords clickers are different to Google Organic Search Result clickers as they are generally at a different stage of the consumer decision making process. We have found that, in many cases, users who click on the organic search results are more likely to be in the research or ‘interest’ stage of the buying process, whereas users who click on sponsored links (like Google AdWords), are more likely to be purchase ready customers. If you don’t have an active ad catching these purchase ready consumers, your competitors may be winning customers who are in fact searching for you!
2. Because Your Competitors Are
Under most circumstances, your competitors are allowed to bid on your branded keywords. You can submit a copyright infringement request to Google for some more specific brand terms but there is no guarantee this will go through. Depending upon local advertising regulations, competitors are generally allowed to use your brand name in their ads (through ‘comparative advertising’) so it is important that you compete in this advertising space if your competitors already are. Do a Google search now and check if there is anyone else advertising on your brand terms!
3. It’s Cheap
A common misconception is that bidding on your company name is a waste of your PPC advertising budget because your website is already in the organic search results for free. This is simply not true. Using your company name as a keyword is actually a cost effective method to ensure you maintain a very high click through rate at a very low cost per click. Brand terms are generally much cheaper than other keywords in your industry vertical (depending on how competitive your industry and how specific your brand terms are). The benefits of running a brand terms campaign often outweigh the extremely small costs involved in doing so.
4. Increases Campaign Quality Score
The high click through rate that advertising on your brand terms receives will help boost the position of your ads in your other ad groups by increasing the overall click through rate of your account and, therefore, increasing your overall quality score.
5. Control Your Message
AdWords ads offer personality for your brand where you can feature your latest products, promotions or brand messages. The personalised ad text gives you the opportunity to control the message so you can communicate directly with your customer. This engages the customer by offering more relevant information and landing pages. Your ads may even attract more clicks than your organic results. For example, if you are an ice cream store running an offline advertising campaign that promotes a free ice cream for all customers who download a special online coupon in the month of June, an integrated AdWords strategy would allow you to capture users searching on your brand terms and send them directly to your coupon landing page or micro-site whilst reinforcing the offline advertising messages in the AdWords ads themselves.
6. Website Relevance
AdWords can boost sales for your business by capturing the market segment in ‘buying mode’ and ensuring these users are quickly directed to the most relevant page in your website, bypassing your home or other irrelevant pages that may frustrate or confuse buyers.
7. Misspelling Your Company Name
If your business name is not well known or difficult to spell, bidding on likely misspellings ensures your company name, and the users intended search, is listed.
8. Increase Your Online Branding and Search Engine Real Estate
If your business has an organic search listing (or listings) and an AdWords ad when a user types in your company name, then your business occupies more physical space on the Google search page. The more physical space you occupy, the more visible your website.
All these factors are why we generally recommend bidding on your own company name in AdWords.
Popularity: 100%
Read MoreInternational eCommerce AdWords Campaigns – Part 2
So here it is, the long awaited part 2 of my guide to successful International eCommerce AdWords Campaigns.
In the last post, we explored how to convert international visitors into paying customers.
Now that you’ve got that sorted, let’s look at how to drive quality traffic to your site.
Although there are number of ways to direct international traffic to your website (international search engine optimisation, offline marketing and international public relations to name a few), Google AdWords remains one of the most effective and efficient mediums with regards to testing the validity of new markets.
AdWords allows businesses to very quickly dip their toes into the waters of just about every market in the world at very little cost. Furthermore, businesses can just as quickly pull out of these markets if said waters start to get a little rough.
The next four steps in this guide will therefore concentrate on how to successfully set up an international Google AdWords campaign for the purpose of generating international traffic.
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- Choose your markets based on website and market trends. Have you noticed sales coming through any countries in particular in Google Analytics?
- Test only 1-2 markets at a time.
- Take cultural considerations into mind. For example, if you are exporting wine, how does your new market perceive alcohol?
- Take exporting issues into consideration. How will your product be taxed?
I’ll have what they’re having
- Use the Google Ad Preview tool to test if and how your competitors are advertising in your chosen market/s.
- How will you create a magnetic advertising message that will break through the clutter in this new market?
- What lessons can you learn from your competitors in this market place?
Tis’ the season?
- Do you have a seasonal product? If so, figure out what season your market is in.
- Remember that your time scheduling will also need to be altered in an international market if your ads aren’t set to run at all times.
Watch Your Language!
- Consider whether you should be advertising in multiple languages. Be careful however as multiple languages can sometimes bring in double the traffic on broad terms. If this is the case, you may have trouble deciphering which negatives to add to your campaigns!
Even though AdWords will work very effectively to kick start your international traffic, it’s important to make sure you’ve got the whole OIMP sorted!
Popularity: 11%
Read MoreApplying the Four P’s of Marketing to AdWords
Ok everybody. Time to dust off that old marketing textbook you’re using to prop up your computer – we’re going back to basics!
If you turn to one of the first chapters you will find a tried and true path to AdWords marketing success. The 4 P’s of Marketing.
The 4 P’s of Marketing (Product, Price, Place and Promotion) should be one of this first ad creation strategies a search engine marketer turns to when building any new AdWords’ campaign. These four elements – which are the cornerstone of nearly all first year marketing textbooks – are of paramount importance in the search engine marketing sphere.
Here’s why.
Search engine marketing is a curious beast. Many bright eyed, bushy tailed newly graduated marketers who find themselves in a search engine marketing position often neglect these core marketing principles and attempt to develop over creative, over complicated and ultimately unattractive search advertising.
However, when creating ads for search engines, marketers need to put results ahead of creative ambitions. By keeping the 4 P’s in mind at all times, a marketer will discover very quickly that utilising some or all of these four elements in their ads – while adhering to strict advertising character limits – will automatically cut the fat off any over-ambitious advertising copy.
This is critical to AdWords success as, through employing this ad creation strategy, one can instantaneously increase any ad’s probability of quickly solving their audience’s perceived problem.
AdWords Solves Problems Quickly
Google is fast becoming the number one go-to source for problem solution amongst consumers. This is great news for advertisers as search engines create a veritable feeding ground of qualified, purchase ready individuals ready to have their problems solved by intuitive, relevant and magnetic advertising. Purchase ready consumers on Google are generally looking to find the quickest and most attractive solution to their perceived problem. So solve their problems quickly and creatively with your ads!
Integrating the 4 P’s
The trick with Search Marketing is to create ads that possess an even balance of creativity and detail about the advertised product/service. If you put yourself in the shoes of a purchase ready consumer on Google, you will begin to understand the importance of utilising the 4P’s in your ads.
For example…
Let’s say you are searching to buy a new acoustic guitar and the following two ads appear:
As you can see, although the first ad in this scenario uses a (somewhat) creative emotional appeal, the second ad would likely generate a much higher CTR as it gives users more than one reason to click.
Let’s break it down.
Assuming the search term was ‘acoustic guitar sydney’, the ad above touches on all four of the 4 P’s:
Product: Acoustic Guitar
Price: From $499
Place: Sydney
Promotion: Huge Acoustic Guitar Sale
The lesson here is to take some time out to evaluate some of your current ads to see whether they are working hard to solve your target audience’s problem. If they aren’t try rebuilding some of your ads with the product, price, place and/or promotion details integrated into your copy.
Or, if you don’t have the time or patience to do it yourself, talk to a specialist AdWords’ firm like Reload.
Popularity: 33%
Read MoreOptimising AdWords for Australia Day
When managing an AdWords account, foresight is imperative.
Understanding upcoming seasonal events and trends and how they relate to the product or service you are selling is a vital skill for any AdWords marketer.
Consider this; you own a lawn mowing business and are currently advertising online. At the moment you are only running generic ads, yet you are still getting a steady amount of enquiries through your website.
Although it is fantastic that you have optimised your campaigns to the point where they are generating a stable revenue stream for you, now is not the time to rest on your laurels.
Google AdWords campaigns require continual optimisation and maintenance in order to maximise any opportunities that may be missed with a ‘set and forget’ style of AdWords management.
For an example of how your mowing business might leverage itself off some major holidays and events during the year, you might consider running ads like:
You can also create new keyword lists, adjust your daily budgets, create new landing pages for your ads or utilise a variety of other common AdWords techniques in order to help you capture some of the increased traffic and online spending that occurs during these periods.
The trick however, is not just to simply capture the extra traffic, but to harness the ‘spirit’ of the event, holiday or season in your strategies.
Remember: Sell the sizzle, not the steak.
Popularity: 20%
Read MoreDigital Marketing: Keeping Its Slice of The Pie
As the economy slowly begins to pick itself up off the floor, we’re left to wonder what effect the past twelve months of cost cutting and penny pinching is going to have on advertising spend ratios in the future.
It’s no coincidence that, over the past year, spend on internet and mobile advertising has increased by 9.4% and 18.1% respectively. In contrast, newspaper (-18.7%), television (-10.1%), radio (-11.7%) and magazine advertising (-14.8%) have all had significant declines in overall spend (see ‘Shift Happens’ video embedded below). It is my opinion that, during the recent period of economic turmoil, many marketing managers were forced to re-evaluate their marketing budgets and the emphasis they place on traditional media spend. Marketers had to become more accountable.
Enter digital marketing.
During the downturn, marketers were drawn to the new shining star of the marketing mix – online advertising and social media marketing. It seems that many of these marketers had seen digital in action but were unsure whether or not to make the transition over to an integrated digital strategy to supplement their diminishing traditional advertising activities. In many cases it was like trying to convince someone who only eats Big Macs to try a McChicken for the first time.
Search engine marketing providers such as Google Adwords and Yahoo Search Marketing have seen massive growth in recent times due to their transparent, ROI based nature while Social Media Marketing is paving the way for a new frontier in branding and customer relationship management. It is a combination of relatively small costs, massive reach, active audience interaction and extreme accountability that has helped catapult digital marketing above the mainstays of the traditional marketing mix during the global financial crisis.
Being wedged in the middle of the digital marketing industry, this news is music to my ears. However, these figures and trends prompt me to ask the question: How much of the marketing mix will digital marketing be able to retain after the economy bounces back?
It will be interesting to see whether digital marketing will, on average, hold the same share of marketing budget it gained over the past 12 months, or will it be once again dominated by traditional media spend as overall marketing budgets begin to increase again. I guess the real question is, have marketing managers around the world enjoyed their taste of digital marketing or do they like their traditional flavours better?
Only time will tell…
Popularity: 16%
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