SEM Tip – Don’t Get Hung Up on Click-Through-Rates
SEM Tip #1
When it comes to managing a search engine marketing (SEM) campaign online in Google AdWords or one of the other search marketing programs, too many businesses get carried away with click-through-rates (CTR).
But before I get into why click-through rates (CTR) are overrated, let’s just clarify what a CTR is. A Click-Through-Rate, or CTR, is a measure of the percentage of people who click on your ad after viewing it.
Typical CTR’s are often well below 1% for most online campaigns, but what is it about them that as soon as they reach 2-3% everyone starts giving each other high-fives even when sales are not affected? So let’s go through the pros and cons of CTRs.
Firstly, CTR’s can be used as a guide to how effective your ad text is. Quite often, the more appealing your ad text is, the higher your CTR will be. But what if you’re in a very specific industry, say ‘neon lighting Brisbane.’ As part of your campaign it would be perfectly normal to include broader keywords such a ‘Brisbane lighting’ in the hope that people who search for lighting in Brisbane will be then interested in neon lighting. However, this is where your CTR can be misleading.
For instance, say my headline for the ad is ‘Brisbane Lighting’ – A large majority of users who have searched “Brisbane lighting” might think this is a relevant ad, so I get a higher CTR. The problem is that they click on the ad, bumping up my CTR and costing me money, only to find when they get to the site that I only sell neon lights. This is a waste…but my CTR looks good right?
On the other side of the coin, if my headline for the ad is ‘Brisbane Neon Lighting,’ all those users who have searched for “Brisbane lighting” will see my ad but only those who are interested in neon lighting will click on it. This means that I get a lower CTR but in this case that’s actually a good thing as I get better quality traffic.
Now, it is well publicised that Google, when ranking ads, don’t just take into account how much you bid, but also your quality score. One of the things that makes up the quality score is your CTR. However, your quality score is unique to each separate keyword, so having a low CTR on a broad term such as ‘Brisbane lighting’ does not affect your quality score on your more targeted keywords such as ‘Brisbane neon lighting,’ so there’s no real advantage to CTR there.
The other downside of having a high CTR is that you use up your advertising budget very quickly. A low CTR has the added advantage of giving you great exposure, as you get more impressions on your ads before your budget is used up. This helps immensely with brand recognition.
So at the end of all this you may be wondering if I can’t trust CTR, what can I trust? Some people put their faith in conversion rates, but this again has many of the same pitfalls. The best statistic to track is cost-per-conversion, which details how much it costs per sale or lead. This is done by the insertion of a snippet of HTML code on your ‘Thankyou for Purchasing’ (or likewise) page. A professional SEM management company can set your business up a conversion tracking AdWords account and manage it throughout the course of a campaign, continually adjusting all facets of the campaign for best performance.
I guess the key thing to take from this today is that when it comes to your online marketing campaigns, don’t worry too much about the percentages; but look at the dollar amounts that it is costing your business per sale to advertise online.
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Read MoreSpend on Search – The Budget Alternative
With macroeconomic conditions in Australia meaning that many businesses are tightening their belts, the most common area that spending is being cut from is marketing.
This is evident by the fact that marketing positions are down by 26% across Australia (BRW Magazine) as many businesses look to cut the fat from their advertising dollars.
But there is a cheap alternative to traditional advertising mediums… search.
There are two kinds of ways businesses can spend money on search. One is through search engine optimisation (SEO) where professional optimisers improve your website’s position in search engine rankings. The other is search engine marketing (SEM) which are the paid ads you will see above and to the right of natural search results.
There are a number of reasons why search engine spending is a wise alternative. Let’s do a quick comparison:
A full page ad in many print media publications costs between $6000-10,000 for just one run. And this is occuring at a time when many businesses are noting a distinct drop in conversion to sales from print media.
One of the clients I manage has a Google AdWords budget of $90 per day. One of the great things about investing in SEM is the ease with which detailed statistics can be obtained and sales conversions tracked. Here are the basic facts from four weeks of the AdWords campaign:
- Around $2500 was pumped through AdWords in that time. This compares quite well to the $6000 that would have been splurged on a print media ad.
- The Ads generated about 180,000 impressions. That means 180,000 people actually had the ad appear on their screens. Even if the readership of the print publication was 200,000, this does not mean that 200,000 people saw the ad, especially if the ad is buried on page 37.
- As a result of these impressions, over 1200 visitors were sent directly to the site.
- This translated into 350 conversions at an average cost per conversion of around $6.50. With the print media ads, it is often very difficult, if not impossible, to tell exactly how many sales have been generated.
So when we sit back now and look at the final figures, this particular client spent half as much money and generated around the same number, if not more, views of the ad. But the thing is, they know exactly how much they spent, how many views they had, and most importantly, how much it cost them per sale to undertake the advertising.
It is this combination of factors that makes search such an attractive alternative to traditional marketing.
But SEM is just half of the picture, as that $6000-10000 can also buy your company a whole lot of SEO. By putting that money into professional SEO you’ll get around 12 months of continual optimisation for Google and the other major search engines.
This means 12 months, not one print run, of potential customers seeing your site up the top of search engine results, and that translates into sales.
So despite many business’ financials being quite tight around Australia at the moment, SEO and SEM remain highly lucrative options as their relatively cheap nature and ease of tracking make them a smart solution for all businesses.
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