Justin Miller

Understand and Boost PPC ROI in 3 Steps

August 13, 2014 by Justin Miller Leave a Comment

Step 1: Understanding ROI of Your PPC

Return (or Value) on Investment (Cost) is easy enough to understand, but applying the concept to PPC can be tricky. Before going further, you MUST have Conversion Tracking setup on your PPC. Without tracking Conversions, there is no way to measure the Return (Value) of your PPC efforts. Once you have Conversion Tracking set up and have assigned a monetary Value per Conversion, measuring the value of your PPC becomes easy. As for Cost, it is already measured for you within AdWords.

Now that we have the Return (Value) and Investment (Cost), ROI is a simple division problem away. But, do you really understand how you earned the value and where the cost went? The next step is breaking down the components that contribute to the ROI equation.

Step 2: The Marginal Parts to Value and Cost

Cost is simply broken down into CPC or Cost per Click. While not every click is going to Cost the same, you will have an average CPC, which AdWords calculates for you, that can be used here. In a similar manner, Value can be broken down into Value per Conversion (from here on will be CV). This is very easy if you only have one Conversion type, but still doable with multiple Conversions (by using an average CV). When looking at the margin Cost and Value, we need a metric to tie the two together, which is where your Conversion Rate (CR), which is Conversions per Clicks, helps us.
At the breakeven point, your CPC = CV * CR. This also means that as long as CPC is less than CV * CR, you have a positive ROI. Below is a table illustrating the relationship of these metrics.

Taking a deeper look at this table, one will notice that whenever the CR drops below 10% the Campaign is in the red, but a CR above 10% brings it into the black, and while the CR is exactly 10% the Campaign is at its breakeven point. The next table uses the same figures but only includes the CPC, CV * CR, and ROI columns.

By looking at CPC and CV * CR, we can determine if a campaign has a positive ROI. Let us look at the final step, which is optimizing your Campaigns to boost your ROI.

Step 3: Boost PPC ROI

Since there are two sides to this equation, there are two methods to boosting ROI.

1) Reduce CPC
2) Increase CV and/or CR

CPC can be reduced a few different ways. The quickest is to lower bids or pause keywords with high CPCs. Of course, it’s best to keep the ones that are earning Conversions, because we do not want to lower the value side of the equation. Another method is to increase your Quality Score. A higher Quality Score allows you to pay less without losing Ad Rank (or Ad Position). Making sure that your Ad Copy and Landing Page content are relevant and even includes your top performing keywords will help boost your Quality Score.
Next is increasing CV and/or CR. Since Conversion Value is more often a fixed amount, I am going to focus on Conversion Rate. Begin by making sure your Landing Page clearly tells the visitor what the desire action (Conversion) is and the next step to take to accomplish it. Next, include a clear call to action within the Ad Copy (i.e. Buy Online, Sign Up or Register). Lastly, confirm that your keywords and other settings are reaching the right target audience. If you want people make a purchase, then people just looking for information are not within your target audience. Ensuring that you are getting your Ads in front of the right audience will help increase CR and boost ROI.

A Quick Recap

Just knowing the ROI percentage of your PPC, whether it is positive or negative, is not enough. You must really understand how and why your PPC earned (or failed to earn) its ROI. By breaking the equation down into the marginal metrics (CPC and CV) and tying the metrics together with Conversions Rate, you can tell if your ROI is positive or negative. Then, the next step is to improve it. Is your Cost side too high? Then start working on lowering the CPC. On the other hand, is your value lacking? Look at targeting settings, Ad Copy, and Landing Pages to make sure you are guiding the right audience all the way through your Conversions Funnel.

Now that you know how to give your PPC ROI a boost, share your success stories in the comments!

Why A Low Quality Score Shouldn’t Get You Down

May 14, 2014 by Justin Miller 5 Comments

Both Google AdWords and Bing Ads give a Quality Score out of ten (10) at the keyword level. These scores are primarily based on relevancy among your keyword, ad copy, landing page, and your competitiveness, which is mainly shown by your Click through Rate (CTR). There are huge differences in how these seemingly similar Quality Scores affect your PPC advertising. For instance, a low Quality Score could be costing you additional money per click, or it could be saving you money by preventing unwanted clicks.

A Low Quality Score Can Be Good?

For Google AdWords, there is no question that a low Quality Score equates to needing a higher bid in order to stay competitive. On Bing Ads however, a low Quality Score could save you money. Bing Ads will reduce your impressions share for low Quality Score keywords. This reduction of impressions will most likely cause two outcomes:

1) Increased Click through Rate (CTR)

2) Reduced Clicks

While this may initially seem like one positive and one negative, remember that you are charged for each click. This means that fewer clicks equates to fewer charges, or lower cost. If the impressions being prevented are less likely to obtain clicks and/or conversions, then the low Quality Score is actually helping you. Let’s look at some examples to clarify.

Google AdWords Low Quality Score

This table shows the real value (or cost) of Quality Score on AdWords. The numbers are based on keeping the same Ad Rank (value of 10), which is calculated by multiplying Bid and Quality Score.

Bing Ads Low Quality Score

There is no clear-cut formula (at least not one shared publicly) that determines how much impression share or how many impressions a low Quality Score keyword can/will receive. The numbers in the table below are entirely made up, but plausible and realistic.

Note: 7 – 10 are lumped together because Bing Ads does not lower impression share for these “good” Quality Scores.

The table above assumes that your CTR remains consistent despite the change in Quality Score, meaning that the number of clicks drops in proportion to the decrease in Impression Share. We are also assuming that your CPC does not change either. While these assumptions are unlikely to play out perfectly as depicted, the table still reveals how a low Quality Score could actually cause a decrease in cost. The real question is whether the value received from the acquired clicks drops as impression share and clicks decrease. If value is declining then the lower cost is not necessarily a good thing, but if value remains high while cost decreases, then your Return on Ad Spend (ROAS) will increase, which means your boss won’t worry about the low Quality Score.

Conclusion

Overall, Quality Score — whether on AdWords or Bing Ads — shows how relevant and competitive your PPC keywords, ad copy, and landing pages are. On Google AdWords, there is a clear path from Quality Score to impact on your bottom line. On Bing Ads, the path is not as clear, but Quality Score is still important. Remember, a low Quality Score is not always a bad thing on Bing Ads. Always track the value of conversions from PPC so that you know when/if a keyword is profitable despite its Quality Score.

We would love to hear about your low Quality Score keywords that are still profitable. Share your story in the comments!

The Positive of Negative Settings in PPC

March 19, 2014 by Justin Miller 1 Comment

All marketers know the importance of reaching their target market. However, what is just as important is missing, or not reaching, those outside your target market. It seems like simple logic, but accomplishing the two are not always one in the same. When it comes to PPC there are settings to reach your target audience, and negative settings to ensure you avoid those outside your target market.

Negative Keywords

While keywords make your Ads eligible to be shown for given searches, negative keywords disqualify your ads from being eligible to generate an impression for a search. This is helpful when there are keywords and/or phrases that are unrelated to your products/services, but are similar or overlap with your long-tail keyword phrases. This is a great way to weed out similar but unrelated products/services, and people not in the part of the buying cycle you are targeting. For example, if you are an online retailer of computers, then you might want to consider using product review and price comparison, as well as brands names that you do not carry (i.e. Apple, Dell, etc.) as negative keyword phrases.

Negative Placements, Topics, and Interest

If you are advertising on the display network, then you have many more negative settings than just negative keywords. Negative placements allow you to select specific URLs to not show your ads, while negative topics will eliminate an array of websites based upon the content on the site. Finally, negative interest filters out users who have frequently visited sites within the given interest group.

All This Negative Could Lead to Positive Results

Multiple benefits come from using negative settings. First, fewer impressions shown to people outside your target audience will lead to fewer unwanted clicks. Therefore, whether you are using Cost per 1,000 Impressions (CPM) or Cost per Click (CPC), this results in lowering cost, or at least spending more of your budget on wanted impressions and clicks. Second, more targeted impressions will lead to more clicks. This means a higher Click thru Rate (CTR), which will ultimately lead to better ad positioning and/or cheap CPC. Finally, a greater number of more targeted clicks will lead to more conversions. This will be a great boost to your ROI. With all the benefits, there is no reason not to be negative inside your PPC settings.

If you found that being negative has, or could, help your PPC results, then let us know in the comments.

Native Ads: A Blessing or Curse?

January 29, 2014 by Justin Miller Leave a Comment

First, in case you have not heard, Native Advertising is creating and placing ads to match the content surrounding it, in that the users’ experience is not disrupted by the presence of the ad. Examples of Native Advertising online include PPC Ads on SERPs (Search Engine Result Pages), Twitter’s promoted Tweets, and Facebook’s Sponsored Stories. In all three of these examples the ads look and act very similarly to the non-ad content on the page.

On One Hand, Native Ads are a Blessing

Since Native Ads do not stand out as ads from the surrounding content, it is less likely that users will ignore these ads, which is currently a problem with typical banner ads. This will in turn increase the interaction rate (i.e. Clicks and CTR) of these ads. This is a huge blessing to the online advertising, specifically display advertising, which has a very low average CTR over the years. Advertisers are hopeful that Native Ads could help revive display ads and spur on additional growth of online advertising.

On the Other Hand, Native Ads are a Curse

While resolving some problems, Native Ads are dangerously deceptive and could result is much worse problems. These ads could easily be mistaken as content rather than a paid advertisement. In the IAB Native Ad Playbook, they recommend that a disclosure is prominent so that users clearly know the difference between ads and content. In my opinion this distinction is a must. Online advertising is already fighting an uphill battle for users’ trust – Thank You Pop-ups, Pop-unders, and malware spreading via ad clicks. Now, if we as online advertisers begin to disguise our ads as content, the little trust we have regained will once again be lost.

Conclusion: Native Ads Good or Bad?

Native Ads have a huge upside and have already made a big impact to online advertising. As more websites build in spots for Native Ads, it becomes increasingly important to clarify the distinction between content and paid ads. As advertisers we decide whether native ads will be a blessing or a curse to online advertising. Personally, I think that marking Native Ads as paid advertising will not cause them to be ignored like other banner ads, and would still have the higher CTR. I think the potential of these ads is far greater than the down-side, and that the down-side can be completely avoided. We as advertisers need to use these ads wisely to reap the benefits, but not suffer the curse and loss users trust in online ads.

We would love to hear your thoughts and insights on Native Ads. Are Ads become too close to content? Is that a good or bad thing for PPC Advertising?

The Most Important PPC Metrics You Are Not Using

December 11, 2013 by Justin Miller Leave a Comment

Everyone knows Impressions, Clicks, Cost and Conversions. Then comes the various calculated metrics using those – Click thru Rate (CTR), Cost per Click (CPC), Conversions Rate (CR), Cost per Conversions (CPA – A is for Acquisition.) After the calculated metrics, Quality Score and Avg. Position have been shown to be very important in generating Clicks and Conversions. But since you already are familiar with those metrics, let’s look at the lesser talked about ones, which can aid you in achieve your PPC goals and objectives.

Impressions Share (IS) Metrics

Search Impression Share

This metric reveals your competitiveness. The percentage is how often your ad is shown in comparison to how often they could have been shown. Fortunately, Google tells us exactly where and how you are losing the Impression Share battle.

Lost Impressions Share (Rank)

While Average Position tells what ad spot your Ads are showing, this metrics tells you how often your Ads are not being shown due to low ranking. If this metric is high and you are missing several impressions, you will need to either raise your Quality Score and/or CPC bid to begin outranking your competitors.

Lost Impressions Share (Budget)

If you are losing Impressions because your budget, then the easiest fix is to increase your budget. A high lost Impression Share (Budget) means that you are being outspent by your competitors and need to be willing to spend more to stay competitive.

Analytic Metrics

Bounce Rate

Bounce Rate is the percentage of searchers who clicked on one of your Ads, but only viewed the Landing Page before leaving your website. This is an indicator that your Landing Pages are not guiding visitors further into your Conversion Funnel.

Pages/Visit

This metric reveals the depth of the average visit. If your Conversion Funnel is multiple pages long, then a small Pages/Visit reveals a leak in your funnel. Shortening your Conversion funnel could be very profitable for you.

Duration of Visit (Seconds)

While this metric does not tell you exactly what users are doing on your site, it does reveal if they are staying long enough to do anything at all. If you web page if very text heavy, but duration of visits is only a few seconds, then it is safe to say that your text is not being read. Try revising your text into bullet points and adding images. A visitors that comes through PPC cost, so you want them to stay and bring value too.

While these metrics might not tell the bottom line like the more talked about Impressions, Clicks, Conversions and Cost, they do fill in the gaps and reveal a bigger more complete picture of the success or failures of PPC Campaigns. Remember to look beyond the main metrics into the ones listed above and others that are Key Performing Indicators. These indicators will help guide you to PPC success, but you have to monitor them closely and act accordingly. Let us know if they are any other metrics that help you monitor your PPC success, or if you have any questions concerning any PPC metrics.

Importance VS Urgency in PPC Advertising

August 28, 2013 by Justin Miller 2 Comments

A few years ago I had someone explain to me the difference between urgent and important. From what I can remember from this conversation, urgent matters were those that needed a decision within a short period of time. Important things were those that are crucial and must get done to accomplish a goal or task. This was explained to me so that I would 1) understand the difference and 2) not confuse the two. In today’s world of instant gratification, it seems that urgency is being given more and more importance, and the two are being blended and confused. One area where this is becoming increasingly evident is in advertising, specifically Online Advertising. Ads are written in a matter to entice the user to not only click, but to convert (buy, sign-up, or another desired action) after the click. As the writer of PPC ads it is up to us as to how to entice them. Should they be pressured into making a rushed decision or shown the benefit and importance of what they could get?

Urgency within PPC Ads

Urgency in PPC ads is easy to spot. All one has to do is look for the call to action – Buy Now, Sign-up Today, etc. Although creating a sense of urgency in a user may lead some to quickly buy, it may also push others away resulting in a loss of a sale. In some cases a sense of urgency already exists, like for repair services. For instance no one wants to wait forever to fix a leaky pipe. So an ad copy that reads “Call Now for a Plumber” creates urgency, but it matches the already urgent situation. Whereas “Buy Shoes Today” is creating urgency just to create urgency. A new pair of shoes is rarely, if ever an urgent matter.

Showing Importance in PPC

Rather than cresting urgency, the Ad Copy could tell the importance of purchasing the product or service. Focusing on the importance tells the user of the benefits of your product/service. Instead of creating urgency in the call to action in the shoe example above, explain that the shoes are the latest style, cheaper, more comfortable, or any other feature and/or benefit. Give the user a reason to click the ad and take a look at your shoes, instead of trying to pressure them into a rushed purchase. Below are examples of urgency vs. importance focused Ad Copy.

The first Ad Copy is very pushy. Focused heavily on price and getting you to buy and buy NOW. The second on the other hand is more tailored to the use of the shoes and the importance/purpose of the purchase of the shoes.

Is Urgent or Important Better for Your PPC Ads

Neither is wrong or right, rather there is a time and place for both types and focuses. And of course they can be a combination of both focuses within the character limits. The question is which focus and tactic is best for your product/service. The only way to know is through continual testing of PPC ad copy.

Here are a few questions to ask to help discover which focus might work best for your Ads:

Is there a natural time crunch with your product/service? (i.e. resolving a leaky pipe for plumbing services.)
Is your ideal customer concerned with features/benefits or speed/timing?
Are impulse sales sustainable for your company?
How long is your sales cycle – does it make sense to try to rush potential customers?

Try focusing ad copy on both urgency and importance, and let us know the results of your testing in comments. Is urgency needed to generate clicks and conversions? Or are people searching for features and benefits of your products/services? Whichever may be the case, remember to stay focused on your customers and give them what they are searching and your PPC will help increase your sales (today – if you are looking for urgency.)