Did you think that Facebook would overcome Google in terms of advertising. Whether it is because of Google “Slaps” where marketers are doing inappropriate things in their promotions or being ignorant of the fact that you can learn skills if you take the time to listen, there are still ways to be successful advertising online. If you think about it, newspapers are getting smaller and disappearing altogether, while more people are turning into the computer to stay up to date to whats new or working now.If you are like the average marketer you maybe have even invested and seen no results because you are setting up your campaigns incorrectly without any vision or guidance. In reality most of us do not have the time to do this and go in blindly to setting up PPC, or pay per click. Why should you spend hours and days trying to learn something totally new right? While you are doing this continued education, you are not spending time getting the right ads driving traffic to your site of choice. Wouldn’t it be nice if someone could do the hard work for you and let you know the proper way to get your online marketing squared up.In this economic state we live in today, we can not afford to waste money on campaigns that bring little or nothing back to us in terms of residual benefits. Imagine if there was someone out there who would do this for you when you are at your weakest moments? Imagine if they donated their time to help you become successful. These people are out there, but finding them is sometimes the trickiest. Whether you sign up to multiple forums on your topic (and leave a signature if you have the slightest business sense) and gain knowledge form the posts available or decide to invest in a traffic course, the options are plentiful online. But with certain changes and FTC guideline updates, big brother is making it harder to be successful.Find tips where you can and share them alike. Go in with some education so you are not one of the online marketers who gives up stating the system failed them…As I frequently say, “it’s not the tool, it’s the person using it.” Do not rush through advice but seek out more so you can fine tune your work efforts to maximize your ROI, or return on investment. I am going to seek out the advice of others on Black Friday instead of fighting the crowds this year, so see how I can improve my campaigns and at the same time help out the Make a Wish foundation. How about you?
After you’ve estimated your initial bids, it’s time to actually put those bids in motion!
Here’s the basic process for setting bids for your new campaign from the web interface:
- Create and name a new campaign and ad group.
- Compose your first ad.
- Add keywords.
- Set your keyword bids.
In AdWords Editor, the option to set your maximum bid for a new ad group appears on the very first screens. As illustrated in Figure 4.37, you have the option to set bids—with a variety of specific bid types—before naming campaigns or ad groups,
or composing ads.
Take a breath. You’re doing great. Next month, you’ll begin what we consider possibly the most rewarding part of PPC marketing: the creative—yet strangely scientific—process of ad copywriting!
How much should you bid on each ad group? Should you start with low bids and go high later, or vice versa? When should you change your bids? What’s more important: ad rank, CTR, click volume, or conversion rates? There aren’t easy answers for questions like these because, as in all marketing efforts, there are different valid strategies. Which ones are “best” depends on your company’s budget, timing, market position, and business objectives.
Determining optimal bidding strategy shouldn’t be viewed as a choice between the “right way” and the “wrong way.” The best bidding strategy is the one that’s most appropriate for your company’s situation (in other words, how much can you
afford to spend?) and your objectives, including brand awareness, revenue growth, or profitability.
The ultimate objective of most advertising campaigns, including PPC advertising, is to maximize conversions. And one of the main reasons that PPC advertising is so attractive and efficient is because measuring conversions and ROI is easy. In order to serve larger marketing and company goals, it makes sense to continually decrease the average cost per conversion so that your campaigns are increasingly profitable and maximize ROI.
Deciding how much to spend per click at the beginning of a new campaign needn’t be pure guesswork. You can “back into” the starting bid price by doing some easy calculations. Although the math is simple, the concepts are powerful. Your ability to calculate and track the following metrics will be largely responsible for the success of your advertising efforts.
Let’s start with one of the most important calculations: conversion rate, which is simply the percentage of clicks that result in conversions. For example, if one of your ad groups results in 200 clicks, and 40 of those clicks result in conversions, then the ad group’s conversion rate is 20 percent, as shown in the following calculation:
40 ÷ 200 = 20%
Cost per conversion is easily calculated, too. Simply divide the total spent on clicks by the number of conversions. In the previous example, if each click cost $1.50, the cost per conversion is (200 × $1.50) / 40 = $7.50.
Step 1 in this exercise is for you to estimate what you’re willing to pay for a sale or sales lead, which is the maximum cost per conversion (also known as cost per action, or CPA). Then you can calculate the maximum click price you can afford (also known as cost per click, or CPC). Before even starting a campaign, you need to determine (or even just estimate) your maximum acceptable cost per conversion. This should be the maximum you’re willing to pay for a sale, a lead, or whatever constitutes a conversion for your company.
If you sell only one item, this calculation is easy. If your product price is $35.00, and your gross profit on a sale is $20.00, you might set your maximum cost per conversion to be $10.00 to allow for a net profit of $10.00. This is calculated as follows:
$35 – $15 = $20 gross profit ÷ 2 = $10 CPA (cost per acquisition)
It gets a little trickier if you sell more than one product, or if your primary objective is to obtain sales leads, and you do not yet have enough data to estimate revenue stream or gross profit. But you need to start somewhere—so use average transaction revenue, or calculate the value of a lead based on your historical ability to convert leads to sales.
Armed with the maximum cost per conversion, you’re now on track to calculate the maximum click price (the CPC) you can afford. First, you need to calculate the number of site visitors it will take to obtain one sale or action.
If you have historical data on how well your site visitors convert, this calculation is a snap. The number of visitors you need to receive in order to make one sale is 100 divided by the conversion rate (represented as a whole number rather than a percentage). For example, if your conversion rate is 4 percent, your site gains a sale for every 25 visitors, as shown in the following calculation:
100 ÷ 4 = 25
Second, you need to use the previous two calculations to determine the maximum click price: the maximum conversion price divided by the number of visitors needed for one sale.
Continuing this example, if your maximum cost per conversion is $10, and your conversion rate is 4 percent, your maximum CPC is $10 multiplied by .04, or $0.40 (40 cents). Here’s the equation:
max CPC = max cost per conversion × conversion rate
This final calculation of maximum CPC is not simply a dry mathematical exercise—it’s crucial to the success of your PPC campaign. If you bid higher than the maximum CPC, you risk losing money. If you bid at or below the calculated maximum CPC, your campaign should remain profitable (assuming sufficient conversions).
What should you do if you don’t have historical data that lets you calculate the conversion rate, as in the case of a new product launch? There is no need to bid blindly. Start with your best guess. Be conservative or optimistic, but guess.
Assume these typical results:
- For most PPC campaigns, the minimum conversion rate should be 1 to 1.5 percent.
- Good conversion rates range from 2 to 4 percent.
- 5 percent and above is a very good to excellent conversion rate.
- Anything in the double-digit percentages is extraordinary.
For example, if you’re launching a new product and have determined the maximum cost per conversion to be $32, a conservative approach would be to assume a conversion rate of 1 percent. Thus, the starting maximum CPC bid would be $0.48 CPC or:
$32 × .01 = 32 cents per click
Another factor in determining initial click pricing is whether you want to reach maximum profitable conversion volume sooner or later. To help you with that decision, we’ll describe two different bidding strategies: aggressive and conservative.
Advertisers who use an aggressive strategy start bid prices at a high level— sometimes as much as twice the amount expected to achieve profitability. Then bids are lowered as data accumulates, eventually settling in at CPC levels that ensure profitable conversions. Obviously, this strategy risks burning ad dollars on the way to profitability. However, it enables advertisers to accumulate data quickly and test ads and landing pages in a relatively short period of time.
So the aggressive strategy is appropriate for advertisers who want or need to minimize the time necessary to attain maximum profitable sales volume or market share. It might be used, for example, by a retailer who wants to conduct conversionoptimization testing in time for the holiday buying season.
The conservative strategy suits advertisers who are more risk-averse, are working with low ad budgets, or have little experience with PPC advertising. As you might expect, this strategy calls for starting bid prices at a low level, and increasing them gradually over time, as ads and landing pages are tested and CTR and conversion rates improve. Conservative PPC advertisers minimize unprofitable conversions, but the amount of time between starting the campaign and achieving maximum profitable conversions can be much longer than if the aggressive strategy is pursued.
If you want to estimate how much time it will take to “test the waters” and get your ads on the first page of search results, Google provides a data point called First Page Bid Estimate.
How much does Google anticipate it will cost to show your ad on the first page of search results? First Page Bid Estimates can give you an idea of how much it will cost to appear on the first page of Google’s SERPs, as shown on the AdWords Editor interface in Figure 4.36.
Testing your conversion tracking is not simply a matter of going to your website and completing a test conversion. You need to click on a PPC ad in order for the PPC tracking cookie to be installed on your computer, and when you convert, a conversion will be registered in AdWords.
Here is the step-by-step process to make sure that your conversion tracking code has been installed correctly:
- Within any active campaign, create an ad group called Conversion Test.
- Within this ad group, insert one keyword that is nonsensical (for example, xxxyyyzzz or abcd1234). Use exact match for this keyword.
- Run a query on Google for this nonsense keyword, and your ad should appear.
- Click on your ad and complete a test conversion.
There is a reporting lag within the AdWords interface, so you can’t convert and check your account a few minutes later. You should allow at least three hours for processing. If you don’t see your conversion then, you may want to give it 5 hours. If after this you don’t see your conversion, your conversion tracking code may not be properly installed. However, if a conversion registers, you’re finished!
There are a couple of reasons we want you to make your dummy purchase from a dummy keyword in an irrelevant ad group. One of them is that you will spend less money for the click. One click probably doesn’t mean very much in the grand scheme of things, but you’re almost certain to spend less money than clicking a “live” keyword. Additionally, you don’t want to pollute your conversion-tracking data.
Google Analytics is a robust analytics program that can help you gain valuable insight into your PPC performance. You can see where visitors are dropping out of your shopping process; you can see how long they stay on your landing page; and you can learn on which pages visitors convert most highly. The best part is, Google Analytics is free!
When you analyze them properly, you can gain invaluable, numerous insights that are from Google Analytics. We could write an entire book on installing and analyzing web analytics, but luckily we don’t have to! As we mentioned last week, a great resource for learning everything you need to know about analytics is Web Analytics: An Hour a Day, which shows you how to slice and dice your information so that you become a master of actionable analysis.
For now, here are the basic steps for getting Google Analytics installed on your website and landing pages:
- Open a Google Analytics account. You can do this by going to www.Google.com/Analytics.
- After you’re in your account, click Add Website Profile.
- Enter the URL of your website, select your country, and choose a time zone.
- The next page displays the universal tracking code that needs to be inserted on every page of your website. Copy the code.
- Insert the snippet of Google Analytics code on every page of your website.
After you complete this process, you should link your Google AdWords account to your Google Analytics account. This way, your PPC traffic is tracked correctly in Google Analytics, and you can access your Google Analytics account directly through AdWords. To link the accounts, follow these steps:
- Click the Reporting tab within AdWords.
- Choose Google Analytics from the drop-down menu.
- Enter your Google Analytics account ID to link the two accounts.
Google’s conversion tracking is one of the most compelling features available on an ad interface loaded with tons of compelling, profit-driving features. PPC is one of the most measurable marketing endeavors, and if you aren’t tracking conversions, you are shooting your campaign in the foot and doing your business a great disservice.
Setting up conversion tracking in AdWords is relatively painless. Here’s the stepby- step process:
- Click the Reporting tab within your campaign and select Conversions.
- On the next screen, click New Conversion.
- Name the conversion action you will be tracking. For example, if you are tracking leads, you may want to call the conversion Lead, or if you’re tracking purchases, you may want to call it Purchase.
- Select a tracking purpose from the drop-down menu. The options are as follows:
- View of key page
- Click Save and Continue.
- Enter the page security level and tracking indicator settings for your website. In Figure 4.35, the page security level is HTTP (the other option is HTTPS). If you are tracking leads that don’t have standard revenue, you don’t need to enter anything in the Revenue for Your Conversion field. If you don’t want a tracking pixel to appear on your confirmation page, select None as the Choose Text Format option.
- AdWords will provide you with the snippet of code to track this conversion. Insert this code into the confirmation page(s) of your website.
On Monday, we discussed delivery options. We mentioned that Accelerated delivery can help generate the maximum exposure for your website, and if optimized properly, this delivery method can really give your PPC campaign a huge boost. Today, we’ll discuss two ways to fine-tune your Accelerated delivery in order to show your ads when your target audience is mostly likely to take action, as well as how to show your ads where they are most relevant.
The two settings we are discussing today are powerful, so adjust them with caution. We don’t mean to scare you, but getting your Ad Scheduling and geo-targeting settings right is extremely important. If you don’t, your ads may show up at the wrong times and in the wrong locations!
First we’ll cover Ad Scheduling. As illustrated in Figure 4.28, you can adjust your Ad Scheduling settings within the Advanced Settings section of your campaign Settings tab.
Before we get to the “how” of Ad Scheduling, let’s first discuss the reasons for using this advanced option. As your PPC account matures and you learn what works and what doesn’t, you will discover that during certain times of the day, your target audience is more (or less) likely to convert. You may find that there are entire days that lack in performance. Ad Scheduling can automatically increase your bids during those peak hours when users tend to convert more highly, as well as lower bids when users are less likely to convert. This is why Ad Scheduling is so powerful!
How do you learn at what times users convert best? The AdWords web interface provides some great reports, but it doesn’t allow you to see hourly conversion data. You can see impressions, clicks, CTR, average CPC, and cost broken down by hour, but you can’t see conversions, conversion rate, and CPC at the hourly level. We suggest you dig into your analytics or shopping cart data to learn this information. Because it’s free, we suggest you take full advantage of Google Analytics. Within this software program, you can get hourly conversion data for your PPC campaign. You can learn everything you ever wanted to know about Google Analytics by reading Web Analytics: An Hour a Day by Avinash Kaushik (Sybex, 2007). After you have acquired hourly conversion data and you’ve learned when you should automatically decrease and increase bids, then you’re ready to adjust your Ad Scheduling settings.
Let’s return to the shoe retailer example for this discussion. Imagine that the retailer has learned that people are less likely to buy shoes between 2 a.m. and 6 a.m., so you’ve decided to lower all bids by 25 percent during these weak hours. Also, the retailer has discovered that people love to buy shoes between 1 p.m. and 4 p.m., so you’re going to increase bids during these times.
When you launched the AdWords campaign for this client, you were targeting all hours of the day with 100 percent of your bids (which is the default setting, and how you should launch your campaign). When you view Campaign Settings and click Edit for Ad Scheduling, a screen like the one shown in Figure 4.29 will pop up in your browser.
Now you’re going to adjust your Ad Scheduling settings in order to take advantage of the hourly conversion information that you learned about in Google Analytics. Click Bid Adjustment at the upper right of the Ad Schedule window and adjust your settings as shown in Figure 4.30.
The adjusted hourly bids are now as follows:
- From 12 a.m. to 2 a.m., your bids are running at 100 percent as usual.
- From 2 a.m. to 6 a.m., your bids will lower 25 percent, and run at 75 percent.
- From 6 a.m. to 1 p.m. your bids will increase back to 100 percent.
- From 1 p.m. to 4 p.m., your bids will increase by 25 percent, to 125 percent.
- From 4 p.m. to 12 a.m., your bids will lower back to 100 percent.
It’s very important to note that the time zone of your ad scheduling is based on your account settings, not the time zone where people see your ad.
Geo-targeting is a powerful functionality that can greatly increase your ROI. Geotargeting is essential for some businesses. Is there a certain place that you don’t ship to? If so, you might want to use the Excluded Locations tool. Or if you’re an international advertiser, you may want to segregate your creative efforts by language and currency.
Before launching your PPC campaign, you may already know whether you need to target a specific geographic location. This decision might be driven by the fact that you’re advertising a brick-and-mortar store that services the local area, or a company that ships to only certain geographic regions.
You can adjust your geo-targeting settings within the Locations, Languages, and Demographics section of your campaign settings, as shown in Figure 4.31.
There are a few different ways to target specific areas within AdWords. For this example, you’ve learned that your shoe retailer sells the most shoes in their hometown of Chicago and in the surrounding Chicagoland area. You are going to adjust your geotargeting accordingly.
In Figure 4.32, we have selected to target the Chicago metro area. On the left, you can see that we selected Chicago from the menu in AdWords, and this is indicated on the corresponding map.
You can choose to target your ads by entering a physical location and creating a radius around this location. In Figure 4.33, we have entered our address as 444 North Michigan Avenue, and we have chosen to display our ads within a 15-mile radius of this address.
You can also create a custom target area within AdWords. On the Custom tab, you can outline the area on the map where you want your ads to appear. In Figure 4.34, we chose the specific coordinates of where our ad should appear.
When you create a new campaign, the default setting is to target your ads to the search and content networks. As previously mentioned, we recommend you turn off content in search campaigns and separate the content network into its own campaign.
You can click the Settings tab within each campaign in order to adjust these settings. You can then change the Search and Content distribution settings in the Networks, Devices, and Extensions section, as shown in Figure 4.26.
As you can see in Figure 4.26, there are two channels within the Google Search Network:
Google Search: Your ads will appear on Google
S earch Partners: Your ads will appear on sites such as Ask.com. You can opt out of Search Partners, but you can’t actually break Search Partners off into its own campaign. Search Partners always requires Google Search to be activated.
We discuss the content network at great length, “Month 4—Advertise on the Google Content Network.” For now, here is some basic information about the options for choosing this distribution channel at the campaign level (shown previously in Figure 4.26):
Relevant Pages Across the Entire Network: Your ad may appear on any web page that Google has deemed relevant to your keywords and PPC ads. You will typically buy these ads on a CPC, keyword-targeted basis.
Relevant Pages Only on the Placements I Manage: Google will place ads only on the sites or domains you specify.
In the Devices section of your campaign settings, you can target computers or iPhones and other smart mobile devices. Similar to separating the search and content networks, we advise that you create separate campaigns when targeting different devices. For example, when you are ready to launch your mobile marketing initiatives, you should create a new campaign and select the iPhones and Other Mobile Devices with Full Internet Browsers option, as illustrated in Figure 4.27.
As you can see in the figure, your choices are as follows: Desktop and Laptop Computers: This is just what it sounds like—your ads will
appear on desktop and laptop computers.
iPhones and Other Mobile Devices with Full Internet Browsers: When you launch a new campaign, the default setting will have your ads appearing on all available devices. As you saw in Figure 4.27, creating a mobile marketing campaign has a great number of options. This is why your mobile ads should be run separately from your other ads. Google continually improves the specificity with which you can target mobile ads. You can choose on which mobile device your ads will appear. (As of this writing, there were only three device options: Android, iPhone/iPod Touch, and Palm webOS.) Also, you can choose which mobile carriers you want to target.
There are three main bidding options available for AdWords advertising. They are as follows:
CPC Cost per click (CPC) is the default bidding option for all PPC platforms. In a CPC strategy, the advertiser pays the search engine a certain amount of money each time an ad is clicked. The advertiser pays only when their ad generates a click—unlike a CPM relationship, in which an advertiser has to pay whenever ads are shown. CPC is the main strategy used in this book.
CPA Cost per acquisition, or cost per action (CPA), is the default cost structure of affiliate advertising. In a CPA structure, the advertiser pays only when an end user performs a specific conversion action (for example, the user makes a purchase or submits a lead form). CPA is the default bidding option when Google Conversion Optimizer is being used.
CPM CPM stands for cost per thousand (the M stands for 1,000). It is the traditional cost structure for radio and other offline media buys. CPM has been the norm when buying display banners from many prominent site publishers and advertising networks. In a CPM relationship, the advertiser pays a certain amount of money for each 1,000 impressions. For example, if an advertiser pays a $3 CPM, they are responsible for $3 if the publisher shows that advertiser’s ad 1,000 times, $6 for 2,000 impressions, and $3,000 for 1 million impressions. Of the three most common cost structures (CPM, CPC, and CPA), CPM favors the publisher the most and shifts the majority of the risk to the advertiser. Remember, the advertiser must pay whether or not there is a click, let alone a sale or other action.
Google offers all three of these bid options. Most campaigns are either CPC or CPM. All search campaigns start with the CPC bidding strategy. Advertisers tell Google they are willing to pay a certain amount per click (for CPC bids), and Google can charge any amount of money up to, but not exceeding, the advertiser’s maximum CPC. For content campaigns, advertisers can select CPC or CPM bidding. When bidding a CPM campaign, advertisers agree to pay Google a maximum amount per thousand impressions, and Google may charge up to, but not in excess of, that advertiser’s maximum CPM bid.
A compelling bidding strategy in AdWords is Conversion Optimizer. Conversion Optimizer is Google’s implementation of automated bid management, automatically controlling bid prices at optimal levels to maximize conversions while maintaining conversion costs at target levels.
To adjust your bidding option, go to your campaign’s settings and click the Edit link next to your current bidding option. When you click Edit, you will see the bidding options for clicks, conversions, or impressions, as shown in Figure 4.25. Remember, CPM bidding is available only on the content network.
Each of the big three PPC platforms enables you to set a daily budget for each campaign. This budget tells the search engine the maximum that you are willing to spend within that campaign each day. By now, you have your campaign structure in place, and if you already know which keywords are most likely to generate a high ROI, you should devote more of your budget to these campaigns.
To adjust campaign settings from within the AdWords web interface while viewing all campaigns or a single campaign, click the Settings tab. When you do this, you’ll see a screen similar to Figure 4.23. You can then adjust your budget settings in the Bidding and Budget section, as indicated in the figure.
AdWords will display your ads as often as possible while trying to remain within your daily budget. We say trying to remain within your daily budget, because at times your daily click charges will exceed the budget you set. On any given day, as the campaign charges near the daily spending limit for a campaign, AdWords will slow down delivery of your ads. However, sometimes your volume may be such that AdWords doesn’t slow down your spending in order to hit your budget exactly.
Another reason your campaign budget may be exceeded on certain days is that AdWords monitors your budget and spending for an entire billing cycle. So, if there are days when you don’t hit your budget, AdWords may allow your campaign to overspend slightly in order to hit the budget for the entire billing cycle. On a single day, AdWords may overspend by 20 percent. However, you will never be charged more than the amount allotted for a billing period. For example, if your daily campaign budget is $5, the most you can be charged during a 30-day billing cycle is $150.
Another important setting in the Bidding and Budget section is the Delivery Method setting, shown in Figure 4.24.
There are two options here: Standard and Accelerated. Standard delivery will direct AdWords to spread out your clicks evenly during the course of the day so that your ads are displayed at all times of the day. If click spending reaches the daily limit early in the day, there may be times of the day when your ads aren’t displayed. With Accelerated delivery, you are telling AdWords to display your ads as frequently as possible, until your daily budget cap is reached—so whatever time of day the click spending reaches that budget limit, your ads will simply stop running until the beginning of the next day.
If your budgets are set properly, we suggest you utilize Accelerated delivery. Keep in mind that with this delivery option, you need to have a budget in place, even if it’s extremely high. This is because something may occur in your campaign that causes a traffic spike, and you may want to have a budget in place to avoid over-spending. Also, we’re not fans of Standard delivery because you have no control over when AdWords displays your ads.
When running your first AdWords campaigns, Standard delivery might be a safe way to manage ad delivery so that you don’t have any sudden budget-busting surprises. However, if you can afford a high budget, Accelerated delivery will ensure that your ads run as often as possible throughout the day. Choosing Accelerated delivery will give you the opportunity to show your ads as often as possible, but you can still finetune when your ads are shown by using Ad Scheduling, which we’ll discuss on Friday.