The PPC Experiment You Never Dare Run

A question that PPC account managers frequently have to deal with is, “Why are we paying for this traffic? Aren’t we going to get that traffic anyway?”
It’s a fair question, even if it is completely annoying to hear for the twentieth time by the twentieth new accounting manager you’ve had to break in. No matter what data you present, no matter how perfectly your charts demonstrate perfect, positive correlation between ad spend, revenues and profits, they never seem satisfied with your answer.
“Fine,” you say. “Let’s try an experiment. We call it the PPC nuclear option.”
“The nuclear option?” the accountant gasps. ”What’s that?”
“Well,” you continue obligingly, “We take all our PPC ad campaigns offline for a few months, and see what the true impact on our bottom line looks like. I just need you to sign off on it here….”
That usually ends the discussion — at least until next month’s AdWords and Bing Ads bills come due.

The PPC Nuclear Option — For Real!

I won’t bore you with the juicy details of how it came about (unless you promise to buy me a drink next time we meet), but the long and short of it is that I am now in the middle of a real-life PPC nuclear option experiment.
Campaigns that had been running for a few years were taken offline abruptly three months ago, and we are just about to put them back online. The website is now relying completely on referral and organic search traffic. The website itself and all downstream processes have remained virtually unchanged.
I thought it would be interesting to make a few simple observations at this point in the experiment. I’ll save deeper analysis for a later date, after we’ve put the campaigns back online.
Observation #1: Greater Than Expected Decline In Keyword Conversion Performance

Keyword conversion performance  before and after the “PPC Nuclear Option” was detonated.

Before we detonated the nuclear option, we were aware we’d lose substantial traffic to the site because about 70% of our traffic was coming from paid traffic sources. What we didn’t know was how our brand keywords or our highest ranking keywords (which were also part of the URL) would fare.
In the chart above, I’ve summarized the before and after conversion volumes for most important keywords that have driven conversions and was surprised by some of the results. We looked at our brand keywords, keywords that were prominent on the site and which appeared in our website URL, as well as our most productive non-brand keywords.
Branded Keywords - Our client’s brand is not a household name and there’s not a lot of search volume associated with it, so our brand keywords have never been our largest source of search conversions. They do, however, rank highly and so we were surprised to see conversion volume on them drop by 28%. We figured, based on earlier studies on brand keyword cannibalization, that we’d see only 10-15% drop in conversion volume for our high-ranking brand terms.
What would account for a greater than expected decline in brand term performance? I have a hunch that our Google GDN display ad campaigns may have been providing a lift while they were running, but since we are not a famous brand, that halo effect only lasted while our display ad campaigns were running. If my theory is correct, we should expect to observe an uplift once we start advertising again. Stay tuned.
URL Keywords – Our next best performers were keywords that literally described our products and which appeared in our website URL. These keywords have generally been at or near the top of the organic search listings, and they perform more like brand terms than generic keywords. We were most surprised that these would have dropped by a whopping 59%.
Non-Brand Keywords – We were also astounded at how deeply the PPC nuclear option demolished the performance of our best non-brand keywords, which dropped pretty near to zero.
Clearly, this client is too dependent on paid search on its most important terms.
Observation #2: Organic Traffic Needs To Contribute More Search Volume

After taking PPC campaigns offline, online organic and referral traffic remain.

This Google Analytics graph shows all search traffic from 2009 through 2013, and to my last point, demonstrates a highly unbalanced mix of online traffic sources, since 75% of their visitor traffic dropped when the nuclear option was detonated. I don’t know what the perfect ratios should be for organic to paid search traffic, but in general, I think most of us would agree that, over time, the mix should start to skew toward more unpaid sources of traffic and rely less on paid traffic.
Of course, figuring this out didn’t require taking the nuclear option because the data has been there the whole time. It does certainly lay bare the situation unambiguously, however. The accounting manager will love this data, and so will the SEO team (that doesn’t exist at the moment) because it shows how even modest investments in SEO can be justified financially.
Observation #3: Friendly “Ghost Clicks”

Google Analytics reports a small amount of PPC ad “ghost clicks” even after taking campaigns offline.

Even two months after taking the campaigns offline, we are still getting visitors from “ghost clicks.” Most ghost clicks happen when a visitor types your URL into their browser after first clicking on your ad. When they start typing the URL, their browser cache types ahead for them, showing them your URL along with your original URL tracking variables. We observed about 4% of our visitors coming in this way, but they represent only about 1% of the original ad click volume.
I don’t know what a good “ghost click” ratio might be, but I’d like it to be higher because that means that our site was so memorable that people typed it into their browser rather than doing a new search.
Observation #4: Unfriendly “Ghost Clicks”
I’ve observed that not all PPC Ad ghost clicks are friendly. In some cases, they may be competitors doing deep dives on your site for whatever nefarious purposes they have in mind. Here’s my evidence of unfriendly ghost clicks:

Hmmm… Lots of visits all of a sudden from PPC ad ghost clicks. Does not look like a friendly ghost to me.

Why would we, all of a sudden, get hundreds of PPC ad ghost clicks when our campaigns are clearly turned off? My first guess was that someone accidentally turned them on; but no, that wasn’t it. I dug one level deeper in Google Analytics and found that all the clicks were coming, on different days, from different locations.

Who clicks from Beverly Hills, Little Ferry and Trinidad? Jet setter, perhaps?

Using my best TV detective deduction skills to develop a profile of the perp, I see that the clicks come from Beverly Hills, CA and Little Ferry, NJ. Both are pretty affluent suburbs. I also see clicks from Trinidad. Could this be a rich jet-setting venture capitalist trying to discover our secret sauce? If so, I’ll bet they are also reading my column; so to you I say, “I know who you are, and I saw what you did.”
Observation #5: Google Analytics’ Accounting For Paid Search Clicks Is Excellent
I had a weird observation when looking at my paid search clicks versus my analytics data. Google Analytics was reporting 7% more clicks than we actually paid for from all our paid traffic sources. I know that Analytics and AdWords account for clicks differently and that Google Analytics reports clicks (suspicious or otherwise), but I never took notice of how great the difference was.
I ran an AdWords invalid clicks report and subtracted those from my Google Analytics total, and found that the number of clicks from our paid search campaigns matched up almost perfectly (99.1% match) with the clicks Google Analytics reported receiving.
An added surprise was my discovery that Google AdWords continues to credit invalid clicks to the account even after turning off all spend. It wasn’t a large amount, but it was a very pleasant surprise nonetheless to see additions to our account balances.

Questions About The PPC Nuclear Option?

I’ve touched on just a few of my own casual observations from this unplanned PPC nuclear option experiment, but there are so many other observations to be made as we bring this campaign back to life. If you are curious about any part of our experiment, and have questions of your own, please leave a comment below, and I’ll see if we can get an answer for you.

Getting Started with Google AdWords: How to Determine Your Test Budget

If you’re considering launching a Google AdWords campaign, then you may be asking yourself, “How much do I need to invest to test this out?  Is $100 enough or do I need thousands?”
It’s an important question and I hear it all the time from prospective clients. Unfortunately, this question is impossible to answer without further research.  For example, we need to answer the following:

1. Which keywords will you be targeting and how much do they cost per click (CPC)?
2. What is the time frame for your test? Do you need to see results in weeks, months, or a year?
3. What is your sales process and typical sales cycle?  Do customers buy the same day they search or does it take months before a purchase is made?
4. What are your typical sales conversion rates?

Let’s go through an example and at the end you’ll know how to estimate a reasonable budget to test a Google AdWords campaign.

Find Your Target Keyword CPCs

In a Google AdWords search campaign, you pay per click.  That means you only pay Google when a prospect clicks on your ad.  If your ad shows up in Google’s results 1,000 times, but no one clicks on it, then you don’t pay a penny.  That’s why AdWords is sometimes called PPC, or pay per click advertising.
So if we’re estimating our budgets, we obviously need to know how much it’s going to cost when prospects click on our ads. And the exact amount you’ll pay depends on the keyword you’re advertising on.  For example, if you advertise on the keyword, “coffee shop,” then you’ll pay a different amount than if you advertise on “mortgage broker.”  Google estimates you’ll pay $2.90 for “coffee shop” and a whopping $13.76 for “mortgage broker.”
That’s a HUGE difference when we’re estimating budgets.
Now, you may be wondering how the heck do you find all the CPCs for keywords.  It’s actually really easy because Google provides you with the Keyword Planner Tool.  Search for your target keywords and the Keyword Planner tool will give you an estimate for how much each keyword will cost per click.  Note that these are estimates so you may pay more or less.

Testing Time Frame

It’s important to realize that you need to go into an ad campaign with a realistic time frame in mind.  As you’ll see later, the time frame will depend on your budget and it also depends on your industry.  There simply may not be enough search volume for your target keywords to get leads and sales data in 1 month.  For example, “mortgage broker” is searched 9,900 times per month in the US.
If 1% of the searchers click on your ad, then you would get 99 clicks from that particular keyword.  Is it realistic that you would get a sale from only 99 website visitors?  Probably not.  Of course, you’ll be targeting more than one keyword.  The goal here is to make sure there is enough search volume for your target keywords to achieve your goals within your time frame.  Plus, if you have a longer time frame, then you can spread out your monthly budget across multiple months.

Your Sales Cycle

This step is easy.  What is your typical sales cycle?  If it’s over 1 month, then obviously you’ll need to test for multiple months to get decent data from a test campaign.  If your customers buy within 1 day, then you know you’ll get almost instant feedback from the campaign once it starts.

Your Sales Conversion Rates

The final step before we can calculate your budget is to use your sales conversion rates.  In my example above, we estimated that we can drive about 99 prospects to our website from the keyword “mortgage broker.”  There are at least two more conversions that need to take place:

1. Prospect has to call, complete a webform, or visit your office after clicking on the ad
2. You have to close the sale

Let’s say your goal is to get the prospect to complete a webform to schedule an appointment.  A reasonable conversion rate for lead generation like this might be 5%.  So out of the 99 visits, about 5 will schedule an appointment.  I’ll assume 100% will show up for the appointment, which is not realistic, but makes this example easier. :)
Next, is your appointment to client close ratio.  Let’s make the math easy here and say you’re sales conversion rate is 20% (and the sales cycle is only a few days) so you would generate 1 new client.

Estimate Your Test Budget

Alright, now it’s time to put all this information together to estimate your test budget.  We already estimated we can generate 1 new client from 100 clicks on a targeted keyword.  Plus, we know our example keyword costs $13.76 per click, so it’s going to cost about $1,376 to generate one sale.
That means we need at least $1,376 for our initial test to get a sale within about a month, based on the CPC, search volume and sales cycle.  So if you only have $100/month to test, then it’s going to take about a year to test just one keyword.  It’s possible you’ll get a sale more quickly, but it’s also possible it will take longer than estimated to get that first sale.  In this example, I would recommend a budget of at least $2,000 to give this one keyword a fair shot.
As you can see, there are a lot of variables that go into estimating your AdWords test budget.  Play around with the Google Keyword Planner to find your target keywords’ CPCs and search volume.  Then run the numbers based on your sales cycle and conversion rates.

Or, contact me and I’ll do it for you! :)

Bing Ads Introduces Performance Comparison Graphs

The Bing Ads UI has long been plagued by obfuscation. Yes, there have been improvements such as the addition of performance trends and change history visualization, but there hasn’t be a way to compare performance data without downloading, formatting  and analyzing reports on your own. Finally, Bing Ads is working on a solution.
Today the company announced it’s working on new performance comparison feature to:

• Compare your current performance to that of a previous period.
• Compare your performance with the MOVING AVERAGE, a reliable performance baseline to measure the success of your campaigns against.
• Compare your performance between weekdays and weekends.
• See performance comparison in the context of change history.

The new feature , now in pilot mode, follows the same layout as the current performance trend with the addition of a “Comparison range” drop down with three options: Previous period, same period last year, moving average.

Both the ability to see performance by Moving average and the shaded Weekend markers are features that are unique to Bing Ads and not seen in Google AdWords.
Moving Average is calculated by averaging the performance metrics across the previous 4 days. All 4 days are of the same day of the week as the original day:

The Moving Average represents the “normal” performance level that can be used as a baseline to measure your daily performance, because it smoothes out the random fluctuations in the comparison trend line, and it also takes care of the “day of the week” factor. It answers advertisers’ frequent question, “how did my campaign do on day x compared with a typical day of the same day of the week?”

The comparative views will be added to the Change History tab as well.
If you’re interested in participating in the pilot, send requests to CHPilot@microsoft.com.

Google Adds Conversion Estimates To AdWords Bid Simulator

Bid Simulator, the AdWords tool that shows click, impression and cost estimates, now includes conversion predictions
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The Bid Simulator displays estimates for both 1-per-click and many-per-click conversions you might have received with different bids. As with the other estimated data, the conversion estimates are based on clicks from a recent seven day period.



So far, conversion estimates appear to be very limited to high volume keywords. Many accounts may see conversion estimates in the Bid Simulator only for brand keywords. Sparse conversion data clearly makes it hard to make any worthwhile predictions about future performance. Conversion estimates on brand keywords aren’t likely to be useful if the bids are already maxed out (as in the example above).
For those accounts with high converting non-brand keywords, the conversion data could be a helpful signal in determining to whether to test different bids.

Hacking Quality Score: How One Advertiser Got A Quality Score Of 8.8/10

I believe that Quality Score is so critical to PPC success. To illustrate the point in a more concrete way, I want to present a detailed case study of a WordStream client that is absolutely crushing its AdWords Quality Score. In this case study, I’ll reveal exactly how they did it, and how much they’ve gained from their efforts.

Average Quality Score Of 8.8/10? What? How!

The advertiser in this case study is a small business operating in the insurance industry (I’ve anonymized the data to protect client identity), which happens to be one of the most competitive verticals in PPC. A skeptic might suggest that the situation is pretty hopeless, without chance of success.
But the truth is far from it! In fact, this AdWords advertiser is thriving! Take a look here:

Figure A: This advertiser’s Quality Score rocks!

Figure A shows a graph of the advertiser’s Quality Score distribution. The green bars on the graph show that all of the  keyword impressions in the advertiser’s account are being accrued to keywords with perfect Quality Scores of 10/10 or 7/10, for an impression-weighted average Quality Score of 8.8/10!
To give you a better sense of just how great this is, the yellow curve on the figure shows the typical Quality Score distribution based on some internal WordStream best practices that we’ve developed. From that, you can see that it’s quite rare to have such high percentages of perfect 10 Quality Score keywords and no low Quality Score keywords in an account.
So how the heck did they do it?

Quality Score Is Just Normalized Click-Through Rate

In a previous article, I showed how having a high click-through rate (CTR) relative to Google’s expected CTR for your ad position is the key for having high Quality Scores. Thus, you’d expect an advertiser with super-high Quality Scores to have decent click-through rates. This is indeed the case, as you can see in Figure B.

Figure B: High CTR = High Quality Scores

Above, I’ve graphed the CTR versus the average ad position for the advertiser’s top 200 keywords (those with the most impressions). Notice how this advertiser’s click-through rates are off the charts!
To give you a sense of how amazing these click-through rates are, the tiny little yellow curve on the bottom of the chart shows you what a typical CTR would be for a given ad position — again, based on internal best practices developed at WordStream. Also note that the advertiser’s overall average CTR from search is a whopping 14.06%, despite being in a relatively low average position of 2.88.
The reason for the high Quality Scores is straightforward: the advertiser has very high average click-through rates vs. what Google expects to see.
The real question here is: How do you get a 14.06% CTR in an average position of 2.88?
Most of the outlier keywords with CTRs of 30%, 40%, 50% and even 70% are branded keywords, which generally have very high CTRs — but the rest of the keywords aren’t. It’s interesting to note that there are even keywords with 0% CTR which have perfect Quality Scores of 10/10. It’s almost like the high account average CTR is pulling up the Quality Scores for all keywords in the account. I see this in a lot of accounts, and it’s one reason why I always advocate budgeting at least 15% of your PPC budget toward branded keywords.
But, what about all the other keywords with high CTRs? How the heck do they do that? Is there a secret computer glitch in the AdWords system that can be exploited?

This Advertiser Earned His High Quality Scores!

The first thing I notice when looking over this account is that this advertiser is no lazy bum! His amazing Quality Scores weren’t the result of some computer glitch, but rather of diligent, smart PPC optimization work. He’s in his account at least once a week for half an hour or so actually optimizing stuff. Take a look here:

Figure C: Slow and steady wins the race – ongoing PPC optimization is key to success

The figure above was created by looking at the change history logs in AdWords, from which I can ascertain what (if anything) is actually happening in the account. Notice how, in the last month, this small business advertiser has diligently created 10 new ads, tried out 164 new keywords, and added 4 new ad groups. Furthermore, by looking at the 90-day change history numbers, you can see that the advertiser’s optimization activities are consistent over time — definitely a key habit for solving the Quality Score mystery.
It’s also worth noting that even with his amazing Quality Scores of 8.8, he’s not resting on his laurels — he’s still in his account every week, optimizing stuff! This is an attitude that I’ve found to be common among PPC marketers with high Quality Scores.
Okay, so now we know that to get good Quality Scores, you have to do some optimization work. But you’re probably still wondering what exactly the advertiser is optimizing! Let’s first take a look at his keywords.

Focus On Long Tail Keywords

In order to get double digit CTRs, you’ll need to be a little picky in choosing your keywords, especially in a super competitive vertical like insurance. How picky? Take a look here.

Figure D: To get double digit CTRs, you’ll need to be a little picky in choosing your keywords

In the preceding chart, I analyzed the account’s keywords to see what percentage of impressions are being attributed to keywords with one word (e.g., “insurance,” which is hopelessly broad and unspecific) versus long tail keywords with 3 or more words (e.g., “boston motorcycle insurance,” which is far more relevant and specific). Notice how a whopping 82% of this advertiser’s keyword impressions are being attributed to long tail keywords? This is a key to achieving double digit CTRs.
Being picky is more than just picking specific keywords; you also need to eliminate junk search queries using negative keywords. But, do negative keywords impact Quality Score?

According To Google, Negative Keywords Do Not Impact Quality Score

The official word from Google is that using negative keywords do not impact Quality Score; however, I’m not so sure about that. I can assure you that smart usage of negative keywords will most certainly raise your CTR — and higher CTR almost always leads to higher Quality Score. (It will also improve your ROI!) Let’s take a look at this advertiser’s use of negative keywords:

Figure E: Do negative keywords raise Quality Score? The Goog says no, but this advertiser swears by it.
Regardless, it certainly raises CTR and improves ROI.

You can see that negative keyword optimization is probably the advertiser’s most favored PPC optimization method, having added around 100 negative keywords in the last month and around 200 in the last quarter. Like weeding a garden, negative keyword optimization is an important ongoing task!
The combination of targeted keywords and specific negative keywords is a very powerful combination. Notice how, in the following figure, you can see that the advertiser’s average impression share across the entire account (on a budget weighted basis) is 89%!

Figure F: Being picky with keywords means capturing a high impression share of a more narrow portfolio of keywords.

This is pretty much as high an impression share as you’ll ever get, since Google never monetizes 100% of any keyword search. Since there are billions of insurance searches every month, and it would cost too much to buy them all, your keyword targeting strategy should involve being picky and capturing a high impression share of a narrow portfolio of keywords, as opposed to targeting broader keywords and capturing a lower impression share.

Ad Text Optimization

The next step to getting high CTRs is matching those “golden” keywords with killer ads — and to do ad text optimization, as this advertiser has clearly done:

Figure G: This small business advertiser has 100 ads!

Above, you can see that even this small business advertiser has over 100 active ads in his account, which is relatively high for a small account.

Leveraging PPC Best Practices

Finally, a quick scan of the account shows that the advertiser is leveraging all the various AdWords best practices like ad extensions, advanced match types, etc. While this may seem obvious to advanced PPC marketers, adoption of many of these features is quite low — for example, only about half of small businesses have conversion tracking turned on!

Figure H: A quick check of PPC best practices!

The Benefits Of Quality Score

I’ve previously discussed the benefits of having a high Quality Score, but how does the theory align with the reality of this case study?
This particular advertiser was previously spending around $1,000/month on PPC and is now spending about half that much. His CPC is roughly half the industry average. His average CPA is approximately $12. What’s not to love here?

This Could Be Your Quality Score, Too

Hopefully in this article today, I’ve convinced you that “hacking” AdWords Quality Score amounts to doing some smart PPC optimization work, with the proper expectation that it’s going to take some time to figure it out. So, what the heck are you waiting for?

Measure & Optimize for Offline Sales with AdWords Conversion Import

Potential buyers have increasingly turned to the web as the first step in their purchase decisions.  So for years, digital marketers in insurance, auto sales, and other high consideration industries have been using AdWords to build awareness and generate leads. These leads have been handed to sales reps, who then help customers complete the purchase process.

In AdWords, you’ve been able to see which keywords lead to higher or lower lead volumes, and to optimize for a cost per lead goal. But there's been no easy way to measure and optimize in AdWords for events that happen beyond the website, like a customer order taken over the phone by your sales team.

New Conversion Import Feature

The new AdWords conversion import feature can help you measure and optimize for the complete end-to-end purchase process. Now you can upload your offline conversion events into AdWords and see how clicks on your ads led to sales made in the offline world such as over the phone or via a sales rep.

Click image to enlarge

And since your offline conversion events will be incorporated into your existing AdWords conversion data, tools such as Search Funnels, Automated rules and Flexible bid strategies can leverage that data.

How you might use the conversion import feature

Let’s see how importing conversions can help a small business measure and optimize for the entire customer journey, from online leads to offline sales.

Isabelle designs, builds and sells high-end custom furniture. She uses AdWords to drive prospective customers to her website, where they can submit their contact information and request a sales call. AdWords Conversion Tracking can measure these raw lead submissions, but since most of them won’t result in a sale, she optimizes her campaigns on raw submitted leads; not actual sales.

Now that she’s able to import her offline conversion data (including sale value), Isabelle can better understand which keywords drive the most profitable sales. With a more accurate ROI picture, Isabelle can better manage her bids and budget.