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.