Do you know the value of a conversion? It may seem like a basic question, but there are many factors to consider.
For example, ecommerce advertisers may determine the actual value of a conversion as the purchase price of an item. If a person buys a $100 widget from your site, then the value is $100. But in the real world we know there are other expenses incurred including overhead, shipping, etc.
If you are participating in online advertising, a way to calculate a value of a conversion is to look at Return on Ad Spend (ROAS). ROAS is simply dollars sold divided by dollars spent. It means how many dollars you are getting back for every dollar you spend. Going back to our widget example, if an advertiser spent $20 for advertising on that widget, the ROAS would be 5. 100/20 = 5. For every dollar you spend, you are getting $5.
Return on Investment (ROI) is another way to calculate a conversion’s value. The formula for ROI is (Revenue — Spend) divided by spend. This is a way to determine what percentage of spend you are getting back as profit. If you spent $20 on advertising a widget that sold for $100, to calculate ROI take ($100-$20)/20 * 100 = 400%. ROI should be as high above 100% as possible. Also, remember to take the lifetime value of a customer into account when examining the value of a conversion.
Regardless of how you measure your success, the important thing is that you are taking steps to track and improve results. Making sound decisions on what efforts are working and not working will surely help to boost your bottom line.
Your Question Answered: Why is it that I have 500 keywords and only 5 of them are getting clicks?
If you are faced with this question, you should consider how your campaign is structured. In most cases, it means you have too many keywords sitting in one ad group.
For those who are unfamiliar with how an SEM campaign is structured, there are some basics to know. I will cover this at a very high level. First, each search engine you run traffic in will require you set up an account. The account is the highest level, overarching component. Within your account you are able to set up campaigns. The campaign level is responsible for setting daily budgets, as well as campaign targeting settings (example: selecting demographics and geographics, etc). Within a campaign you can set up Ad Groups. Ad groups are responsible for housing the keywords you are bidding on, and determining of the overall budget, how much you are willing to allocate to this keyword ad group. It is also at this level that you set the bids you are willing to spend on individual keywords.
If you have 100 keywords in one ad group competing for the same budget, it goes without saying only the most popular keywords will consume that budget. These keywords they will be clicked on more often than the niche keywords simply due to broad keywords having higher search volumes.
So what is the solution? First, find out what keywords are getting the most clicks and put them in their own campaigns. These keywords need to have a budget controls set so they don’t exhaust your entire budget. Why should you worry about this? In most circumstances, keywords that are getting the most clicks are broad keywords. Broad keywords probably aren’t converting as high, but they are very important in the early stages of the sales cycle to be found for. Thus, when a searcher learns about your brand while they conduct their initial product search investigation. By nature, these keywords are certainly getting you traffic, but as a default they are eating up your budget.
The remaining keywords you have are probably more niche in nature, which means they have a tendency to convert higher. Niche keywords usually means a searcher is now at the buying stage, and looking for exact product specifications. These keywords are going to have lower search volumes, but they are also valuable since it’s an indication someone is ready to buy. These keywords should be pooled into their own relevant ad groups and given their own budget, so when a searcher does come, you have much greater probability to have your ad displayed.
In the world of search engine marketing companies work to get the most bang for their buck. Many setup their accounts with keywords, ad copy and cpc bids and they are off to the races. The difficult part comes once a campaign has been running for a while. How do you analyze the data and make beneficial adjustments? If you find that you’re averaging position 1, receiving a good amount of impressions but no clicks, there are several steps you should take.
Step 1. Check Your Keyword Grouping
Many times when a search engine account is opened, one campaign is created with one or two ad groups and all keywords are put into them. This isn’t a good setup practice. Make sure the keywords in each ad group are relevant to each other. For example, if you own an Italian restaurant, don’t just throw keywords like: homemade lasagna, garlic bread, Italian restaurant, and baked ziti under one ad group. They should each have their own separate ad groups; from there you can add in more keywords that are related to your main keywords. For example keywords that could be added into the lasagna ad group would be: homemade Italian lasagna, homemade meat lasagna, etc. Organization is always important when structuring keywords, ad groups and campaigns.
Step 2. Check Your Ad Copy
Is your ad copy relevant to your keywords? For example: If you are bidding on the keyword running shoe but your ad says: Shoe Sale. Shop Now and Save. Free Shipping on All Shoe Orders Over $45. Guess what? Your ad isn’t specific enough. Think about it, there are all types of shoes out there, men’s shoes, sneakers, sandals, flip flop, dress shoes, etc. How do they know you have the shoe they are looking for? Being specific is always better.
Step 3. Run Reports & Add in Negative Keywords
Reports can always give helpful data that isn’t always visible from a top level view. Google offers a report called the search query report which tells what keywords a user typed in when your ad appeared. For example: If you sell jewelry collections and one of your keywords is the Twilight collection, you may have noticed that in recent months your impressions went up, but you received no clicks. This was probably due to the fact that many movie and book fans were searching for items related to the movie Twilight. Therefore, you would want to add in negative keywords like: books, movies, dvds, etc to your negative keyword list. This way your ad doesn’t show for irrelevant searches.
These are only a few of the steps that need to be taken when optimizing an account, but they are definitely a good starting point. If you’re in a high position, but not seeing the clicks, start making adjustments to your search engine campaigns. The results may surprise you.