We must all be familiar with the amazing feeling of a “big win” in AdWords. Applying that clever new tactic that increases conversion rates significantly feels like you finally hacked the AdWords system!
I’m sure we’re just as familiar with the incredible frustration that follows when that same game-changing strategy doesn’t increase our profits 300% for all our campaigns.
Our search for that next big win often prevents us from acknowledging that we don’t scale our campaign exponentially nor steadily based on single wins. To develop a successful AdWords campaign, you must begin with a solid foundation based on careful and thorough planning followed by rigorous optimizations. Trends are rapidly evolving, and AdWords is doing a great job keeping up. You must embrace change and continuously reassess your campaign strategies if you want to obtain optimal results.
While the most substantial way to increase your campaign’s ROI still involves long-term planning and thousands of micro-wins, its level of success greatly relies on whether or not you’ve considered and correctly applied the following points:
1. Make a Plan and Stick to It
If you’re a die-hard AdWords manager like me, you need to fight the urge to make adjustments to your campaigns every 5 minutes, especially when things aren’t going exactly how you planned. Before you do, DON’T. Nothing harms a campaign like getting too focused on individual scenarios and losing sight of the bigger picture and ultimate campaign goals.
Don’t be fooled – having a plan might sound basic, but it’s indispensable for a campaign’s success, and sadly, the lack of a clear plan before launching a campaign is probably one of the most common mistakes made.
Advertising is as much art as it is science. Having a plan guarantees positive evolution. It means performing the adequate research and gaining the necessary knowledge to apply the ideal strategy. It entails understanding the changes in consumer psychology and behavior, assessing competition, performing a complete marketing analysis to develop effective strategies, planning for seasonality, expansions, new channels, holiday promotions, upcoming trends, and much more.
Let’s take holidays, for example.
It goes without saying – the holidays are an important season for retailers to get in front of customers and drive peak sales. According to NRF, for some businesses, holiday sales represent nearly 30% of annual sales.
It’s never too soon to start thinking about how to leverage the holiday trends to maximize the impact of your campaigns. You need to get your campaigns primed and ready before the holiday season if you even want to consider competing with the businesses that have been prepping for them all year. During the holidays, the stakes are high and so is the competition. They will not be a profitable season for your business if you do not plan for them well ahead of time. If you want to read more on how to unlock holiday success, check out Google’s Best Practices.
The same goes for seasonality. “If you want to create a sustainable and thriving business, you’ll need to adapt to seasonal trends, by planning your marketing campaign ahead of time.” Neil Patel.
In advertising, “seasonal” goes beyond the usual definition of summer, winter, and holidays. You need to identify the trends and periodical shifts in your industry to plan accordingly.
How can I start planning?
Learn from previous years. This applies to pretty much everything within your AdWords campaigns. We often forget the treasure trove of information we have within our own accounts. Your historical data is extremely valuable, and it is crucial for you to review it before you start working on your digital marketing plan and campaign strategies.
The importance of planning also lies in its holistic approach. The advertising campaign is always part of an integrated business objective. Its goals must be aligned with those of the business for it to be profitable. Your AdWords campaign shouldn’t be a day-to-day project. If you create a plan and stick to it, you will boost your campaign’s profit margins in no time.
2. Tracking Tools
The right tracking setup can easily make or break a campaign. Tracking conversions and goals in Google Analytics and AdWords are critical to understanding the impact of your digital marketing campaigns.
Relying only on clicks and click-through-rates is not enough! While they might bring a smile to your face, they don’t make you money nor will they make your campaigns successful.
Instead, it’s crucial to capture the metrics that will enable you to optimize your campaigns efficiently and scale. (Simply said, track conversions.)
Ok, so, what are these metrics? How can I identify them? Where do they go?
Let’s start by defining a conversion. A conversion is an action that’s counted when someone interacts with your ad and then takes an action that you’ve defined as valuable to your business; this can mean an online transaction, a newsletter sign up, or even offline actions, such as a phone call to the business.
According to Dialogtech, “Even in today’s digital world, phone calls remain one of the best ways to earn business.”. Smartphones are our primary device for everything. Over 51% of the website’s traffic comes from smartphones, making them the most popular device for internet users. For a campaign strategy to be effective, it must consider phone call leads. (To learn more about how to attribute phone conversations to the success of digital ads, check out this article.)
Though you might feel tempted to narrow conversions down to something “definite” like a verified sales or an app download, by broadening the definition, you can look at big-picture trends and obtain great insight about your audience’s behavior and shopping journey.
To get started, we need to take a deep look at the business’ objectives. What are the specific goals of the website? What action do we want visitors to take? Are we generating leads or online transactions? What is the value of each conversion? What is their lifetime customer value?
Asking ourselves these questions will not only help us define the conversion goals we need but also better understand our campaign’s objectives and how to set it up.
That said, tracking conversions and analyzing data alone won’t increase sales overnight. But, it helps you make smarter marketing decisions, which are key to increasing the campaign’s ROI.
How will Proper Tracking Boost my Campaign’s Profitability?
Conversion tracking matters, a lot. Like one of the most important quotes in business says: “If you can’t measure it, you can’t improve it”
If this isn’t proof enough, let’s look at the stats. According to Hubspot, 97% of campaigns with poor tracking don’t produce a positive ROI. It’s that straight-forward; if you aren’t tracking conversions, your campaigns aren’t likely to produce a profit.
Let’s take a deeper look at a summary of several studies performed.
Less than 50% of active AdWords accounts have conversion tracking implemented. (Wordstream) As mentioned before, we can accurately assume from the get-go they’re not profitable.
While looking into the remainder, it turns out only half of them had any meaningful conversion metrics in place. This means only about 25% of all AdWords accounts have conversion data that can actually be used to improve campaign performance.
While delving into the performance of these accounts, the following was found:
- On average, AdWords accounts had a conversion rate of 2.35%.
- About 30% of them have conversion rates below 1%.
- The best performing quartile of accounts had conversion rates of 5.3% and above.
ONLY ACCOUNTS WITH PROPER TRACKING METHODS
- The average conversion rate is 3.16%.
- Just over 15% of accounts had conversion rates below 1%.
- The highest quartile of accounts had conversion rates of at least 8% or better. Furthermore, the highest 10% of the accounts with effective tracking had conversion rates of more than 11.50%
We can conclude that AdWords Accounts with proper tracking have about 50% better conversion rates than the typical AdWords account might have. This shows that implementation is a must.
3. Data Attribution
Understanding attribution models and finding the perfect fit for your business might be the most beneficial change you can make to your AdWords campaign. There’s always a catch, and it might be the scariest one, too.
As a seasoned marketer, it had been a while since I got butterflies in my stomach while optimizing a campaign, but I must admit, the first attribution model I changed felt just like the first AdWords campaign I created and launched. So nerve-wracking!
Fortunately, great risks come with great rewards. It was then easy to admit that although last-click attribution had always been AdWords’ default model and all my experience and knowledge was based on it, it was not the most effective model.
Last-click attribution greatly, and erroneously overvalues the final interaction. The foundation of marketing is based on the buying funnel. According to Salesforce, it takes six to eight touches to generate a viable sales lead. And 60% of the sales cycle is over before a buyer talks to your salesperson. (Corporate Executive Board)
If you’ve kept up with what Google has been preaching for years, you’ve heard about the Zero Moment of Truth (ZMOT). This deals with how the customer journey has changed in the digital age and recommends ways to reach customers at each stage of the journey.
To summarize, consumers have evolved, so last-click attribution doesn’t make sense. Why? Because consumer psychology is different. With access to real-time data and limitless options, customers are far more educated and tend to have a longer and more thorough research period.
We cannot ignore our potential customers in different stages, and we must properly credit all the different touchpoints in the funnel for the value they bring to the business. Google has done a great job providing options for different business objectives, and they even went the extra mile by creating the Attribution Model Comparison Tool. This tool provides metric forecasts per each attribution model and makes it easy for you to predict what would happen if you changed your campaign’s model.
With so Many Options, Which is the Right One?
That depends on your business goals and campaign objectives. The bottom line, attribution models are fictitious. They are a best-effort attempt at mimicking real-life behavior to help guide campaign structure, but they will never be entirely accurate. So, it’s up to you to assign credit to the metrics and channels that are most important to your business.
Before making any changes, it’s important to first understand all the available attribution models. Check out this table to see a complete overview of attribution models.
With that in mind, if your buying path is short and your goal is high efficiency, you need to focus on the bottom of the funnel. Once again, it’s crucial to consider all touchpoints, o time-decay would be the best bet. If your focus is new customer acquisition, the top of the buying funnel is a priority and position-based is recommended.
If you want to learn more about each attribution model and how to pick the right one for your business, this Savvy Revenue article is a must-read, since it’s probably the most comprehensive one on this topic.
What Does This All Mean for Me and My Campaign?
It is important to understand how each one of the steps within the sales funnel contributes to conversion and how this can be applied to your campaign. Proper data attribution will allow you to apply the campaign strategies needed to increase ROI by correctly identifying all your potential customers. This brings us to the next point: creating custom audiences.
4. Custom Audiences
Keyword intent, ad content, and campaign settings are extremely important for paid search. But they need to be matched to the most efficient, well-segmented audiences for them to be effective.
The more you know about your users, and the users who convert, the better you can target your campaigns.
The Pareto Principle states that, for many events, roughly 80% of the effects come from 20% of the causes. When applied to digital marketing, this means that 80% of your revenue can be attributed to 20% of your customers.
Although the percentages may vary, it is still the case that some of your customers are worth a whole lot more than others, and identifying them will make the difference in your campaign’s profit. To learn more about how to use the Pareto Principle in marketing, check out this blog on Entrepreneur.
As described in the point above, understanding the sales path means understanding your audience and how to target it. If your product has a long sales funnel, you can target different stages with specific content tailored to each segment.
Considering they are at different phases of the buying funnel and buyer intent differs for each one, segmenting custom audiences will allow you to change your approach to specific groups of people. Then you can provide messaging that best fits their needs and appeals to them the most, whether this is aggressive promotions for cart abandoners or unique sales propositions for home page visitors.
Use and Abuse Remarketing Lists
Remarketing is the ability to show specific ads to users based on their previous visits and actions on your site. This can be extremely effective in terms of conversions and cost since you can use those previous visits and actions on your site to identify highly interested individuals.
Through remarketing with Google Analytics, you can create remarketing lists in AdWords based on various parameters.
Go beyond all visitors – cart droppers, blog readers, video watchers, phone callers, previous converters… the possibilities are endless! The audiences can be used for Display, Search, Shopping, and YouTube, so make sure you use them whenever possible to supercharge your campaigns.
We have already discussed the importance of targeting customers throughout the different stages of the funnel and tailoring the message. Remarketing campaigns have been a game-changer for this purpose.
When you properly identify and credit the first interaction and subsequently add the customer to your audiences, you automatically gain a competitive advantage. You can now follow this customer throughout their whole journey, and all their online interactions will be influenced by the fact that they’ve visited your site before.
With the appropriate audience lists, ad message, and bid modifiers in place, you will have a campaign strategy that your competitors can’t beat.
Google’s Third-Party Audiences
Google has shifted the primary focus from intent to customers. Like Melissa Mackey correctly predicted for 2017; “I’m thinking more ‘audiences’ and less ‘keywords’ than ever before.”
And why not? After everything we’ve discussed, it’s a no-brainer; there isn’t a single campaign structure in the world that will generate profits if it’s not targeting the right audience.
Google used its infinite data and proprietary tools to introduce their own third-party audiences.
Instead of solely relying on your own data and findings, you can now apply Google’s predefined audiences to better target your potential customers.
Use Google’s Audience Insight Report to discover opportunities and obtain the perfect blend between your own remarketing audience insights and Google’s defined audiences. The efficient use of both will guarantee an increase in ROI by converting qualified potential customers throughout all the stages.
To learn everything there is to know about Audience Targeting, read Brad Geddes’ blog.
5. Embrace Machine Learning
64% of marketers say they saw the benefits of using marketing automation within the first six months of its implementation. (Regalix, 2015)
Nearly 70% of businesses are using a marketing automation platform or are currently implementing one. (Aberdeen, 2014)
Marketers using automation software generate 2X the number of leads than those using blast email software and are perceived by their peers to be 2X as effective at communicating. (Autopilot, 2015)
Marketing technology spend is now higher than the advertising spends for companies. (Gartner, 2016)
And the list goes on. There are endless statistics pointing to the importance of leveraging machine learning. 2018 is the year of machine learning and artificial intelligence.
Machine learning has always been a part of PPC. Why is it suddenly so important?
When I started working with AdWords, it was almost inconceivable to use automated bidding strategies, not if you wanted an efficient campaign, anyway. But the exponential advances Google has made over the years in their algorithms and automated tools are so substantial that they far surpass the manual adjustments and precision you (a human manager) might have.
Imagine the following scenario of an unfortunate yet typical human mistake. You might constantly be optimizing your ads, creating new variations and split testing, all to improve your conversion metrics. So you make adjustments based on conversion rates, which, ironically, could end up negatively impacting your campaign’s profit.
Take a look at the following ad metrics, both with the same impression volume:
1.5% CTR and 5% Conversion Rate
3% CTR and 3% Conversion Rate
Most advertisers will immediately pick option 1, without realizing that this ends up dropping total conversion volume. Even with a lower conversion rate, the second ad brings in more conversions due to higher CTR and therefore, click volume.
So, How Can Machine Learning Help?
Google made huge investments in smart strategies during 2017. Among some of the new offers, we have custom in-market audiences, live event targeting, automated ads and rotation settings, smart data attribution, new and enhanced algorithms for bidding strategies, and many more.
Different bidding strategies can lead to different results. Test if you are better off with manual bidding, cost per acquisition bidding, or manual bidding with enhanced cost-per-click. Computers can crunch data better and faster than humans, so it’s important to let them do some of the dirty work. This will result in better trend analysis, better forecasts, and on a grand scale, better results. By properly applying automation, you can free your time from repetitive tasks and focus on high-value activities, which generate higher campaign ROI.
Fortunately, automation is not limited to Google’s tools. If you are still a bit skeptical about giving control of your campaigns to the engine making money off your clicks, you can look into using third-party automated solutions, such as Kenshoo and Optymzr. Both have proven track record and great performance stats.
Here’s a common example of the results we saw before and after implementing a paid bid management solution:
Now, if we plan on handing off part of our job to a computer, we need to make sure we understand the system, its abilities, and its limitations.
Automation is still new and isn’t flawless. If implemented incorrectly, automation can really hurt the results, so we must be very careful when using it. It can boost a campaign just as much as damage it. The rapid rate at which these technologies are evolving makes it crucial for you to understand automation and be aware of the effect it might have on your campaigns.
You can dive deeper into automation with this great article by Melissa Mackey.
Conclusion: Embrace Change
AdWords is a changing world. Embracing new trends and opportunities will help you stay ahead of the competition, and will allow you to boost profitability. Having a defined plan is just as important as targeting the right audience and implementing the appropriate tools. With so many resources to improve account performance, it is important to identify where the quick wins are and what can have the strongest impact on your campaign’s results. Putting some of these ideas into practice will help you increase overall performance, and immediately boost profitability in your campaigns.