Very rarely do we at Permission come across business owners with an unending stream of ready-to-spend cash to divert to their Google AdWords campaign. In fact, the opposite is generally the case. In which case, the best mantra for every Kiwi business owner to abide by is: get more for your clicks this month than you did last.
Sounds simple, but how do you do it? The first step is to thoroughly understand the way in which Google goes about spending your money. Let’s spend a few minutes pulling this apart.
In most situations your budget is allocated at a campaign level and represents a fixed cost per day. Some days you will be above the spend, some days below. But when you extrapolate this spend over a month, Google does a great job of ensuring you don’t spend more than you expected to – they do this by “throttling” your campaign…
Each day, at midnight, your budget is refreshed with new funds and your ads start to display. If your daily budget isn’t enough to gather all the clicks available for the next 24 hours Google will, by default, limit or “throttle” your
campaigning by exposing it gradually during the day. This allows you to get clicks from each part of the day: morning, afternoon and evening.
However, you have the power to edit this “throttled” setting. You can burn through your budget as fast as possible, if you choose. Or you can alter the time of day and days of week the ads are shown. So if your best leads come during the weekend and you receive poor-quality leads on a Monday, you can choose to stop showing then and move your budget to get more weekend traffic.
How do you know if your budget is so low that your ads are being “throttled”? Google makes finding this a breeze with one of their core reports – see the example below. Here Google reveals the “impression share” of the campaign (that is, the amount of times the ad would have been seen if it was available) due to both budget restrictions and campaign quality.
We all know what a campaign with a low impression share is like – it’s the one where your ad seems to be hiding when you go looking for it on Google. You type in your target keywords and your ad doesn’tshow. Or, even worse:
your boss types in the same keywords and arrives at your desks with print-outs proving the same failure.
Now let’s look at what causes your budget to deplete so quickly before the day is up. People clicking your ads is the simple response – hurrah for response! But let’s dive a bit deeper into how a campaign could be set up to make
Google’s puppeteering a lot less controlling than it needs to be.
Let’s say you run a bakery that supplies venison pies and cream buns. Both of these are available from your website, but it’s the venison pies that represent 70% of your revenue and a sizeable part of your profits. Wanting to
improve your traffic, you start advertising with Google on both keywords (“venison pie” and “cream buns”) and place them within the one campaign. This is set up with a budget of $20 per day and is configured to target Aucklanders.
After two weeks you have spent just under $300 and have sold just one pie and two cream buns. Total sales are a very measly $50 and you’re left with a feeling of distrust of all things Google. Especially when they tell you that there’s a lot more clicks available and that your ads were being throttled. What a waste of money.
Then you take a deeper look into what you got for your budget. You see that the campaign delivered 400 clicks for cream buns and just 20 clicks for venison pies. So an OK conversion rate for the pies but an appalling one for the buns. In addition, you realise the buns keywords were a lot more popular than the meat pies and therefore grabbed as much of the budget as they could. So the first lesson is to split the campaign into two groups– one for pies, one for cakes – and then apply the budget to each in a way that better reflects the commercial benefit of each ie weighted more heavily to the more-profitable venison pie offering.
Now let’s say the bakery owner goes home and tells their partner how they have beaten Google at its own game and are now spending their click dollars so much better than before. To prove this they get out their laptop and, at 6pm, search for “venison pies” – they proudly show their partner that their ads are still appearing at 6pm due to their budget being slowed across the full day. The owner then gets a bit show-offy and logs into their order system to smugly point out all the nice new orders coming from those who clicked and then converted. Good news. But not for long.
The bubble is quickly burst by the partner who takes over the laptop and types in keywords like “meat pies”, “fresh savoury pies” and “fresh meat pies”. Alas, no ads appear.
“Surely more people would be searching for these terms than a very specific “venison pies”,” he queries.
So the next day a rather deflated baker goes back to work, adds these keywords into her venison campaign and awaits for the torrent of orders. You guessed it – it doesn’t arrive.
What does arrive is a bundle more clicks, delivered by the addition of these broader target keywords – but unfortunately they’ve now carved into the budget, stealing valuable budget from the more targeted (and ultimately
more beneficial) “venison pies” keywords. The poor baker’s campaign has been “throttled”.
When it comes to allocating budgets to keywords, there are always trade-offs to be made (unless money is no issue for you). You can’t be seen by all search terms all the time, and nor can you grab all the clicks available. The magic is knowing where to invest the right amount of awareness (think ad impression) for each keyword and at what cost (think cost per click) to capture the optimum return on your spend (think advertising cost/conversion revenue).
Happy bidding.
Google Analytics recently updated the way in which users could build segments. The screens got a tweak to make them easier to use and a fair dollop of extra parameters were added. This all sounds super geeky and of little use to most business owners, however because I’m writing about it here I can assure you that the opposite is really the case.
First up let’s get into what Segments are and why they need some attention. I’ll begin with a three stage levels of how people view the traffic their website receives.
This is a throwback to the old ways of tracking websites. Basically it’s a technical term that relates to the type of content that is downloaded from your website as people browse your pages. So a website designed a different way could have more hits than another but its traffic could be lower. Because of this inherent issue knowing your “hit count” is most probably less valuable than knowing nothing about your sites performance.
Now we are making progress. This is a count of actual humans who are clicking on your pages. Visitors have page visits, returning visits and new visits. They are the closest thing we have to measure when it comes to tracking actual people. We can see where they came from -Google organic or paid advertising, directly to your site, or from you last email campaign. And we can see what pages they looked at.
However the illusion in all of this is that everyone is the same wanting the same problem solved the same way. A big bucket of sameness. Which thankfully isn’t correct as the world is made up of very different people wanting solutions to their own different type of problems. This is where Segments come in.
Segments allow you to carve up your visitors into logical groups. Once built, you can see how the groups perform on your website compared to other groups or the overall site average. The latest update gives you a bit more flexibility in how these groups are defined and more importantly lets you look at people, not just the visits they take.
For instance here are three groups that were not available before but are now.
So you run an e-commerce store and want to see how customers who have spent more than $100 over the last two months interacted with your website. Previously this was all done at a visit level.
Previously any customer who completed an order worth $100 or more during a single visit was added to the segment. Now you can define this segment at a user level which allows Google analytics to sum all the sales a user made during this period and if they were $100 or more, include them in the segment. As you can imagine, there’s quite a bit of difference between the two.
Let’s say your ideal user needs to visit your website and look at a landing page for a specific service and then to complete a contact us request form. They may do this over a series of sessions.
For instance, their first session has them arrive and look at the landing page, the next has them completing the form. Now with this update you can define a segment as those who complete both actions whether these were completed across one or multiple sessions.
Previously if they didn’t do both actions within the one visit they were not included.
This could be ideal for those addicted to offering daily deals to boost their e-commerce revenue without knowing the true long-term value these customers have. Now it’s possible to define a segment by those visitors who had their first visit to the site as a result of the deal. Then it would be a simple task to compare how they performed long-term against those who arrived through other means.
To follow are a few screenshots of the new segment building interface. Google has made it easier to create your first segment by offering a few templates to get you started. Spend some time this month checking your Google Analytics account to see if it has been upgraded to this new feature. And if so -then dive in and build some segments of your own. Or failing that – phone the office and one of our team can help you out.
So how profitable is your online advertising spend? Finding answers to this question is not as hard as many business owners may think. In this short note I’ll take you through a fictitious dialog with a prospect to show you the steps we follow to reveal if their existing online marketing is forging a path towards future business profitability or short term loss.
I remember the first time I was introduced to this concept of “creating a path to profitability”. I was employed by a dot com company that was full of promise, investor’s funds and unbridled enthusiasm. We had lavish offices, fancy art on the walls and only the best advertising agencies to work with.
Just to give you a guide on how much money was involved back then. We were part of a larger company that between us shared two floors of a recently built office block overlooking Auckland harbour. So it was decided that rather than use the stairs to move between us we would arrange for a building firm to cut a massive hole in the middle of the top floor and build a marble staircase to link the two. I was OK with using the lift.
Anyway, the company was fortunate enough to hit the market at the right time with the right type of product. Low and behold after three months of trading the financial results were in and we had made a profit. Yippee! I was asked to come into the CEO’s office immediately when the figures were released and was told to sit down as he shut the door behind me.
Yes the result was good. I had apparently shown them a “path to profitability”. Now my job was to widen the trail, hire more staff and open more offices to grab as much of the market as we could. We never achieved the same profit figures again. Fortunately this company had deep wallets and a plan to keep moving while the funds were leaking out of the company.
Anyway, back to applying this to online marketing. Frequently people start a conversation with us when they think they are in situations like this, spending too much to achieve very little.
Within a few minutes of us talking we can generally see where the focus needs to be applied and have outlined a very simple path to profitability to follow. Here’s how the conversation usually goes. To make this work I’ve included a fictitious business owner Mike who runs a service business in Auckland. Mike is struggling to make his online marketing pay its way. He spends around $750 per month with Google AdWords and is not sure if this is too much or too little. He is convinced it’s the former.
CONVERSATION STARTS
Ring ring…. we join the conversation after Mike has told me a bit about what he does and how long things have been going.
Chris: OK, so let’s start with the ideal end result – you making sales. When this occurs, what would be its average amount?
Mike: Well it depends on what they buy. But on average I would say $450.
Chris: Now of this amount how much would you be prepared to spend on marketing?
Mike: As little as possible J
Chris: Thank you. I know that every business owner would want the same so let me put it another way, what would be the most you would pay before the cost of creating the sale exceeds the profits it would produce?
Mike: OK, so I know I was a bit glib with the first answer so let’s go with $50. If it costs me $50 for each sale then things still work. I can pay for all my materials, pay the staff a wage and have a bit left over for a rainy day.
Chris: Great, now just so I’m sure – how many of your clients would you expect to buy from you more than once?
Mike: While our industry should have repeat business I must admit that we are not that good at generating it. However, if we were I would expect 20% of clients to repeat within two years BUT I didn’t allow for it when coming up with my very rough $50. I expect my current leads to be paid for by the money we create from their first sale, not those they may produce in the future.
Chris: OK so working back from the sale being made. How many prospects do you need to talk to before you make a sale?
Mike: Again this all depends on the type of work people are looking for. The quality of our leads really fluctuates – especially from the website. But to break it down into averages I would pick that half of those we talk to will become a client.
Chris: So for every two prospect leads you create – one will become a client.
Mike: Yep that’s true, but quite often we cannot get hold of the leads that are generated through the website. I would say that allowing for this we would need five leads to create one sale.
Chris: OK so the $50 needs to be split between these five, leaving $10 as the most you should pay for a lead. Anything more than this and your marketing costs are looking too high. At the start you mentioned spending $750 per month with Google – which should represent about 75 leads at the average cost of $10. How many leads are you getting?
Mike: Not that many. Probably on a good month we would get around 30. I’m not exactly sure – I’ll have to go back and check my email to count them up but it’s nowhere near 75. Sounds like I might have to put a stop to all that Google advertising… I thought it was costing too much!
Chris: Hold on… Before you jump ahead, instead of checking your email can your website analytics tool provide that lead count?
Mike: What analytics? We don’t have any for the site. I do get a raft of reports from the people who manage my Google advertising. Clicks, and impressions – is that what you are referring too?
Chris: Nope. What about visitor counts and page views? The details giving you insights on how your website is performing with the traffic it is currently receiving?
Mike: Sorry – I don’t have anything like that.
Chris: OK. So let’s not jump into cancelling anything with Google just yet. First off let’s set up some analytics on your site and let it run for a couple of weeks to collect some data. Then we should see which keywords you are buying clicks for that are actually delivering the right types of people to your site who then go on to fill in your quote request form. There could be some that do this for $5 and likewise others that do it for $100 and of course some which arrive and don’t convert at all.
Mike: So I presume we would dump those that don’t convert or convert at too high an amount and focus our spend on those that fit below our target $10 per conversion rate?
Chris: You are on the right track but not exactly there. Yes to focusing on the low cost conversions but no to automatically dumping those that don’t convert at all or do for too high an amount. For instance we may find keyword phrases that are responsible for traffic which doesn’t currently convert but between us we feel should. It may not be a problem with the wrong sort of visitor – it may be that the site is not set up to convert them yet. The same goes for those costly converting keywords. Let’s not dump these as again we could have a content issue. And not wanting to layer too much complexity on it too soon, but there could be leads that cost a lot to convert but represent the best types of customers for you.
Mike: You had me all the way through until that last part. Let’s get some tracking going and then we can dig into what spend is creating what.
Chris: I know there’s a bit of complexity in here but just remember that the path to profitable online advertising starts with your ideal cost per lead and works backwards. We know this so with some analytics running between us we can find out the rest.
CONVERSATION END
Yes, I know it’s a very simplistic view and the numbers were made to be nice and neat. However this short dialog should provide some insight on the steps ahead. Give us a call today if you would like to move forward like Mike did.
Last month I met a marketer who works for a New Zealand company that spent $10 million on Google AdWords in 2012. What made this even more fascinating for me was that I had never heard of the company name and I would pretty much guarantee for 99% of you the same would apply.
She told me all of the industries that they operated within and all were legitimate business categories that were quite boring. No exotic borderline operation here. Just a worldwide network of normal businesses that run on the strength of their ability to optimise their spend with Google.
At first I was just shell-shocked by the amount they were spending. I mean just thinking through the actual mechanics of managing something like this was hard to comprehend. For instance, just getting the money to Google each month would be on a whole different level from charging a Visa card. I half jokingly suggested that the Google people must be waiting outside their office ready to collect the next suitcase of cash. Apparently the truth is very boring – automatic bank transfers on a daily basis.
Nevertheless, they must be on a Google Advertising short dial with this spend? Yes they have dedicated account management but only see people who come across from Sydney once or twice a year. (Don’t expect a sales call for your $50k per annum spend.)
Fortunately we were able to chat for a while before the next session of the conference we were both attending began its next session. So what did I learn that I can share with those with a fraction of this spend? Well from what I learnt, here are a few principles that I can share as working well for those keen to squeeze more value from their Google clicks.
Firstly – It all starts with a sound understanding of your “AdWords Numbers”
Now when you are spending over $800,000 on clicks each month you would assume there was some wastage factored in when it came to analysing the effect that the clicks caused. Not in this case. Each and every click was accounted for in precise detail.
So while this company operated a number of websites – think more than 100 – each and everyone used a well tuned Google Analytics account to reveal exactly how much each sale cost in clicks. This was compared to the acceptable marketing spend for the margin they spent. If the sums made sense then they just kept on buying those clicks.
It’s a simple math problem really that was asked every minute of every day. Were they “buying” the sale from Google for the right amount to enable them and Google to remain in business?
Secondly – Once the math is solved then the world is your playground.
This company is based in Auckland but has offices in Australia, the UK and North America. But it all started from solving a very simple problem in Auckland. Could they make the math work selling one service to one set of buyers? Then, once the this was completed they looked for the same buyers in Australia, from there North America and finally the UK.
We have a Google Adwords optimisation client who has done something very similar, all be it on a much smaller scale. Like our $10 million friends they started in Auckland, then moved to Wellington and wrapped up their New Zealand journey with Christchurch before crossing the ditch into Australia via Adelaide to Melbourne and finally Sydney. The core principles we applied together to make Auckland work and have so far successfully been translated as we move around the globe together.
And finally – to wrap up our learning’s from this conversation, don’t think that just because you spent $100,000 with Google last year that you deserve any special treatment. I asked them what they received for Christmas from the search giant (expecting something nice for such a relationship). It was nothing special.
In fact, if you were a customer who came along to our office warming party last year then you left with a gift that cost more. And rest assured we don’t have any online marketing clients spending $10 million per annum with Permission.
Not yet anyway 🙂
Check out Permission Website Marketing’s June Newsletter Update.
For more website marketing information, take a look at our online marketing services, or give us a call on 0800 893 477.
Every month we hold a customer conference call that all of our customers are invited to join. At the beginning of these conference calls we have a section on what is new in the online marketing world that we believe is worthy of your attention. This is a video of the introduction of May’s conference call 2013.
This month we talk about decoding not provided traffic that appears in Google Analytics, new hyper localised Google Maps, the new local business listing rating system and a great new resource to check out from Google!
http://www.youtube.com/watch?v=95RRRvggq24
Check out Permission Website Marketing’s May Newsletter Update.
For more website marketing information, take a look at our online marketing services, or give us a call on 0800 893 477.
It would seem that fishing has now gone all hi-tech. The other day, while wandering along a stretch of Coromandel beach with my ageing and mad Spaniel, I noticed a couple on their quad bike carrying what look like to be a orange torpedo down to the water’s edge. Mello, my Spaniel, was as interested as I and did her best to get in the way as they bent down and fussed away to get the thing started.
Within a few minutes a power of froth was coming from the propeller. While he slowly guided it into the surf she walked back holding a line that joined it to their bike. In a few moments the orange flash was tunnelling out through the surf towing a fishing line of 25 baited hooks behind it. Minutes later all you could see was the golden flash of the light as it buzzed through the surf far, far off in the distance.
I sauntered up to learn more. Apparently the “thing” would cover 1Km in 10 minutes and only needed to be out there for 45 minutes at the right time of day. So all you needed to do was invest an hour each day (and the $2750 for the torpedo thingy”) and there was a good chance you would be hauling your fancy gear back with some additional weight of fresh fish. Great for those short on both time and something for tea.
Not such a good plan if you like to fish the way I do.
Needless to say, the fish are safe when I turn up on the beach. My surfcaster is ageing, the reel is even older and you can smell my tackle box before you see it. The ideal evening fishing for me involves lots of casting, lots of still, and very little chance of taking anything back home. A perfect way to spend 3 hours alone on the beach.
I don’t think I’m too dissimilar to others I see lined up next to me. For us it’s more about the time of peace and quiet with the occasional flurry of excitement thrown in occasionally. The appeal of pulling out 25 snapper in 45 minutes is mildly appealing, that is until I think through the logistics of gutting all that flesh and then finding something else to do instead of heading back too early.
The world of online marketing is a space filled with a mass of technology and services all claiming to do more things in less time, just like our friendly orange torpedo example. Very rarely does it all turn out exactly as sold. (Just as an aside while we were at the beach I spotted a notice in the local store posted by someone who was looking for help as their fishing torpedo had come off its line and hopefully was going to wash up on the beach rather than reach landfall in Argentina.)
This month our newsletter talks to the point of mixing up your online marketing tactics to make good use of those delivered in both a “slow” and “fast” way. The theory being that the best long term competitive advantage comes from applying tactics that take the most time to deliver.
The same can apply when influencing the speed at which people purchase online. A small proportion of your purchasers will dive into their wallets immediately on arriving on your site. Others will need time to ruminate about their decision. Most online marketers spend time influencing those that buy quickly when there’s a larger group who need time to make a decision.
Email marketing comes to mind as a key strategy to achieve success here. By now everyone should be familiar with its use, but rarely is its effectiveness measured in the right way. While most track who opened the message and what links were clicked within it, very few look back and see if by receiving these messages customers were more or less likely to buy again or for the first time. These are the real outcomes which the tactic needs to be measured against.
Paid advertising can be a star here too. Here you can set up campaigns to re-market to those that bought from your website before to entice them back as they trawl the Internet. Likewise, if they came but didn’t purchase then your re-marketing could convince them to come back and make that first purchase.
Direct mail, and dare I say telemarketing, are other strategies that can be deployed successfully here too. Just because you created the lead online doesn’t mean you have to always use the same channel to market to them in the same way. Mix up any of these tactics with to help you achieve the most influence where you can.
And that’s the true illusion here. Whilst technology can present the appeal of achieving more in less time, when it comes to making buying decisions the majority still need time to think things through. That will never change.
So this month think about those who have contacted you and are still thinking about the services or products you offer. What can you send to these who have expressed an interest but haven’t purchased yet? And how about those that have bought before but haven’t for a while? What can you do to entice them back?
Every month we hold a customer conference call that all of our customers are invited to join. At the beginning of these conference calls we have a section on what is new in the online marketing world that we believe is worthy of your attention. This is a video of the introduction of February’s conference call.
This month we talk about AdWords Enhanced Campaigns, Google AdWords Script and important reports to improve marketing efforts.
http://www.youtube.com/watch?v=uK7IFoqKkeo
Every month we hold a customer conference call that all of our customers are invited to join. At the beginning of these conference calls we have a section on what is new in the online marketing world that we believe is worthy of your attention. Below is a video of the introduction of Novembers conference call. This months new and nothworthy information relates to Google Analytics – Universal Analytics and Online and Offline Tracking, Google Webmaster Tools – Disavow Links, Google Adwords – Location Targeting, Google Tag Manager and sending email campaigns at appropriate times.
http://www.youtube.com/watch?v=t8wbowtFrCg
You can find the latest website marketing update here.
Every month we hold a customer conference call that all of our customers are invited to join. At the beginning of these conference calls we have a section on what is new in the online marketing world that we believe is worthy of your attention. Below is a video of the introduction of Octobers conference call. You can access research here on the best time to post on Facebook and the mobile marketing strategy.
http://www.youtube.com/watch?v=hnZuN1Zz5-k
So your competitor tells you over a beer that they got 100,000 hits on their website last month. You know that your numbers show just 5000 unique visitors. Should you celebrate or commiserate?
You would be surprised how many times we are asked to help others answer this question. So let’s get stuck into the measurement basics of website analytics especially when it relates to defending your stats at the bar.
Firstly, the concept of a “website hit”, also called a “page hit” is well outdated. It is the count of a retrieval of any item of a graphic or a page from a web server. Build a website containing a ton of small graphics and your “hit count” will skyrocket while your visitor count remains the same.
Some count page views instead of hits. This is marginally better but still not ideal. Page views are exactly that – individual views of the pages your website holds. Own a website with lots of pages and if your navigation is good then your page view count should be higher than those with “skinnier”sites – even though the latter could be receiving more traffic.Nevertheless, tracking page views instead of hits is one step closer to the ideal measurement of measuring the real people who fire up their browsers and visit your site.
This leads us nicely to what Google Analytics (GA) focuses on tracking ̶- real, live, website visitors. Yep, the human biomass who clicks from page to page and hopefully does what you want them to do.It does this by setting a cookie on the person’s browser on their computer when they arrive.
The accuracy of this approach falls down if a) they use more than one browser on the same computer because then they are counted as two visitors; b) two people use the same browser on the same computer because then they are seen as one visitor; and/or c) either group clear their cookies or don’t allow them to be set.
Allowing for all this, once a person arrives they are marked with a cookie that tags them as visiting your website and a counter kicks off to measure the time of their visit. If they come back tomorrow they are seen as a returning visitor. (They have up to two years to come back before they are counted as a new visitor again.) Their visit is finished when a) they leave your site; or b) stay on a page for more than 30 minutes. (If they leave and come back within 30 minutes this is counted as part of the original visit.)
So just to recap, here are some of the core visitor, visit metrics GA reports on and what they mean.
Visitors – real people who visit your website.
New Visitors – those arriving for the first time.
Returning Visitors – those coming back to see more.
Unique Visitors – the total number of unique visitors to your website. I may come to your website three times in a month – the first as a new visitor, the other two as returning visitors.However, I am only counted once as a unique visitor. This last stat is a good one to use to compare site activity.
Visits – the time spent looking through your pages.
% New Visits – the % of visits of your site’s total that were generated by people visiting your site for the first time.
So when someone next tells you they had 100,000 hits on their website, tell them while that’s nice, how many actual people does that represent?
Let’s say you’re a large multinational operation with branches spread all over New Zealand and each and every branch manager is keen to get started with their own Google AdWords advertising campaign – all sending traffic to their part of the one website. In a number of ways this is all good news. However in a similar volume of reasons this could be the start of a massive headache for all – unless it is managed properly.
So with the goal of wanting to remove any undue stress from a Branch Managers life –here’s my take on the good – and not so good – parts of the opportunities that lay ahead.
So let’s tackle the good stuff first.
OK by getting this far there’s obviously some widespread belief that online advertising could well do some good. This in itself is a major achievement. I have been involved in situations where half of a national group are keen – a third is not and the rest are have no opinion at all. Unfortunately in most situations like these the default status of doing nothing tends to get the vote. It can be a lot easier to say why something shouldn’t be done than why it should. Fortunately that hurdle has been passed.
Which leaves the final test of actually putting some money behind the idea. And like the saying goes – talk is cheap. Nothing tends to clarify the mind as much as allocating some hard earned marketing budget into an “idea”. Once a group has collectively reached this stage – especially one that spans the country – then they are a few rungs ahead of the competition.
So this leaves what may been seen as the easiest part, getting the job done and buying some Google Advertising. This is where it all could unravel into a complicated and expensive mess.
Some see the next obvious step being for each location to set up their own Google AdWords account and begin to manage their own budget and ads. The Google advertising system would make this a breeze to do. Non technical people will have an account, some keywords, a few ads displaying and a credit card sending money to Google in less than 15 minutes.
And all of it will be the WRONG choice for a situation like this. Here are four reasons why this is the case.
Reason #1. Broad match keywords = Bidding Confusion
Before I start let me tell you that this reason is probably the most complex of the four to get your head around. But the effort is worthwhile. Once you understand this one then you will see why a distributed AdWords Account solution is such a problem.
OK let’s start. Google allows you five different ways to bid on the terms prospects use when using their search engine in. For sake of simplicity I’m just going to cover two here – exact match and broad match. So if you have the exact match keyword of “Auckland Flower Shop” and someone types the search term “Auckland Flower Shop” and then your ad would show. And conversely if you had an exact match keyword of “Flower Shop” without the Auckland part then the ad would not show.
Follow so far?
OK now let’s deal with the second option – broad match. This is the type that Google has you pick by default when setting up a new account. Most newbie AdWords advertisers have accounts full of this match type of keyword.
A broad match keyword of “Flower Shop” will show your ad for these search terms “Flower Shop Auckland”, “Flower Store, “Flower Shop Wellington” and even “Flower and Vegetable Shop”. Think of it as Google’s way of stretching the meaning of your broad keyword to ensure your ad is shown to as many people who are searching.
Now if you are an Auckland Flower store then using this match type in your advertising account then the first two search terms are worth their click cost. The other two – “Flower Shop Wellington” and even “Flower and Vegetable Shop”- are a waste of your money.
Now if you have a dozen flower shops around the country all running their own Google advertising within their own accounts and all using the broad match term of “Flower Shop” then you can just imagine the confusion. The Auckland shop could be displaying advertising for the search term “Wellington Flower Shop” and the Hamilton store could have their advertising showing for those typing in “Auckland Flower Shop”. And every store could have their ads shown for “Flower and Vegetable Shop” when none of them sell vegetables.
Fixing all this mess is made a lot easier by gathering all the keywords together into the one Google advertising account and diligently using the correct keyword match type to ensure the most relevant store’s advertising is shown for each searcher.
Reason #2 You are only allowed to advertise your domain once for each search result.
Google makes available about 10 places for paid advertising next to its search results. The less scrupulous advertiser may think that by setting up 10 different advertising accounts they could place ads in each space and block out their competitors. Not so fast. Google only allows one advert to be shown for each website domain for any one keyword result.
And in situations like I mentioned before – where multiple accounts are trying to bid on the same keyword and sending clicks through to the same web domain – guess which ad Google decides is the best one to show?
The one that makes Google the most money.
So by bidding as separate entities for the same keyword each advertiser from the same domain is effectively bidding against themselves and by doing so increasing their advertising costs. Not so smart.
Reason #3 Negative keywords taking longer to surface
Earlier I told you about the different match types Google lets you use mentioning two of the five that are available. This time I need to cover one of the three left – negative match. This is a keyword that you want to ensure your ads don’t display for.
So using the last example of the flower shop the term “Flower and Vegetable Shop” fits into this category. In this list could also be terms like –“setting up a flower shop”, “flower shop signs”, “flower shop jobs” – all relevant search terms but highly irrelevant to a normal flower shop wanting to sell flowers.
Most new Google AdWords advertising accounts don’t have any negative keywords in them. People just don’t think of them when starting out. Later on – if the advertiser actually takes the time to look into their account to – they are added as they come to surface in the actual click reports Google provides. Which is the issue – they take time to surface. The more clicks you are buying the faster these details come to hand and therefore the quicker the account becomes optimised for the right types of keywords.
Final Reason #4 – Spreading your Google Account Love too thinly
Providing relevant advertising to searchers is a key goal for Google. The more relevant your advertising is in the eyes of Google the greater the benefits they will provide you. (And for “benefits” think “cheaper bid prices”.)
You can find out how “relevant” your advertising is in the eyes of Google by looking at the Quality Score they have allocated to each of your keywords. This is a value between 0-10 that is based on the relevance to the searcher of your ads, keywords and landing page
From what we have been told and seen, Quality Score, is also attributed at a Google Account level too. So if you own an account that delivers a steady stream of high quality (in Google’s eyes) advertising then some Google love in the form of rising Quality Scores for your keywords will come your way. And obviously the more advertising you buy and properly optimise, the greater your chances of building an account like this.
So there you have it. Four reasons why setting up an AdWords account for each and every branch is not the best way ahead and how the one properly managed Google AdWords account by a central source, will do this job so much better for all.
Let’s imagine I had a coin-operated Gumball machine that delivered, in place of sugar-coated balls, a steady supply of OK-quality prospects. How much cash would you place in the machine to get each prospect?Now most would say “as little as possible”. This I understand; that’s normal human nature at work. But what if I told you that you are not the only person who was able to use the machine?
You see, behind you are your competitors eagerly waiting to use it once you are finished. Plus, the rules state that you pass to the person behind you when you choose not to enter any more money. So,knowing this, how much would you enter before you decided to pass it to the competitor behind you?
Got you thinking a bit more now?
Great, because the Google AdWords advertising system is very similar to that Gumball machine.And every time you launch your campaign you are figuratively lining up next to your competitors as you all try to attract the same profile of prospects.
Now,getting back to the Gumball experience, the smart person would have done their sums before their turn came up.And while the others may spend too little and miss their turn or spend too much and market themselves out of a business, the smart ones would know exactly how much to enter before they expected a prospect to arrive, and when to pass if it didn’t eventuate.
So let’s work through the steps they would have taken to make them so smart. Firstly, they would have calculated the likelihood of average quality prospects turning into clients.Then they would have a good indication of the average amount of profit (not margin) that each customer was worth.
Calculating customer worth becomes interesting when customers are retained for a long time. They can end up becoming very, very valuable.In these cases, worth can track profits for not only the first sale but right through to an expected multi-year life span.
In markets like these the Gumball machine is ravenously hungry for cash before it yields a prospect as competitors are willing to load up coin after coin to get that one prospect.The same applies when prospects have a high propensity to convert into a customer coupled with a high transaction value. In both of these cases you’d better get used to shoving in those coins to get the growth you need.
The Gumball machine concept is relatively straightforward but I would suggest that less than 10% of Google AdWords advertisers know the number at which they should buy prospects and, conversely, when they should pass to the person “behind” them. Based on my unscientific research over 10 years of online marketing experience I have only come across two clients of ours who, when asked for their “gumball number”,were able to provide it.
The first was a world leader in a very competitive health and fitness arena;the second was a highly successful one-person business in financial services. Both knew the marketing “numbers” of their business down pat. In each case it was – and still is – a pleasure to work with them. So long as we can provide them OK-quality prospect leads at a cost below their “Gumball” number then all remains well in the land of online marketing.
So why do so few advertisers know this number?
One reason could be that those selling traditional advertising never touted it as an effective way to measure performance. “Investing”$1500 on a newspaper advertisement and not being sure if the 10 leads captured that week were solely due to it makes it either a great purchase or a shocker. Whereas online there’s more measurement than you can shake a stick at and determining the exact cost for each prospect captured is possible with just a few clicks of your mouse.
Secondly,as business owners we may have found the whole financial side of measuring marketing performance a bit daunting. If you are in this camp, then this book may help̶Found Money: Simple Strategies for Uncovering the Hidden Profit and Cash Flow in Your Business by Steve Wilkinghoff. You can find it on Amazon here. As a non-financial person myself, I thought it did a great job of showing you the simple steps necessary to create some lasting financial insight with regards to your marketing spend.
Sorry, there really isn’t any good reason to not know your “Gumball number”.
The giant Gumball machine of online marketing is here to stay. And while I relate it directly to Google AdWords, in reality it signifies the complete online marketing space. Your option is to either stand in the queue armed with the right knowledge or take your chances like the rest of them. Personally I would prefer if it was the former. Why not give us a call today if you think this is a good idea too.
I am reliably told that successful baking is a lot like chemistry. All you need to do is follow the instructions, add in the right ingredients in the right order and you are all set to create the same successful outcome of your “experiment” every time. Somehow, it never seems to work the same way for me. Either I rush things and miss something out or, even worse, mistake one thing (think salt) for another (think sugar) and a disaster is on the way.
Nevertheless, get it right and what you see in the image at the top of the recipe page should be close to what you take out of the oven. And let’s face it, it’s that image we all want. Yep, a nice thick slab of carrot cake with a very non-healthy spread of cream cheese icing. Yum scrummy. The thought of munching through this makes all the hassle of creating it and cleaning up afterwards worthwhile.
E-commerce websites are nothing like carrot cake. That I know. I also know that their owners all have revenue and profit targets they want them to meet. And for me that’s the picture at the top of the recipe – the bit that gets them excited. However, for many, the bit below – the recipe they need to follow to make the image a reality – that bit is missing. What exactly do they need to do to “bake” their way towards these numbers?
All this came up during a recent customer planning session. We were working through the next 12-month target for a very successful e-commerce website. The target – or the yummy picture that got us all excited – was very enticing too. Double digit growth was expected in both top- and bottom-line numbers. But what was the recipe they were going to follow to make this a reality? There were a few blank looks around the room so I started with the carrot cake analogy and then as a group we worked through designing the recipe they would need.
Fortunately, an e-commerce website requires fewer ingredients than your average carrot cake. The four staples are: visitors, customers, purchases and costs. Of these, it’s the customer part that’s the most important to sort first. The outcomes of the work in this area drive the marketing costs you will need to afford and with it an understanding of the visitor counts this expense needs to generate to make it all work.
So how many customers did they need to achieve their goal? Was it, say, 5000 people spending $150 each or 1000 spending $750 each? And of these customers how many would they expect to buy more than once during the year? And of this group what would their average annual spend be? These are very simple questions that can be deceptive in the amount of work required to find credible answers for. In this case, the client had to go away and analyze their previous 12-month sales figures and then spend a few days drilling through this data to reveal the answers they required.
Fortunately for them they had a great business, selling a great product that customers purchased reasonably frequently during the year. And of these three wins it was probably the last one that was the most important. Repeat purchase e-commerce websites are so much easier to make work. Email marketing fits nicely into this space too. So does paid search. You can afford to enter this market and pay high click costs if you have the promise of a repeat purchase customer at the end of it all.
Conversely, businesses built on once-only purchase activity are a challenge. To make these work the margins need to be good, with strong and obvious points of differentiation to make them sustainable. Both of these are hard to create and even harder to protect.
But as I mentioned earlier, thankfully this wasn’t the case here so we mapped out expected sales from repeat purchasing, allowing for some increase. Some of the margin from this work would support our email marketing efforts – a solution ideal for customer retention. The gap we had left over was a new customer revenue line. This was spread over the months ahead – allowing for some demand fluctuations during the year based on seasonal changes that affected their industry.
Then we had traffic to sort. We had a good understanding of the site’s conversion rates for new customers based on the last 12 months so we could work out these figures and calculate the required visitor growth to make the conversions we wanted a reality. We then split this between SEO and paid search, based on the ability of specific keywords to reliably bring us new customers.
After a couple of relatively focused sessions and some deep analytical work at their end we had our recipe. And yes, it had some assumptions that needed validation as the year progressed. Things like “we expect existing customers to spend 15% more this year due to our improved email marketing” and “our product margins will remain the same”. But still, it was there ready to be worked through during the months ahead.
So are you an e-commerce website owner who just stares at that nice revenue and profit number hoping it will eventuate? Well, now’s the time to stop hoping and start creating the ideal recipe for you and your business. Let me know if you need any help with your ingredients.
Have fun.