I am always surprised when I find businesses measuring Ad effectiveness based on click-thru rate. CTR is a simple measurement of clicks given as a percentage of impressions. That is, for a given volume of ad impressions, some number of readers have clicked-thru to your site. Unfortunately CTR can be very misleading. If you create a gee-wiz ad (such as click here to WIN), you can make your CTR soar, but if 100% of those clicks bounce, or otherwise don’t go past your landing page, you have wasted your money. What is needed is some kind of conversion or success metric to indicate that a positive step has been taken beyond just clicking the ad.

Conversion tracking is offered within Google’s, Microsoft’s and Yahoo’s the Ad interface. To track conversions, a code snip-it is placed on a confirmation page and information, like total purchase amount, can be captured. For a eCommerce site this provides straightforward business case as it is easy to understand that paying $1.00 for a click that result in a sale that nets $2.00 is a good investment.

If you don’t sell on-line, you can measure demo requests, requests for information, or file downloads as conversions. For service businesses, if the prospect selects your Contact page, where your street address, phone number, or email link are displayed you have established a clear ‘buying signal’.

I highly recommend turning on conversion tracking and installing the conversion code for every search engine you work with. Once this is enabled, you will have an additional column in your ad account showing ‘conversions’. Use conversions to help you tune the wording in your ads and to see which keyword phrases are producing the best results. One note, if you rely on a Contact page as a success metric, be sure to remove address, phone number, email contact, etc. from other pages on your site or your conversion rates will be skewed low.

There is also a conversion measure is also available in Google Analytics called Goals. Google Analytics Goals lets you identify a single page visit as a goal or visits to a series of pages can trigger a Goal. Setting ‘Goals’ helps you identify your most fertile source of leads and tune your advertising budget accordingly.

Web Analytics adcenter, adwords, conversions, CPC, leads, yahoo marketing

I have blogged about this breaking Adwords campaigns up before, but recent events merit revisiting this approach to PPC management. While employed as a in-house marketing manager, I was faced running campaigns that included some very high-cost phrases (in excess of $10). This select group of phrases appeared to be the only words that were converting. We measured demos, and trips to the contact page as conversions. We received conversions only once out of eight or nine clicks (at $10/click a conversion cost $80 to $90). Moreover at $10/click, I was quickly exhausting my daily budget for few paltry conversions. This was clearly a chicken and egg scenario, I needed leads to get sales, but I needed sales to pay for generating leads.

A typical sale was between $2,500 and $5,000. When you divided new sales revenue by leads over the span of a year, we had an average revenue of $1000/lead. So I felt paying up to $100/lead was reasonable.  However, we had a sales cycle of 3 to 6 months and since every lead doesn’t close, I needed to temper my enthusiasm for getting new leads with the realities of cash flow.

My first thought was to separate my AdWords campaigns by keyword cost, dividing words into producing and non-producing campaigns. This way I thought I could focus my ad dollars on these high-dollar phrases where they were producing the highest number of leads.

Then something unexpected happened. Prior to dividing my campaigns up, my high-dollar, high-conversion words had been consuming each days ad spend. After placing high-dollar phrases in a standalone campaign with its own budget, lower cost words were able to run for longer periods. Statistics emerged showing that while the lower-cost ($3.50/click) phrases converted at a lower rate, the cost per conversion was half the cost of the high-dollar phrases.

As a result of this exercise, we abandoned the high-cost phrases, reduced our ad spend by half, while increasing our exposure and maintaining constant flow of leads.

I now believe you need to take this a step further and separate campaigns into high, medium, and low (or exposure) campaigns.

High and Medium campaigns are those which convert to leads at a solid rate. Here, you have to look closely at your cost per lead (annual new sales revenue/leads) and your cash flow to determine what you can afford to pay. Phrases whose cost start moving into stratosphere can be abandoned or throttled in separate campaigns so they don’t exhaust ad budgets prematurely.

The low-cost campaigns provide exposure and build name recognition in exchange for an occasional lead. If phrases in this group become performers be sure to move them in to higher performing campaigns to be sure they have adequate budgets for them perform. These low-cost/ exposure campaigns may also include words that have become too expensive to keep within the top 5 positions on the first page, but might continue to provide exposure and even an occasional click from lower positions or even second page results.

So what position should you shoot for? While I like to stay above the fold in position 3-5, there is certainly and argument to settle for an occasional click with a lower cost from a lower position. – but again, I think it all comes down to cost per conversion and what you can afford to pay for a lead.

SEM Huntsville adcenter, Budgeting, conversions, CPC, leads, ppc, yahoo marketing

I think most of us do the basics with our PPC campaigns, grouping phrases and then those phrases with related ads (such as marketing: internet marketing, web marketing, and services: SEM services, PPC Services…). However a recent exercise I went through yielded big benefits.

Now let me preface this by saying I don’t advocate the use of click through rates to determine the effectiveness of an ad. I always look for some kind of conversion metric to use. You may be thinking that you don’t have a conversion metric, but even if it’s just measuring visits to your contact page, you need something to ensure that you are doing more then just getting people to your click on your ad. Read more…

SEM Huntsville Ad Campaigns, CPC, CTR, Search Engine Marketing, SEM Huntsville