Are your AdWords campaigns working… like, really working?
That might be a surprisingly hard question to answer. Anybody with an AdWords account can see if they’re getting clicks, and it’s not too hard to set up conversion tracking — but chances are that the reason you put money into AdWords was that you wanted to get money out.
In other words, you want your ad spend to produce sales.
As obvious as this statement is, actually determining how different factors in your AdWords campaigns affect sales can be fairly difficult. To try to shed more light on the subject, we recently conducted a study on how different variables affect ad performance at Disruptive Advertising (my company). We pulled data from well over half a million keywords and measured return-on-investment against dozens of variables.
In short, we wanted to answer the question: What predicts profitability in an AdWords account? Our findings may surprise you.
1. High CPC = low profitability
With any pay-per-click platform, the more clicks cost, the less profit you’ll make. However, many businesses are quick to argue that if a new sale is worth enough, it’s worth it to bid on keywords with expensive CPCs.
But do things actually work out that way?
In our study, we found that ROI rapidly drops off as your cost-per-click (CPC) increases. For example, take a look at data we pulled from a variety of e-commerce companies:
Now, for these companies, a sale was worth anywhere from tens to thousands of dollars, so you’d think that at least some of their keywords would perform well at a higher CPC. But it didn’t work out that way.
Even for expensive products, higher CPCs were directly linked to low ROI, to the point where paying more than $5 for an e-commerce click is like saying, “No, I don’t want to make money on this product.”
2. Long-tail keywords are a waste of money
Based on the above findings, it seems like long-tail keywords would be the way to go. After all, the longer the keyword, the less competition there is and the cheaper the click will be.
However, that only works up to a point.
When we looked at how keyword length affected ROI, we found that the most profitable keywords typically had 15 to 30 characters.
If you think about it, these findings make sense. Below 15 characters, you face one of two problems:
- The keyword is too non-specific and produces low-quality clicks, or
- The keyword has good volume and intent but is way too competitive.
Above 30 characters (and especially above 40 characters), the searches are usually incredibly specific and have low conversion intent. For example, we once saw an AdWords account that had received 127 clicks from the search term “how do I remove the terrible smell from carpet that has been flooded using household ingredients.”
Despite all these clicks, this search term had never produced a single conversion. Why? Well, people who bother to type in a 96-character search term like this are usually looking for a very specific answer — the kind that you get on a forum or answer board, not a landing page.
3. More clicks don’t mean more conversions
If you have a conversion rate (CR) of 5 percent and a click-through rate (CTR) of 5 percent for a given ad, it’s easy to assume that doubling your CTR will double your conversions. While that may be true in some situations, as a general rule, increasing your CTR actually tends to decrease your conversion rate.
Yes, you read that right.
In our study, higher CTRs were typically associated with lower conversion rates. Let’s take another look at that e-commerce data we were talking about earlier.
(Note: Since this is e-commerce, a single click sometimes leads to multiple sales, which is why a good chunk of our conversion rates fall above the 100 percent mark.)
As you can see in the graph above, as CTR improves, the conversion rate plummets. But why? Since people only click on ads that they think match their intent, wouldn’t a higher CTR lead to a higher conversion rate?
Unfortunately, that only happens if you are targeting the right audience with the right message. In many cases, CTR improves because you are targeting the wrong audience with the wrong message (or at least an unclear message). As a result, they think they’ve found what they’re looking for, only to end up on your landing page and discover that your business isn’t what they really want.
4. There is no silver bullet
Sadly, this is where the clear data ends. Although AdWords experts love to say, “Pull this lever and you’ll make more money,” it doesn’t work out that way in practice.
For example, let’s take a look at how well click conversion rate (percentage of clicks that convert at least once) predicts ROI:
At first glance, this graph looks great! I mean, look at that trend line. Clearly, the higher your conversion rate, the more profitable your campaigns will be, right?
While this graph looks compelling, there’s a problem. If you take a close look at the graph, it’s pretty clear that the dots don’t really follow the line. In other words, the trend line doesn’t do a very good job of predicting real-life results.
In statistics, we describe how well a trend line fits the data using R2 (R squared). In the case of the graph above, the R2 value is 0.31, which essentially means that the trend line is only accurate about 31 percent of the time.
In our study, we found that the best predictors of ROI were the amount of time spent on a page and the number of pages visited. That’s kind of a no-brainer — if you’re converting, you’re going to spend more time on the site and visit more pages. But it’s hard to use that data to improve campaign performance. After all, forcing someone to visit more pages and spend more time on your site isn’t likely to get them to convert.
But what about all the other metrics we love to watch? How does modifying those metrics affect ROI?
As you can see above, the very best predictors of ROI are CTR and CPC. But even those factors only have R2 values of 0.27 and 0.19, respectively. A 27 percent and 19 percent success rate aren’t exactly the kind of wins you want to wager money on.
Now, that being said, these numbers are based on our whole data set. When you group companies with a $0.25 CPC and a $10 product with companies with a $25 CPC and a $1,000 product, your data are not going to be very consistent.
So, let’s try to simplify things. Instead of looking at our whole data set, let’s look at the R2 values for e-commerce keywords with very similar CPCs and see if that provides any additional clarity:
In this chart, I’ve assigned bronze, silver and gold medals to the top predictive factors in each CPC range. As you can see, hashing out the data in this way does improve the predictive value of each of these factors, but our best performer is still only accurate about 50% of the time.
So, regardless of what you may read out there, there is no “silver bullet” for AdWords performance. Improving your CTR, ad position or conversion rate might improve your ROI, but it’s a shot in the dark.
Really, when you get right down to it, every business and market audience is unique, which means that the only true “silver bullet” may be blood, sweat and tears. That being said, these data may be a bit of a relief to you.
After all, if improving these metrics doesn’t reliably improve ROI, that means you can spend less time worrying about your CTR and more time identifying new, creative ways to reach and influence your target audience. If you’re focused on creating profitable ads and campaigns, rather than improving surface metrics like bounce rate, you’ll probably end up with better results.
Keyword research is not easy. Every SEO has done it, but few will ever master it completely. In this guide we go beyond raw search volume data to metrics that
This is not supposed to be just another keyword research post. This post is about going beyond raw search volume data, using metrics which will help you choose keywords which deliver the best ROI for you right now.
To start with I am going to assume you have carried out your keyword research already, and are starting off with a comprehensive list (if not, our complete guide to keyword research for SEO will help you do this).
The more keywords, the better: you want to start with a massive data set and then use the below points to whittle down your keywords.
Here is the full list:
1. Get Cost Per Click data
Cost Per Click, or CPC data is invaluable to SEOs. Why should we have to test one keyword’s effectiveness against another’s when the PPC guys have already got it figured out?
If marketers aren’t spending money to appear on the keyword, it’s clearly not commercially viable. We want to be using CPC data to exclude keywords.
Any keywords with less than 50p CPC clearly isn’t commercially viable, so ditch them from your list, and prioritize all those keywords with over £1 CPC.
2. Focus on what you already rank for
This point is about prioritizing short term goals. There is no point focusing on a keyword, no matter the search volume, if you don’t rank for it.
Moving a keyword which isn’t ranking to page 1 is going to take time, and will only start delivering traffic right at the end. Moving a keyword from position 11 to position 9 can take no time at all, and you will see the traffic coming through instantly from managing to get on the first page of Google.
Below is the classification we use at Zazzle Media to secure short-term wins for our clients and to help them to manage their expectations too. The position range column refers to the ranking position of each keyword on Google.
Position Range Opportunity Group 2 – 4 Short Term 5 – 20 Quick Win 21 – 39 Medium 40+ Long Term
Click-through rate studies all show that it’s page one or nothing, and as ‘Short Term’ and ‘Quick Win’ all sit on page 1 & 2, the vast majority of your traffic will be coming from these.
Long term keywords should not be ignored, especially if they can deliver significantly more traffic than other keywords, however your keyword optimisation strategy should reflect the effort-to-benefit ratio which the above classification will identify.
3. Choose the easy options
SEO is not done in a vacuum. For every campaign you invest in, there is always going to be a competitor out there investing more than you.
Ranking above a bigger brand is hard, very hard! If you’re not up for going toe-to-toe, budget-wise, with the big players in your field, then you’ll need to go after the easier keywords.
You can outrank more authoritative sites with more specific, more engaging content. However, as a rule of thumb we use referring domains as a signal of competitiveness on the keyword.
We use Majestic’s Open Apps to get referring domain data at scale. However, any backlink audit tool is sufficient. It’s best to look both at domain and URL level with this, with extra weight put on URL level (a 75/25 split).
Compare the average difficulty score for your keyword set against the URL on your site you wish to target the keyword on, and rule out any keyword massively out of reach.
4. Focus on traffic, not search volume
So, if I’m searching for a fashion item… I type in ‘dresses’ only to see that the results page is full of women’s dresses – this isn’t what I wanted! I then have to change the search to ‘men’s dresses’ to get the desired result. Think about the thousands of other men in my position!
But seriously, some keywords will have more clicks per search, some less. Did you know the clicks per search for the phrase ‘Chelsea Boots’ is only 0.64? This means that out of every 100 searches, it only results in 64 clicks.
A search volume of 25,000 looks absolutely massive, but a clicks per search of only 16,236 massively reduces what was a huge keyword.
We get this information from Ahref’s keyword explorer, and it really is impossible to do it any other way. You can get a lean towards how strong a keyword is through inspecting the SERPs and seeing the conformity of the ranking URLs. Are all the websites similar? Or are we seeing informational mixed with commercial results, mixed genders, etc.?
Google is all about delivering the best results for its users, and a mixed bag of results is a quick indicator that it doesn’t know what the user wants, so we’d anticipate lower click volume. It’s impossible to do it this way at scale, but will help you choose between a few keywords.
5. Use seasonal data/trends
Lots of businesses rely on seasonal traffic, which will completely invalidate average search volumes. Make sure your traffic estimates are based on when you are busiest, and focus your strategy on delivering growth at that point in time.
This means on-page and technical changes made months in advance, before consolidating link equity to key pages when they need it most.
Equally so, Google trends is your friend; go after keywords with an upward trend (obviously), don’t prioritize a dying keyword. You can get exports of your top keywords and use a SLOPE formula to determine whether your keyword is increasing or decreasing.
This is especially handy for your long-term keywords, to determine their true value.
6. Focus on keyword categories, not individual keywords
When completing keyword research, your keywords should be tightly categorized and mapped to individual URLs or directories. This allows us to see opportunity at a grander scale, helping you redraw the boundaries, and think more naturally about optimization.
Optimizing for individual keywords is so far outdated – content marketing helps us move beyond this and optimize for topics (this guide will help you do so). This helps us to be more informative and more comprehensive than our competitors. By grouping keywords by tight semantic relationships, you will not only have the head term, but also all the queries people have.
Think about it: what is more relevant and more authoritative than a directory/website that has great, in-depth content for every stage of the funnel?
Focusing on groups of keywords is not only more natural, but will deliver more opportunity for traffic growth as your supporting content ranks for keywords in its own right. If you have done enough to capture the right keywords, you can get conversions through bottom of the funnel, informational keywords.
The above six points will help you to have a more strategic approach to your initial keyword research, which enables you to get the best out of the resources you have – and get above the competition.