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Pay Per Click (PPC) Advertising: It’s about Traffic that Engages and Converts: Not Impressions, Clicks, or even Click-Through Rates (CTR)

Often, after we take over a Pay Per Click (PPC) search engine advertising campaign for a client (such as a Google AdWords campaign) we get a panic call from the client that goes something like this, “You’ve lowered our Impressions!” or “Our Click-through rate has gone down, What are you doing!” or “The number of Clicks to the site is down!”

We then have to try to convince them that the metrics they were using to manage the PPC campaign are not the most important metrics, rather it’s about bringing targeted traffic to the site that is engaged enough to convert in some manner, whether this is filling out an inquiry from, purchasing something, picking up the phone and calling, downloading an important white paper, visiting a brick & mortar facility, or at the very least spending a reasonable amount of time on the site.

Some client’s who may have been running their own campaigns for some time have a very hard time understating and accepting that when you manage a PPC campaign with the goal of improving the more important metrics of Conversions, Cost per Conversion, even Time on Site, you very often lower one or more of the other metrics.

In this post I’ll how you some actual examples from client campaigns where we’ve lower one of these metrics but improved some other more important metrics leading to more conversions or a lower cost per conversion or both.

Impressions & Clicks Have Declined!!!
This client was running their Google AdWords campaign themselves until we took it over about 4 months ago.

The report shows the past year’s results as reported by Google Analytics:

Notice that the number of Impressions (the number of times the client’s ads were shown in the search results) has gone down since we started managing the campaign and the number of Clicks (the number of people who clicked on an ad) is lower in June 08 then when the client was running the campaign

Here’s the typical panic call – “Our impressions are way down!” or “The number of Clicks is down!”

Yes they are. But let’s look at the more important numbers:

 

The number of impressions is indeed down dramatically and the number of Clicks each month was lower in June then ever before. However, notice that the number of conversions is up more than 300% (in this case it’s the number of visitors who paid to become members – “Approx # of Sign Ups”). The related Conversion Rate is also up more than 300% (The conversion rate is the percentage of the people who clicked through to the site and converted, i.e. signed up to become a member).

Look at the decreased cost per conversion (Avg Cost per Signup). It’s gone from $266 and $366 per signup in December and January down to $139 and $98 per signup in May and June.

How can this be? How can we lower the number of times the ads were displayed (The Impressions) as well as the number of people who clicked through to the web site and improve conversions at the same time?

We systemically paused keywords and in some cases even entire AdGroups that were not converting into signups at an acceptable rate. When you lower the number of keywords that are running obviously you’re going to lower the number of ad Impressions (the number of times ads are displayed).

More importantly, this client was attracting many of the wrong people to click through to their web site. A high percentage of these people who were not converting. They were spending a large portion of their monthly budget on clicks that were not converting. Their ad budget was being eating up by these clicks. Turning off keywords and ads that were not converting (and testing new ads and keywords) allows the keywords and ads that are converting to run more often within their budget resulting in higher numbers of conversions for a lower average Cost per Conversion.

Impressions and Google’s Quality Score
Some would say “who cares if the impressions are high? I don’t pay unless someone clicks through to the site anyway.

Well, actually you do pay in these days of Quality Score.

If you have large numbers of Impressions with relatively few clicks this means that you have a relatively low Click-Through Rate (CTR: The percentage of people who see an ad and click on it).

For example, in December 07 the above client’s ads were seen 574,901 times. 2,995 people clicked on an ad. That’s 574,901 impressions / 2,995 clicks = a 0.52% Click-Through Rate. However in June 07 there were 160,703 ad Impressions. 2,380 people clicked on one of those ads. That’s 160,703 Impressions / 2,380 clicks = a much higher 1.48% Click-Through Rate. The CTR was almost 3 times higher in June 08 than it was in December 07.

With Google the Click-Through Rate is one major factor that is used to determine the AdWords Quality Score. The lower the quality score the more you have to pay per click for your keywords to be active – called the Minimum Bid. For example, a keyword with a very low Quality Score might require a minimum bid over $1.00 to be active where a keyword with a high Quality Score might only require a minimum bid over $0.25 to be active.

A poorly performing keyword can affect an entire AdWords account, because another factor used to calculate Quality Score is the account’s history. An account’s history is measured by the CTR of all the ads and keywords in the account. If you have many poorly performing keywords in an account this could adversely impact your Quality Score.

Furthermore, Quality Score is used when determining ad rank (the position in the search results) as well as minimum bid prices. Low ad rank and high minimum bid prices can affect your ad’s visibility and performance (Note that some of the above description was provided by Google).

Lower Click-Through Rates!!
There are even times when we actually lower the Click-Through Rate as well as, in some cases, the total number of clicks to improve the overall results of a campaign.

Take a look at these actual client AdWords numbers:

Notice the click-through rate in the more recent month of March 08 (CTR = 0.28%) is less than half of click-through rate for the earlier month of November 07 (CTR = 0.70%). The total number of clicks is also down from 39,933 to 36,766 (Note this is a combined search and content network campaign so the CTR’s are much lower than a search only campaign).

Here’s the typical panic call when a client sees numbers like this – “Our Click-Through Rate is dropping!

Yes they are. But again let’s look at the more important numbers:

Notice that even though the Click-Through Rate and the number of Clicks have gone down the number of conversions has gone up from 235 to 346 and the cost per conversion has been reduced from $48.70 to $40.63. They are spending less for more!

This is very counter intuitive to most people, “How can you possibly lower our CTR and be improving our campaign?!!”

Well here are a few real world examples where lowering the CTR and possibly the number of Clicks actually improves the campaign result, for example:

Changing Ad Copy to Better Focus on the Target Market
Assume you run a PPC campaign to sell high capacity, after-market fuel tanks for pickup trucks (bought by, for example, people who pull campers etc).

You might have an ad like the following:

High Capacity Fuel Tank
For Pickup Trucks
[third line of copy]

This ad might be delivering decent results such as the following:

But what if you only sell fuel tanks for American made pickup trucks? The way the above ad is written it is likely enticing people who own foreign pickup trucks to click through to the site too (clicks that you are paying for). Once these visitors arrive at the site they soon realize you don’t have a fuel tank for their truck. They leave the site and continue their search.

To improve the campaign you might test an ad such as the following:

High Capacity Fuel Tank
For American Pickup Trucks
[third line of copy]

This ad would likely have the affect of reducing the number of the people who own foreign pickups from clicking on the ad while those who own American pickup trucks should continue to click through (in fact, even more owners of American pickup trucks may click through because the ad makes it clearer to them that your company likely has what they are looking for).

That simple change of focus in the ad (we just added one word) might result in the following results (Note that the following numbers for Ad 2 are not actual client metrics they were adjusted to show you how changes to an ad can affect the metrics):

By changing the ad to entice only the target market, the CTR and the number of clicks has gone down (because most of the owners of foreign pickup trucks are no longer clicking on the ad) but the Conversion Rate and the number of conversions has actually increased and the cost per conversion has been reduced. Again, more Conversions for less cost per conversion.

Lower Ad Positions to Reduce the Cost per Conversion
Very often we reduce the maximum amount of the bids on keywords in order to lower the cost per conversion to some target cost per conversion or ROI amount. When we lower the maximum amount of bids on keywords it has the affect of lowering the ad positions in the search results for those keywords. Lower ad positions will typically result in a reduction in the number of people clicking on an ad. However, as long as the ad stays on the same page of the search results the Impressions will remain the same. With the same number of Impressions and less Click-Throughs the Click-Through Rate will go down (CTR = Impressions / Clicks).

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