Many of our new clients believe their web sites are converting well. Most base this on overall numbers of leads and inquiries or sales from their web site, not from a detailed analysis of their metrics.
When we compare the conversion rates for brand vs. non brand keyword phrases it can be a real eye opener.
The example we’ll talk about in this article will include calculations based on a Google AdWords PPC campaign, only because it’s easier to estimate ROI from PPC campaigns. However the findings apply to SEO, the “organic” search results too. Also, this example is for an ecommerce site, but the findings apply to lead generation sites as well.
This client’s PPC campaign has been losing money for 2 years on non-brand phrases!
We’ve been running a small PPC campaign for a client for two years. Unfortunately, their ecommerce site was hosted by a 3rd party that was unable to add conversion tracking code or analytics.
We’ve been able to optimize the PPC campaign based on Click Through rates only for two years. So we’ve keep the budget low all this time.
Finally this fall they finished an upgrade to the ecommerce system and we are able to install AdWords conversion tracking as a well as Google Analytics.
We ran the campaign through the holiday season then looked at the numbers in Analytics for both paid and organic search phrases.
ROI calculation for the Brand Keyword Phrases
Some 40 different brand keyword variations (mostly variations on the company’s name and domain name) were searched on to reach the site in period.
The top 10 brand keyword variations that brought significant traffic to the site had conversions rates (completed purchases) ranging from about 7% up to about 20%. The overall average conversion rate for all brand phrases was a healthy 10.28%.
The average cost per click for their brand names in AdWords is $0.25 so for a 1,000 visitors they would pay about $250 in Google Ad spend.
At a 10.28% conversion rate those 1,000 visitors should result in about 102 sales.
They make about $175 in gross profit on each sale so these 102 sales would result in about $17,850 in gross profit.
That’s a very healthy ROI of $17,600 on an investment of about $250 ($17,850 in gross profit – $250 in ad spend. Plus some portion of the fee they pay us to run the campaign).
ROI calculation for the Non-Brand Keyword Phrases
However the news was not so good for non brand phrases. There were over 100 non-brand phrases. The overall conversion rate for non-brand phrases was an anemic 0.27%
The average cost per click for these much more competitive non-brand phrases was about $1.50 (About 6 times as expensive as the brand phrases). So for a 1000 visitors they would pay $1,500 in Google Ad spend.
At a 0.27% conversion rate those 1,000 visitors should result in about 2-3 sales (let’s be optimistic and say 3 sales).
With $175 in gross profit on each sale, 3 sales would result in about $525 in gross profit.
But they’d spend about $1,500 in Google Ad spend to make $525 in gross profit. They’ll lose money on those non brand phrases, almost a $1,000!
Luckily they have seen a decent return on the brand phrases in this campaign so they may have made money overall. We’re testing the ROI on brand phrases now (that is whether it pays off to run their brand phrases in a PPC campaign. See the note below).
We’ve stopped running any non-brand phrases in this campaign until the client can work on improving the conversion rates on the site.
Note about running your own brands in PPC – Should you pay to run your own brand phrases when you are reaching top organic search results for them? Most of test results show that it is worth doing so. We’ll probably do an article on this in the future based on actual tests [update: See For More Info section below].
Why the huge difference in conversion rates for brand vs. non-brand phrases?
You should expect a higher conversion rate for brand phrases. People who search on your brand phrases knew something about you before they came to the site (possibly from referrals, print or other traditional media, or perhaps they were past clients, etc)
Depending on the awareness of your brand in your market, many of the people searching on non-brand phrases may know nothing about your company when they arrive at your web site. They will be much less forgiving. Just about anything that frustrates them or makes them uncomfortable will likely cause them to exit your site and go back to the search results to select a competitor’s site.
A Note about Latent Conversions. Some percentage of the people who search on your brand names may have in fact searched on non-brand phrases in the past but did not convert during the first session. They may then search on a brand name to locate your site in a future session in which they do convert. This future session may not be attributed to the original keyword in your metrics. So the conversion rate of your non-brand phrases may not be quite as low as your metrics reports.
Here’s a summary of this client’s brand vs. non-brand conversion rates:
Brand Phrases = 10.28% (Average conversion rate)
Non-Brand Phrases = 0.27% (Average conversion rate)
That’s a ratio of 38 times! In other words the brand phrases are converting at a rate 38 times greater than the non-brand phrases.
This unfortunately is not unusual. We often see huge differences in conversion rates between the brand and non-brand keyword phrases.
By contrast, when we look at client web sites that have a positive ROI for the non-brand phrases we usually see ratios of from about 3 to 6 times, i.e. the brand phrases convert 3 to 6 times better than the non-brand phrases.
For example if the conversion rate for brand phrases is averaging 10% we typically see the conversion rates for the non-brand phrases at between 1% to about 3% (We love to see some average conversion rate ratios for brand vs. non-brand phrases that you see for your sites or clients’ sites in the comments)
What you should do?
Calculate your brand vs. non-brand conversion rates
Do a similar calculation to estimate your brand vs. non-brand conversion rates.
Use your analytics to do this and include both the organic and PPC keyword traffic.
For conversions, it’s best to use only “hard” conversions such as purchases or lead submissions where you can estimate the leads to sales ratio fairly accurately.
If you have no PPC campaign you can use Google’s Traffic Estimator to get an average cost per click for a sample of your important non-brand phrases and the average cost per click for your brand phrases.
See what the numbers tell you about both your brand and non-brand phrases:
What’s the ratio of the conversion rates between the brand and non-brand phrases? If the ratio is very high, such as more than 10 to 1, your site may not be doing a very good job with the visitors reaching the site who searched on non-brand phrases (again many of these visitors may know nothing about you before they reached the site).
Would you be making money with a PPC campaign for your non-brand phrases?
What about the brand phrases?
It will almost certainly pay off to take steps to improve your conversion rates. If you can improve the conversion rates for your non-brand phrases to a point where they’d paid off in a PPC campaign you’ll also likely improve the conversion rates for most sources of traffic to the site which can really pay off in increased leads and business.
For More Info