Using AdGooroo to Diagnose and Fix Impression problems (Part 2)

Posted by Richard Stokes on December 30, 2005 to

There has been some improvement from the steps taken earlier, but the results are mixed. Overall coverage in the keywords I'm monitoring has declined, however due to the keyword expansion my overall traffic has increased and my avg revenue per visitor has increased by 36%! I started to get excited, but then I noticed that this increase in revenue was nearly offset by the increase in advertising costs. So now I'm tying up more money in AdWords, but my profits haven't budged. I have to diagnose why this is happening before going any farther.

How could my coverage have declined? To find out, I click on my advertiser detail report to see exactly what has changed since I ran this experiment.

Before - 5 out of 20 keywords appeared

After - 7 out of 20 keywords are appearing, but at a lower coverage:

Deleting and adding keywords is still working very well for getting them re-listed on Google, as evidenced both by the AdGooroo chart and my campaign sales statistics. However, my overall average coverage has gone down from 34% ro 26%. There's a clue in the above chart that is a dead giveaway. In the first chart, the keywords tend to hug the top of the graph indicating that when Google runs my ads, they get close to 100% of the impressions. That indicates that my daily ad budget is sufficient. In the second chart, my keywords are all over the place, well below 100%. When you see the individual keywords bunching up below 100%, it almost always indicates that the daily budget is insufficient. This usually happens when newly added keywords start chewing through the campaign budget.

To verify this, I log into Google. My budget is set at $100/day. This was more than enough in the past, but the daily recommended budget has now gone up to $430/day. $100 divided by $430 is 23%, which is about the same as the AdGooroo reported coverage (26%). My meager $100/day budget is being spread across $430 worth of ads, and so Google is throttling the number of impressions my campaign is receiving.

Now before I jack my budget way up, I need to drill in to my campaign and see where the new money is being spent... the new keywords I added are probably the reason why. It turns out that this is exactly what is happening. My campaign now contains the words "dvd" and "dvds" which are both high traffic words. This could be a good thing or a bad thing, depending on how well they convert... When I check this with my analytics software, it turns out they are marginal - it appears I'm making a very small amount of money from them. I lower the bids and check the rest of my keywords. After a few more adjustments, I'm ready. Google now says my recommended budget is still $380. This is a large jump given that I don't yet have bulletproof statistics to rely on. I decide to increase it to $125/day. This should bring me to a target of 33% coverage.

Next Step: Ad Copy Testing

When I establish new PPC campaigns, I first like to get the maximum coverage possible for a little better than breakeven. I will drop bids down all the way to the 7th position on the page, unless it is painfully obvious that the particular keyword in question just isn't converting (in which case, I remove it from AdGooroo and drop the bid even further, or just delete the keyword).

Once I'm in that position, I then spend a lot of time on ad copy. A-B testing is the method of choice for this. It can transform a campaign from breakeven to a real money maker.

For this campaign, I've spent about $2,200 in December and had revenues of $2,050. Pretty close. So now it's time to move onto the heavy lifting. I'll show here how I do this for just one keyword.

The example keyword I'll use is "dvd shrink". Here's the current keyword chart:

We are currently showing up at around 16% coverage near position 2. The coverage for this keyword should improve as a result of our campaign budget changes, but now we're looking to improve profitability.

Many people mistakenly believe the goal of A-B testing is to maximize the CTR. The thinking goes that with a higher CTR, your ads will appear more frequently and at a higher position. This will lead to more traffic. But that's where the chain of logic stops - this is a traffic maximization technique. This is fine if you have an unlimited budget or a branding goal, but not so fine for other marketers.

Our goal is to maximize incremental profit - this is a combination of CPC, conversion rate, and total clicks. Notice I don't worry about rank or CTR. What I do is tag all of my ads with a tracking code, let them run for no less than 100 clicks (usually much more), and then drop my campaign statistics into a spreadsheet. I add a column to calculate the incremental profit per ad. Finally, I use the value of that column to determine which ad is best. Sometimes my CTR goes down ... but usually, it goes way up because traffic is one of the inputs into this function.

Not only does this improve my profitability for the keyword, it also increases the CTR for my entire campaign, resulting in more favorable Google positioning overall.

Now to get some good ideas for ads, I use AdGooroo to generate a list of all ad copy in this keyword, sorted by % served. I jot down the most frequent ads which are relevant to my industry. When I'm done, I modify them and then test up to 6 ads at a time in my AdWords account. Here are the top ads.

DVD Copy Burn Music
Copy DVD To CD
Copy Playstation One and Two Games
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Now I modify each of the ads ... never run the same ads as your competitors! Not only does it confuse visitors, but it is also a potential copyright violation. The idea here is to capture the essence of searcher intent (guarantee, instant access, download, etc), not to plagiarize ads.

After I modify them, I enter each into Google with a unique tracking code. In a week or so, I can then consult my analytics software to capture the statistics I'm after, and then delete the non-performers. This is a lot of work, so I usually try to work on about 5-10 keywords at a time, starting with the ones that are consuming most of my budget.