The Five Levers of PPC Advertising

Does your company advertise through Google AdWords, Yahoo! Search Marketing, and/or MSN adCenter? Here are some real-world tips for making the most of your PPC campaigns.

Regardless of which industry you’re in, there are five main “levers” that can be manipulated to increase or decrease the quantity and quality of traffic to your website from paid search engine ads. The five levers are:

  1. Keyword Selection
  2. Click-through Rate
  3. Conversion Rate
  4. Bidding & Budgeting
  5. Ad Targeting


1) Keyword Selection

The keywords you select will have a direct correlation to your site’s traffic levels and ROI. Think about what your potential customers might actually type to find your product, and use that thought process to generate a preliminary list of relevant terms. Then plug those into Google’s Keyword Tool and Traffic Estimator.

Sometimes, general isn’t best. Google’s default is “Broad Match”, which essentially means if a searcher searches for anything that includes the keyword you purchased (no matter what order the individual words are in), your ad will show up. Try your unprofitable keywords on Phrase or Exact match. You can also run a Search Query report to see what queries people are actually typing in to find your Broad-matched keywords.

Also, don’t be afraid to add Negative keywords to filter out traffic from irrelevant searches. Just be sure to scour your negative keyword list to make sure you don’t accidentally add any negatives that will inadvertently block your ads from being displayed to good traffic!


2) Click-through Rate

It seems so obvious when you think about it, but simply increasing your CTR a slight amount can have a big impact on how much traffic your site receives. The most important rule here is test, test, test. Every AdGroup that gets a decent amount of traffic should have 2-4 ads running at any given time. Be sure to collect enough data to make sound decisions before abandoning a losing ad or rolling out a winning ad. Often times you need hundreds of clicks to an ad before you can scientifically say if it’s a winner or a loser.

There’s another good reason to continually optimize your ads — Google’s Quality Score. The AdWords system actually rewards ads that have high CTRs with lower CPCs. So by writing a better ad, you can effectively pay less per click.

One last caveat — high CTR isn’t always best. Relevance is most important, so please don’t write ads that do not clearly represent your product or service. You may get more traffic today, but this is not a sustainable strategy.


3) Conversion Rate

Conversion rate is probably the most important of all the five levers. Often times a small increase to your conversion rate will have a huge ripple effect down the line. The best way to go about this is with conversion funnel optimization, where a company like Magnifi Online would analyze your landing pages and checkout process, and help you develop new pages to test scientifically against your current landing pages and checkout process.

Conversion rate optimization is so critical to long-term paid search success. If your conversion rate is only 2%, that means 98 out of 100 clicks are a waste of money! We see so many companies spend too little time on improving the purchase process of their website. Trust us…it needs work! You should consider optimizing your conversion funnel before anything else.


4) Bidding & Budgeting

Another great way to influence your sales and leads is to simply optimize your bids and budgets. With respect to bids, take a look at a keyword report and look for keywords that are hemorrhaging money. Pause them, delete them, or bid them down to their minimum bids. Then look for keywords that are profitable. If they’re not already in position one, try increasing their bids so you can get a higher ad position. Continue tweaking max CPCs in this fashion until you have well-optimized bids for each keyword in your account.

In terms of budgeting, first look at your budget settings. Google’s default is “Standard Delivery”, which spreads your ads out evenly throughout the day or month. This means that sometimes your ads may not be shown. If you set your campaigns to “Accelerated Delivery”, Google will show your ads as quickly as possible, until your daily or monthly campaign budget runs out. Assuming your budget is high enough, you should see your ads 100% of the time. Try running a campaign report by hour by day to see if your campaigns ever shut off throughout the day, and consider increasing your daily budget accordingly.


5) Ad Targeting

Are your ads shown to the right audience? If you’re a small, local brick-and-mortar business, make sure you’re campaigns are set to show in only your geographic region. If you’re a large, multi-national corporation, take note that Google’s default is now “United States + Canada” (assuming you created your account from within the US). You may want to consider expanding your campaigns to target other countries as well. If you don’t have the resources to translate your ads and landing pages into other languages, try running your ads internationally in English. Believe it or not, a lot of people search in English from overseas.

You can also set day parting and week parting rules in Google AdWords, which allow you to show your ads during specific times of the day and/or specific days of the week. You can even set incremental bids. For instance, you may want to increase bids by 20% during peak converting hours and decrease bids 10% during evening hours, when conversions may be weaker.

With the search engine marketing environment changing so quickly, it’s difficult to stay abreast of everything. As you’ve seen here, however, there are a few fundamental tactics and strategies that you can use as levers to affect the quantity and quality of your paid search traffic, improve ROI, and ensure long-term growth.


Next Steps: Putting This All Into Practice

If you have any questions or comments about any of this, please submit your question to us and we’ll have someone get back to you right away with advice or help.