| LED Digest 2516: Know Your ROI |
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================================================== The LED Digest Moderated Discussion List "Effective Online Advertising, Since 1997" Data > Information > Knowledge > Wisdom www.GetWebContent.com/LED : the LED's Key Sponsor The Web's Most Experienced SEO Content Providers. www.SEOToolSet.com/training/ : the LED's Premier Sponsor Bruce Clay's Search Engine Optimization Training & Certification ================================================== List Moderator: Published by: Adam Audette LED Digest adam, led-digest.com http://www.led-digest.com .............................................. October 18, 2007 Issue no. 2516 .............................................. .....IN THIS DIGEST..... ==== CONTINUING ================= <Moderator Comment> ~ SEM 2.0 and a Couple Great Readings --== Optimizing AdWords by Conversion Rate ==-- ~ Mark Welch "...conversion rate and cost per conversion are merely proxies for the real metric..." ~ Andreas Huttenrauch "The other part to look at is the ad copy itself." ~ Chris Nielsen "Adding a 'lead' conversion code to your contact form may help..." --== Stay Away from Google Analytics? ==-- ~ Michael Martinez "I wouldn't trust Google Analytics farther than I can throw it." ======== CONTINUING =============================== <Moderator Comment> Greetings LEDer, Two items for your consideration today: 1) Managing SEM 2.0 I don't know if you're familiar with the SEM 2.0 Google Group ( http://groups.google.com/group/SEM2 ), but you should be - and I hope you'll join and give it a try. It's a very small discussion group that was begun by Andrew Goodman after the collapse of I-Search ("collapse" is a very strong word... "fizzling out" is probably more accurate). Anyway, it's a neat group with a super high signal and is 100% focused on search marketing topics. The member list is pretty impressive, there's definitely some experienced folks there. But there are also plenty of newcomers and "dabblers" looking to get more insights and input on what they're doing with their businesses. Reason I bring it up, is I've been talking with Andrew over the last month or so and am going to take over the community leadership role there. Andrew announced my involvement earlier this week. I'm really psyched to bring my experience to the interesting SEM group, and to get a chance to work with Andrew who I've always thought highly of. So go check it out, join, and post something! http://groups.google.com/group/SEM2 2) Great Readings First is this somewhat amazing survey of the Web design and development community at A List Apart. What a classy job they do and what interesting data: 2007 Web Design Survey http://www.alistapart.com/articles/2007surveyresults Second is this totally refreshing read from long-time LEDer Michael Martinez. The title doesn't really do the post justice -- it's about much more than hard core SEO. It's also a critical view of the industry cheese and fluff that's so prevalent these days: 20 Hard Core SEO Tips http://seo-theory.com/wordpress/2007/10/16/20-hard-core-seo-tips/ Enjoy your reading! -Adam ------------------ From: Mark J. Welch Subject: Conversion rate > Does anyone else optimize PPC campaigns based > solely on conversion numbers? Are we potentially > losing a lot of sales and great traffic because the > analytics aren't totally accurate? - Nate Holley, LED Digest 2515 - http://www.led-digest.com/content/view/1927/190/ Nathan asked whether it's proper to design a campaign based only on conversion rates or cost-per-conversion. My answer is "no," to the exact question posed, although I suspect that Nathan probably already applies the same kind of analysis I'm about to share. First, "conversion rate" and "cost per conversion" are merely proxies for the "real metric," which is "gross profit per marketing dollar spent." Our goal is always to generate sales that produce more than $1 in gross profit for every marketing dollar spent. (Depending on overhead and other factors, the goal might be $1.10 or $2.50 per dollar spent.) If you rely on any "proxy" as your measure, and if your competitors really measure the "real goal," then over time you're going to lose out because your competitors will poach the profitable customers and you'll end up with the left-overs. For example, you might think it's fine to have a conversion rate of 10% or a cost-per-conversion of $10, but then you'd still be disappointed (and unprofitable) if your average order size gradually dropped from $35 to $10. (And you'd have a mistaken perception about the market, since your strategies have caused you to draw mostly from one segment of the broader market.) Of course, we can never rely exclusively on "real data," no matter how "technically accurate" and no matter how precisely the data matches our goals. That's because we're dealing with statistics, which can be misleading if analyzed improperly. The most obvious example here would be "long-tail" keywords (those thousands of keywords which aren't in your top-100 volume keywords, but which are occasionally searched). In September, I launched a large campaign with about 4,000 ad groups and 25,000 keywords. Six weeks later: - More than 500 of those ad groups and 10,000 of those keywords have drawn zero impressions or clicks; I'll consider these campaigns "inactive." - Perhaps 2,000 of those ad groups and 10,000 of those keywords have generated "some impressions and a few clicks, but zero sales" -- let's call this the "low-volume dud group." - Another 200 ad groups (perhaps 1,000 keywords) have generated "some impressions and a few clicks, with one or a few sales" -- let's call this the "low-traffic-with-sales group" - And of course 500 of the keywords have "lots of impressions, many clicks, and many sales" -- let's call this the "primary group." For this campaign, I have an overall conversion rate of 1%, so I generally look for "at least 100 clicks and at least 2 sales" before I even consider putting any keyword into the "primary group." Within the "primary group," I generally enforce my ROI goals fairly strictly -- if I see ROI below my target for an ad group or individual keyword after 100-200 clicks, I'll reduce bid rates or pause the campaign. (Typically, in this particular campaign, I am seeing about $2 in gross profit per $1 spent, for ROI of +100%. If ROI drops below +25% I'll drop the bid rates.) Within this "primary group," my overall conversion rate is about 1%. Most of my time, energy, and "testing" is done within this "primary group," which accounts for about 85% of total activity (clicks and sales). Within the "low-volume-with-sales group," most ad groups and keywords have "incredibly high ROI" (often +500% or +1,000%) because the conversion rates may be 10% or higher (many keywords have 1 sale from fewer than 10 clicks). I certainly will maintain those ad groups (and I may consider increasing bids), but I know that generating 1 sale from 5 clicks might just be a "fluke" and I will probably draw zero sales from the next 50 clicks, so any response must be cautious and tentative. Within the "low-volume dud group," my ROI is -100% (awful), but the data is inconclusive because I haven't reached a statistically significant number of clicks yet for any individual ad group or keyword. I'm not going to cancel an ad group or keyword that has 15 clicks but zero sales, because over time, it might still generate a positive ROI. However, I will look at the aggregate data, and if I discern a pattern (for example, if I have 50 ad groups related to "widgets" and they've drawn a total of 1,000 clicks but zero sales), I might make some decisions about that broad category. Within the "inactive group," I see no immediate reason to purge these keywords, and I expect that 50% of these groups will see activity in the next month. If I used a "blind, mechanical" analysis, I'd delete every campaign with negative ROI, which means I'd delete those 2,000 "dud: ad groups with "some clicks but no sales," even though I don't have statistically significant data. And a "blind, mechanical" analysis would suggest that I should increase bids on the 200 "low-traffic-with-sales" ad groups, even though I don't have statistically significant data. That approach would cause me to overspend on "fluke" keywords, and would lead me to "drop" thousands of keywords that might have generated sales next month. Mark Welch -------- new post - same topic -------- From: Andreas Huttenrauch Subject: Conversion rate To Nate's post on Adwords tuning for conversions vs. click-throughs, I would definitely advise the former. Traffic (clicks) are very expensive. It's really easy to get a lot of traffic. People will come and look without much persuasion if there's no obligation. Getting people to commit to a purchase is much more difficult, but this is ultimately where profit lies. After all, it's pretty pointless spending $350 to acquire a customer to purchase a product where the overall profit is only $45. If a keyword is attracting a lot of clicks, but no sales, then it is not attracting qualified prospects. The other part to look at is the ad copy itself. Make sure it's not misleading people : ie they click with an expectation to find something, but the site doesn't deliver. As a follow-on to this, it's important that the site does a good job of closing sales. Conversion is the ONLY attribute to tune for in sales (branding exercises etc are different). Andreas Huttenrauch Globi Web Solutions http://www.globi.ca -------- new post - same topic -------- From: Chris Nielsen Subject: Conversion rate > My question is simply this: am I blowing it by optimizing > her campaigns only according to conversions? - Nate Holley As you mention, some sales can be realized at a later date, or even through phone orders which will increase your reported conversion cost in Google. The client really needs to take in all the data to make decisions about what is really working and what is not. In addition to looking at what the AdWords campaign is doing, take a look at total sales where you cannot confirm the source of the sale. These sales may or may not be a result of AdWords, but you can use that to see if you are making or losing money. If you are losing then you should quickly cut things that don't seem to be producing. But even if you are raking in the sales, it would make sense to either delete things that are not converting, or lower your bids on them. Lowering the bids on non-converting keywords to the minimum may have the same effect as pausing them and if you see sales dip, you can see if there is a connection by raising the bids again. Adding a "lead" conversion code to your contact form may help you to see what is driving sales indirectly, and of course asking any callers how they found you can also help to understand what is working. Finally, people do delete cookies from time to time. This is also going to skew your conversion rate, so it's really important to have the "big picture" to avoid dropping things that may be working for you. Thank you, Chris Nielsen International Phone Cards ESGBuilt.com ========= Begin Sponsor Message ========= Blogging can improve your site's ranking with both search engines and end users. Now, would you like us to tell you something you maybe don't already know? OK. A blog shouldn't be written like other web content. Here's why: http://www.getwebcontent.com/blog/?p=16 http://GetWebContent.com/LED - Blogging are us. ========== End Sponsor Message ========== -------- new post - new topic --------- From: Michael Martinez Subject: Google analytics > ... why would an SEO expert say [to avoid Google Analytics]? > ... I've always heard about "Google Analytics" and figured it > was something standard. But I'd love to know why you > shouldn't touch it with a 10-foot-pole. - Shelly Cole, LED Digest 2515 - http://www.led-digest.com/content/view/1927/190/ I have used a lot of analytics packages through the years. As far as I am concerned, I wouldn't trust Google Analytics farther than I can throw it. The data is incomplete, the numbers don't add up, and occasionally I find them reporting results from other Web sites instead of my own. People like Analytics because of the reporting functions. I will admit that the reporting functions are nice but they're not the best I've ever seen. For a free tool they are good reporting functions. Of course, it would be nice if they reported something useful or, dare I ask for it, ACCURATE. I track Analytics on a number of sites because I am expected to. If I had my druthers, I'd druther not have to ever use Google Analytics again. That said, I use Google Analytics on the SEO Theory blog because it's free, because I don't need to accurately measure traffic on the blog, and because Google Analytics reports just enough data that I'm not overwhelmed. It shows me some trends that, when compared to other about equally insufficient analytics tools' reports, seem to be consistent with third-party metrics performance standards. That is, Google Analytics is probably no worse than anything else out there that relies on Javascript. I don't like Javascript-based analytics. That's just me. Some people swear by Javascript-based analytics. That's just them. Hope that helps. Michael Martinez http://www.michael-martinez.com/ (c) Copyright 1995-2007 Orange Wheel, LLC. All Rights Reserved. ----------------------------------------------------------------- "Hatred does not cease by hatred, but only by love; this is the eternal rule." - Buddha |
