One of our clients did just that and asked us:

“We are seeing QS below 5 for some of our top spending keywords. Should we optimize these keywords and try to increase our QS?”

It’s a great question, so let’s do a quick refresher. QS is still mostly made up of CTR, and there is often a give-and-take between quality score and conversion rates. In other words, ads with higher CTRs show lower conversion rates.  You may be able to write a more click-friendly ad, but the marginal clicks you will receive are from less qualified folks. Now when you mouse over the little bubble (on the Keywords tab) you will get a bit more detail regarding QS. For example, one of our main keywords has an AdWords QS of 4, which means “average” for CTR, ad relevance and landing page.

Let’s say we want to test a price in the 1^st line of ad text (ie, $24.95), which Google also will include in the headline of the ad. By putting price upfront, we might exclude folks who want to see something like “up to 50% off”. Sure, a 50% off ad may have a better CTR (QS), but it may not be as profitable for you (the advertiser).

To sum it up, we generally do not “optimize for quality score” and instead prefer to optimize on harder metrics such as CPA or ROAS.

Old News

We recently began reporting to a new hire for one of our long-time clients. Since we have had this client for several years, we naturally have considered dayparting from time to time. This new direct report suggested we reconsider using dayparting in our AdWords account, citing it as a way to increase bids during periods of heightened impression activity. This is a poor idea. Let me explain why.

The key thing to remember is that we want to maximize value; impressions alone denote zero value, and they may even have a negative correlation with value. Value is comprised of revenue (or some other conversion metric) and click costs.  If we talk only about revenue, conversions, or conversion rates, we are missing out on a key component of value.

For instance, it may be the case that revenue and revenue-per-click (RPC) increase greatly from 2pm to 5pm, but unless cost rises at a slower rate than does revenue, increasing bids is probably not a great idea.  If, however, average CPCs for some reason stay the same while RPC increases 20%+, then a daypart bid multiplier could be a great idea.

Dayparting as a response to increased or decreased impression activity misses the point that the goal is centered around value. Further, to calculate value you have to take costs into account. We do want to increase revenue or conversions, but within a certain efficiency metric. For a conversion-oriented account, CPA (Cost Per Acquisition) is the efficiency metric. For a revenue-oriented account, ROAS (Revenue Over Ad Spend) may be the efficiency metric.  But to talk about impressions or clicks without talking about revenue or conversions, not to mention costs, will lead to poor decisions.

We all love feeling as though we’ve dodged a bullet, right? In this post we provide some practical tips and real-life examples for using AdWords tools without them using you.

The AdWords Search Funnel

• Top Paths report: we especially enjoy the Transitions reports.
• Assisted Conversions report: understanding assist roles may change your bidding approach.
• Path Length report: this will tell you how many folks are NOT converting on the first click alone.

Head over to Trada and read the post! http://www.trada.com/blog/advanced-adwords-tools/

Does ad position affect click-through rates (CTR)? Yes.

Does ad position affect your campaign’s cost? Yes.

Do ads in the top ad position get more conversions? Yes.

Does ad position affect conversion rates? No.

Can you guess the most important question above? Yes, it’s the one answered No. This also happens to be one of the most misunderstood points about ad position. Listen to what Google’s chief economist, Hal Varian, has to say:

“We have used a statistical model to account for these effects and found that, on average, there is very little variation in conversion rates by position for the same ad.”

That’s pretty straightforward, and you should trust Hal. To be more accurate, it’s totally possible that for any given account ad position may actually correlate with differences in conversion rates. But in aggregate – and in virtually all of the PPC accounts we have managed over the years – we have not found this to be the case.

So, to recap: if you want more clicks, put your ad at the top. If you want more conversions, go for the top. But if you do that, you’re going to spend proportionately more money. Just don’t expect those clicks from the top to convert at a higher rate.

It’s all the same when it comes to ad position and conversion rates.

[Google AdWords agency support person],

Thanks for doing the work and for sending this (PDF document of AdWords account analysis and recommendations), plus for following up with the raw data (which we requested in order to further look at the same data they were referencing – p.s., when the data came, there was no date range anywhere on the document, so it was still difficult to look at the same data in the advertiser’s AdWords account – who sends data without referencing the date range from which the data is derived?? I mean, who does that???)!

In reference to the PDF, page 4 points out that during off-peak times, (our advertiser client: “the advertiser”) approaches “market” impression share, and that there is a gap between the advertiser’s impression share and the market during peak times. If we bid to a CPA target, how might we use this trend data to improve the account? In other words, if account clicks decrease, it is because conversion rates are decreasing and we are trying to hit target CPA. If we assume that the Google data shows we are missing out on an opportunity, how do we bridge the gap, knowing that we’re only decreasing bids to hit target CPA? Any ideas or insights would be great! (hint: I can’t imagine what these ideas might be — messaging that speaks to off-peak time periods? I don’t think so…)

Page number 6 assumes that the keywords on which we’ve lowered bids would actually convert just fine, if only we would increase bids to get these ads on page 1, but I’m not sure that’s indicative of reality. My feeling is that we have bid these keywords down for a really good reason – they are either not super relevant to the advertiser’s value proposition, or they are branded terms, where users have demonstrated they are really intent on seeking out the brand rather than signing up for another brand. (We’ve tested these branded terms extensively, of course.)

Thanks for listing some specific kw’s. We show that for (insert phrase-matched kw here) we have a CPA of (dollar amount), which is (about 30%) higher than target (dollar amount) CPA – but also that the Google Conversion Optimizer is doing the bidding – your spreadsheet is looking at the 1st page min estimated bid versus our current maximum bid – but our current max bid has no bearing on anything, b/c this is a conversion optimizer-managed campaign. We’ll go through the other keywords in the spreadsheet – maybe we’ll find something!

Page number 7 seems fallacious. The inference is that in general for this account (actually, the Google folks say this applies to just about any account), keywords in high ad positions convert better, which is totally false. There is a correlation between keywords in high ad positions and strong conversion rates; but the causality is that we bid higher on higher-converting keywords. We cause this correlation to be so.

Would love any thoughts.

SEM has grown very fast in terms of click spend and sophistication for several years running. The Google AdWords interface (both web and AE) continues to get more jam-packed with various bells and whistles (ways of looking at & controlling your click spend). 3rd-party technology for reporting, optimization, keyword discovery, ad optimization, etc., is as prevalent as ever.

CMOs need to know what’s important – what should their focus be, in order to get the best return on their time and effort. The answer gets back to the core of what search is all about, and it brings to mind the saying “the more things change, the more they stay the same.”

1) Focus on what your company brings to the table – what is the true value proposition, or need that your company fills?

2) What sorts of keywords might searchers use to seek out your products & services? Remember – the beauty of search is that users can find what they are looking for (rather than stumble across things they didn’t know they wanted! — that’s more for display!). Sure – go crazy with the long tail if that’s what makes you feel good – but don’t stray too far from your relevance curve.

3) Strive for a consistent thread in terms of user experience, starting with: a) bid on relevant keywords where user intent likely has to do with your value proposition; b) match keyword categories with ad text that is both relevant to your keywords and which encourage the click, but that also stays true to your value proposition; give the user a consistent post-click experience, with a landing page that messages benefits, additional info, and that includes the same offer/call-to-action mentioned in the ad, if possible.

4) Ask whether you are tracking and measuring the right things. It’s easiest to move SEM programs forward with a lot of daily conversion data. But at the end of the day we also need to measure actual revenue or lifetime value, or a suitable proxy for those. The trick is to be able to use a metric that gives the SEM manager enough data to do their job, but still (via an internal tracking system) be able to match that daily conversion data up with ‘harder’ metrics.

5) How good is the data? CMOs need to understand the data that they are looking at in order to gauge the accuracy of the data and the degree to which it’s telling them what it’s telling them. Google AdWords and Google Analytics often provide great data for making correct directional changes; but they are no substitute for a company’s internal database, which should be used to check against data discrepancies on a regular basis.

If the CMO stays focused on these big-picture items (where, actually, the details are all-imortant!) she will have the wind to her back.

Check out the vid:

Click here to read: (PPC Ad) Statistical Significance: Not Just for Geeks Anymore on SearchEngineLand.