Basic PPC Analysis

Filtering keywords and knowing which keywords are converting and which ones are loosing money is the key to any account optimization strategy.

Filter keywords that are generating clicks and cost, but no conversions at all . Doing this based on 1-2 days or weeks of data would not be recommended unless you are dealing with a product that generates extremely high volume of traffic, clicks, and conversions within that time frame. Recommended time frame would be at least a month or more. After identifying these keywords, ask yourself:

  • Is the Max. CPC too high?
  • As a result is the Avg. Position too high and therefore generating a lot of junk traffic?
  • Is the ad copy not relevant to the search query?
  • Is the landing page appropriate for the keyword and ad copy?

Fact of the matter is, if the keyword has not converted in over a month and has only contributed to negative spend then it will not convert anytime in the future and you should consider pausing it or deleting it from the account. Another important fact to note is, you might have only a dozen keywords with high spend or you might have 1000s of keywords with only $1-$2 in spend each but those 1s and 2s add up.

Lastly, those 1s and 2s that are mentioned above, you could use a statistical benchmark to determine if the keyword has actually had enough exposure to convert or not. You could do this by taking your overall account’s conversion rate to calculate what is the minimum number of clicks needed for a keyword to convert. If the keyword has not incurred that many clicks, you might want to consider leaving the keyword active for a while.

Filter keywords that generate Conversions but Negative ROI or higher than your target CPA . If your account is structured keeping your business goals in mind and you have a solid keyword list in the account, you will only have a handful of keyword fitting this profile and for that matter only a handful of keywords converting in your account overall (80-20 rule always). Ask yourself questions:

  • Is the Max. CPC too high?
  • As a result is the Avg. Position too high and therefore generating a lot of junk traffic and bringing down your overall Conversion Rate?
  • What is the CPA or ROI goal and how does it compare to the CPA or ROI of the keyword?

Based on your business setting, use any formula you wish to use to adjust the Max. CPC. I personally tend to use the following two formulas the most:

(Target CPA/Actual CPA) X Current Max.CPC

OR

Target CPA X Conversion Rate

If You have an ROI goal, figure out what CPA value will help you achieve that goal and use the formula above to calculate bids.

Filter keywords that generate no conversions or clicks . This is usually an interesting set to monitor. You can further break this list down to two sets:

  • Keywords with positions 5 or better
  • Keywords with positions worse than 5

You don’t have to take 5 as the deciding position, based on your accounts historical performance, you can choose any position that you know is the cut off limit for you. Based on the suggestions above, if positions are better than 5 that should tell you that the keyword just doesn’t have search volume and hence is not right for your account. Pausing/deleting those keywords would be wise. On the flip side, keywords with worse than position 5 are the ones that you can further test to see if they are worth keeping in your account or not. Now there is no hard and fast formula for this, so simply increasing bids by percentage amount for these keywords and follow up monitoring should tell you over time if they are keepers or not.

Filter keywords that are converting as well as meeting your ROI or CPA goals . You could set up another test around these by increasing their bids and being a bit more aggressive with them. Some recommendations:

  • Create a separate campaign around them to focus only on those keywords with highly targeted ad copies (make sure you pause the original keyword).
  • Analyze their position and test if a higher or lower position increases or decreases conversions overtime (be careful to monitor them and not to loose all your good work with them before the test).
  • Testing their bids is another test that will eventually lead you to #b i.e. positions getting higher or lower.
  • If you can, set up a new account and domain around the keywords converting at an acceptable cost. Generally, setting up a domain themed around keywords can contribute to incremental conversions.
  • Or you can simply leave them as is and monitor them over time to make sure they maintain their performance

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This entry was posted on Sunday, August 31st, 2008 at 9:24 pm and is filed under 4. PPC Bid Management, Basic Analaysis. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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