The ultimate goal for any E-Commerce business is to be profitable. This same objective applies to Adwords and Bing Ads pay-per-click (PPC) campaigns. So, how do you ensure that you have profitable PPC campaigns? We consider an ad campaign to be a success when the cost per acquisition (CPA) of customers or transactions keeps going down, while the number of customers or transactions keeps going up.
Let’s break CPA down into its bare components:
“CPA = Ad Cost / Converted Clicks
Ad Cost is a major factor affecting the CPA of your campaigns, and wasted spend is the main issue behind poor CPA. I will share the approach my team uses to quickly identify and eliminate at least 20% in the wasted ad spend.
First, be aware that there are two components that make up Ad Cost: the number of clicks and the cost per click. Ad cost can be calculated as such:
“Ad Cost = Clicks x Cost per Click
Bidding and improving keyword quality scores can influence your cost per click; however, market conditions pose a limit to the extent you can reduce your bids while staying competitive.
This leaves us with the second variable – clicks. This is the variable we can control by reviewing and adjusting where the clicks are coming from. We recommend examining the following areas:
You will be surprised by how much of an impact making changes in these areas can have on the campaigns.
Our approach starts with identifying campaigns with high CPA and prioritizing them for deeper analysis. To eliminate the waste, we recommend using an 80/20 rule and sorting everything by cost within two time frames:
This gives us a prioritized view along with statistically significant data to make sound decisions.
Depending on the size of your campaign and targeting area, we recommend looking at the following dimensions:
In most cases, the wasted ad spend exists because of two reasons:
What to do about the issue:
The analysis can be performed at either a high or a granular level, depending on your targeting. Once the poorly performing locations are excluded or reduced, you will start seeing more efficient ad spend.
At the end of this exercise, you will have eliminated areas that have resulted in at least 5% waste in your ad spend.
You may be running ads 24/7, 365 days a year. Your may have certain days, hours or combination of days and hours that generate clicks, but result no conversions. This leads to wasted ad spend. You have the opportunity to eliminate it.
For example, if you are an automotive E-Commerce store and you run ads 24/7, you may quickly realize that 20% of your budget incurs between midnight and 6am, but does not generate conversion during these hours. Noting this, you may realize that your ideal client profile never does research between midnight and 6am.
What to do about the issue:
This exercise will help you avoid at least 5% waste in your ad spend.
Search terms are words searchers type in the search box. When they match your keywords, it may trigger a response that brings your landing page or ad to the searcher. They are the real data is behind the keywords. If you are using a variety of keyword match types, running a search-terms report can provide a great deal of useful information. Looking at the account only at the keyword level can be misleading.
For example, the phrase-match keyword “delivery near me” can trigger the following search terms:
If you are a pizza restaurant, you will immediately notice that you are paying for clicks related to food that is not related to your menu.
What to do about the issue:
Search term analysis save you at least 5% more in waste.
To ensure that our ads aren’t being shown to the wrong audiences, we always check our network settings.
Google Adwords offers three network options:
Bing Ads offers three network options as well:
When the campaign is created, the network settings may automatically opt to Search Partner or Content/Display Network. The implication may be that these additional networks are incurring wasted ad spend.
What to do about the issue:
This will save you at least and addition 5% in wasted ad spend.
Take control of your clicks. Prioritize your campaigns in the order of importance, and start going through each dimension. You will be surprised by how spending just 30 minutes making small changes in each dimension can help you eliminate 20% of wasted ad spend.
Have you tried any of these techniques on your ad campaigns? Tell us about your results in the comments.
