Clicks, conversions, and Christmas

Online advertisers have noticed that CPCs tend to increase during the holiday season and have asked us why. We turned to Hal Varian, Google’s Chief Economist, for an explanation:

Many advertisers track their average cost-per-click (CPC), but what really matters for the bottom line is the average cost-per-acquisition (CPA): how much you have to spend on advertising to make a sale. The third factor to watch is the conversion rate, which is defined as conversions (sales) per click.

Note that these numbers are neatly tied together by the convenient formula:

CPA = CPC/Conversion rate = (cost/click)/(conversions/click).

Clicks, cost, and conversions all go up during the holidays. As it happens, conversions increase more than clicks, so conversion rates tend to rise. This makes the clicks more valuable, so advertisers raise their bids to reach more consumers. As a result CPCs get pushed up.

(Click image for full-size version)

The plot above shows the median CPC, the median conversion rate, and the median CPA during the 2006 holiday season for those Google AdWords advertisers who use conversion tracking. The series have been normalized so they all start at the same point on November 1.

Last year, Thanksgiving fell on November 23. Note how the conversion rate (green) and the CPC (blue) both dropped on that day which means CPA (red) went up. Perhaps watching football and eating turkey trumped online shopping on Thanksgiving?

Right after Turkey Day, people started on their Christmas shopping so conversion rates started to rise. During this period, advertisers raised their bids in order to get more prominent positions in the ad auctions so they could attract those shoppers. That increased the median CPC (blue). But the conversion rate rose more than the CPC, which pushed CPA (red) down. Even though the clicks cost more, the conversions -- what really matter -- cost less.

The conversion rate peaked on December 11, somewhat before the peak of overall retail sales, since it takes time to process and ship the online orders. By December 23, things were pretty much back to normal. Once Christmas Day arrived, conversion rates dropped to their lowest point of the year -- people were just too busy opening presents to think about buying more things… at least for the next few days.

The bottom line is that is that the cost of clicks does tend to rise during the holidays. But since those clicks are more likely to turn into sales, the CPA goes down, making those seemingly expensive clicks quite a bargain. If you are interested in tracking how your own conversion rates and CPAs change during the holiday season, you can set up AdWords Conversion Tracking on your ads and see how these metrics work for you.

Thanks to Hal for his explanation on how the holiday season can affect the ROI for an AdWords campaign. And remember, you can always visit the AdWords Help Center year-round to read up on tips on how to improve your ad performance.

Posted by Christina, Inside AdWords crew

ROI: why it matters and how to track it -- part 3 of 3

In part two of this series, Fred Vallaeys, Product Evangelist for AdWords, discussed how to set up the conversion tracking feature available in every Standard Edition AdWords account -- and how to use conversion tracking information to track your ROI. Today, in the final installment of the series, Fred is back with tips on how to start using that ROI data to your advantage.

Once you have a week's worth or more of conversion tracking data, you should have enough information in your reports to start adjusting your bids to improve your ROI. Here are two strategies to improve bids using your new data.

When ROI is less than 100%

Using the type of report I described last week, sort the data on the “Value / Cost” column (which is your ROI expressed as a percentage) and look for keywords that have a negative ROI (i.e. less than 100%), but enough clicks that you'd reasonably expect some conversions to have happened. These are keywords for which your advertising costs exceed your profits, so your bids for these keywords may be set too high. (Please see the Notes section near the bottom of the post for further discussion on why I say 'may' here.)

In most cases, you should lower the bids for keywords with ROI less than 100% to the amount in the “Value / Click” column from the report. The “Value / Click” amount reflects how much profit you gain per click, so if you set your maximum CPC to this amount and the performance remains consistent, you will at least break even on these keywords.

When ROI is more than 100%

For keywords that have a positive ROI (i.e. greater than 100%), consider increasing your maximum bid -- but not higher than the amount in the “Value / Click” column. By increasing your bid, your ROI will decrease but you may end up making a greater total profit because you’re getting more clicks when your ad moves to a higher average position.

Consider the hypothetical situation shown in the table below. To begin with, your max CPC of $1.00 puts you in position 6.0 on average and your ROI is 200%. Then, suppose there are two possible scenarios when you raise your max CPC by $0.20 to $1.20 to improve your average position to 5.0; in scenario A, the higher position gets you 10 extra clicks and in scenario B, you get 15 additional clicks.

Because you’re paying more for every click, your ROI decreases and you need more clicks to make the same profit as before. As you can see, in scenario A, your net profit has declined from $50 to $48 so you should keep the old bid. In scenario B, your net profit has increased from $50 to $52 so you should keep the increased bid and experiment with raising it even further.

	Avg. CPC	Value / Cost (ROI)	Value / Click	Avg. Position	Clicks	Cost	Total Value	Net Profit
Current	$1.00	200%	$2.00	6.0	50	$50	$100	$50
Scenario A	$1.20	166%	$2.00	5.0	60	$72	$120	$48
Scenario B	$1.20	166%	$2.00	5.0	65	$78	$130	$52

About this table:
Cost = Avg. CPC multiplied by Total Clicks
Total Value = “Value / Click” multiplied by Total Clicks
Net Profit = Total Value minus Total Cost
Note that only the “Net Profit” column is something you have to calculate. All other columns are available in AdWords reports.

If your competitors aren’t looking at ROI data when setting bids, they won’t know which keywords are costing too much, nor which keywords could have delivered greater profits in a higher position. Now that you’ve got the data to see the complete picture and make smarter bidding decisions, you’ll have an edge over competitors who are bidding without being fully informed.

In addition, enabling conversion tracking is also the first step toward using two products which let you bid directly using Cost Per Action (CPA) bidding: the Conversion Optimizer beta and Pay-Per-Action (PPA) beta. These products may make it easier to reach your ROI targets, as well as help you to spend both your time and your advertising dollars more effectively.

Notes: for when you have ROI-negative keywords.

I don't say that you should definitely decrease bids for ROI-negative keywords, because it is also important to factor in the lifetime value of a customer. Also, a keyword may have been used in combination with other keywords before leading to a conversion.

The lifetime value of a customer is probably greater than the one-time conversion event. For example, if you’re selling flowers, it’s quite likely the customer may buy flowers annually for every birthday or anniversary. If you factor this in, the customer may be worth far more than the profit you make on their first purchase.

There is also the possibility that some of your keywords are used while customers are comparison shopping, and once they've made up their mind, they find your site again using another keyword. For example, if someone searches for “flowers”, they may just be researching their options. Once they know what type of flowers they want, they may do another more specific query such as “buy red roses”. If this happens, the conversion will only be assigned to the last keyword they used and you may want to keep the more general keyword to ensure potential buyers are aware of your site early in the purchase cycle.

This concludes Fred's ROI series, which we hope will help you improve your advertising results. Should you have any unanswered questions, or if there are particular areas you'd like to see covered in more detail, please let us know. We'd be pleased to invite Fred back for more posts in the near future.

Posted by Blake, Inside AdWords crew

AdWords Ads: what's your location?

Lately we've received some inquiries about the locations that are often displayed beneath the last line of text in AdWords ads. Here's some helpful information that explains when we display locations, and how we determine what to display.

When you use regional targeting in your campaigns, Google users searching from your targeted areas will see the city or region name (whichever is more specific) displayed directly beneath your ad. This alerts users that your product or service may be especially relevant to them due to your proximity, and it helps you reach local users. Check out this example ad:

We show the name of the region or city based on the actual search query or the Internet Protocol (IP) address of the user, if available. Learn more about how AdWords knows where to show your keyword-targeted ads.

With regional targeting, it isn't possible to prevent locations from appearing underneath your ad. Visit the Targeting by Location section of our help center to learn more about targeting your campaigns.

Update: Revised content to provide clarity on regional targeting.

Posted by Heather, Inside AdWords crew

Just three more shopping months

As we launch into fall, many retailers are already gearing up for the most important sales season of the year -- the winter holidays. It may seem like we have a long way to go before December, but according to the 2007 Holiday eSpending Report, shoppers are hitting their favorite online stores well ahead of time -- some even report that they've already finished their holiday shopping!

With this in mind, it's never too early to start thinking of ways to attract more customers. We suggest creating a separate, fine-tuned winter holiday campaign with specific, narrowly focused ad groups and relevant keywords to attract potential customers. The Keyword Tool is a great resource to turn to for ideas and tips on creating a number of keyword variations.

You may also want to write ad text that appeals directly to the audience you're targeting. After creating multiple ads per ad group, you can look at the % Served column in your 'Ad Variations' table to see what kind of ad text attracts more clicks. And, remember that AdWords will automatically show the ad with the higher clickthrough rate (CTR) more often, so you can experiment with different ad texts to see what works best.

As always, you can visit the AdWords Help Center year-round to find ways to improve your ad performance. Retailers can also check out our optimization tips.

Posted by Christina, Inside AdWords crew

ROI: why it matters and how to track it -- part 1 of 3

Over the past couple of years you've met a number of AdWords experts on our blog -- and, in that spirit, we'd like to introduce Fred Vallaeys, the Product Evangelist for AdWords. You may have met Fred in person, or heard him speak at recent industry events. If you're someone who attends these types of events keep your eye out for him: he loves to hear feedback from our advertisers firsthand.

Today, we begin a new series on a subject that is key to advertiser success: Return on Investment (ROI). In this series, Fred will cover why ROI matters, how to track it using tools available from AdWords or other sources, and how to optimize AdWords advertising for ROI.

Now that the stage is set, let's get started. Here's Fred:

I've heard it said at conferences that online advertising is the most cost-effective way for businesses to attract new customers -- but how exactly is such a claim measured? Well, one of the beauties of AdWords is that results are easily measured. Not only do advertisers get reports about clicks and impressions within their account, they can also track conversions of visitors to their site. One possible downside of having all that data, however, is that advertisers may become distracted by tracking lots of metrics at the expense of losing focus on the ones that matter the most.

On the other hand, many advertisers don't spend much time at all monitoring their campaigns. They might check only one metric, such as impressions, clicks, CTR, or their overall spend -- and so long as they don't see anything obviously amiss, they don't make any changes to their ads, maximum CPCs, etc.

Regardless of how much or how little an advertiser measures results, it's possible to miss out on potential profit if close attention isn't paid to the one metric that almost certainly matters the most: ROI. And while impressions, clicks, CTR and costs are all important components that contribute to the ROI, these metrics only show part of the picture.

The ROI metric can be defined in two ways: the revenue generated for every dollar spent on ads, or the amount of profit generated from every dollar spent on ads. I'm going to focus on profit here, since that's what most advertisers inquire about.

The formula for ROI is as follows (keeping in mind that the "revenue minus cost" in the top line equals profit):





For any campaign where the advertiser's goal is to get a conversion, whether it be a sign-up, a sale, or something else, the ROI should be greater than 100% -- which simply means that for every dollar spent on AdWords, they've made a profit. The greater the ROI number, the greater their profit.

Here's an example -- let's say an advertiser has two keywords ('flower delivery' and 'fresh flowers') and spends $50 on each. For the same $50, the advertiser receives 50 clicks for 'flower delivery' and 100 clicks for 'fresh flowers':

Keyword	Impressions	Clicks	Cost	Average CPC	Conversions	Profit	ROI
flower delivery	1,000	50	$50	$1.00	5	?	?
fresh flowers	1,000	100	$50	$0.50	10	?	?

Based on the data in the table, the keyword 'fresh flowers' seems like the better of the two because it has a lower average CPC and it leads to more conversions (sales). But without tracking the ROI on both keywords, an advertiser would have to guess whether it makes sense to change the bids for these keywords. If they were only looking at the average CPC or the conversions per keyword, they may be making assumptions that could end up costing them money.

Now, here's that table again -- but with figures added for ROI:

Keyword	Impressions	Clicks	Cost	Average CPC	Conversions	Profit	ROI
flower delivery	1,000	50	$50	$1.00	5	$100	200%
fresh flowers	1,000	100	$50	$0.50	10	$50	100%

Notice that the keyword 'flower delivery' has a much better ROI, even though it generated fewer conversions and fewer clicks for the same advertising cost. This could be the case for a variety of reasons -- for example, users who clicked on the 'flower delivery' ad may tend to buy products with a higher profit margin. The average profit per sale on the keyword 'flower delivery' is much higher ($20) than 'fresh flowers' ($5), which justifies the higher CPC for the keyword 'flower delivery', even in light of fact that it receives fewer conversions.

When an advertiser tracks and monitors their ROI, they are seeing the complete picture. This allows them to make smarter decisions about their online ads and, ultimately, make their business more profitable.

Now that you've seen why ROI matters and how it can help you to make more informed decisions, Fred will tell you how to track and monitor your ROI in part two of the series. Then, in part three, he'll take a close look at some tools and strategies for optimizing ROI. We hope you'll stay with us for the entire series -- and as always, please feel free to comment along the way.

Update: Republished to correct formatting of tables

Posted by Blake, Inside AdWords crew

Just three more shopping months

As we launch into fall, many retailers are already gearing up for the most important sales season of the year -- the winter holidays. It may seem like we have a long way to go before December, but according to the 2007 Holiday eSpending Report, shoppers are hitting their favorite online stores well ahead of time -- some even report that they've already finished their holiday shopping!

With this in mind, it's never too early to start thinking of ways to attract more customers. We suggest creating a separate, fine-tuned winter holiday campaign with specific, narrowly focused ad groups and relevant keywords to attract potential customers. The Keyword Tool is a great resource to turn to for ideas and tips on creating a number of keyword variations.

You may also want to write ad text that appeals directly to the audience you're targeting. After creating multiple ads per ad group, you can look at the % Served column in your 'Ad Variations' table to see what kind of ad text attracts more clicks. And, remember that AdWords will automatically show the ad with the higher clickthrough rate (CTR) more often, so you can experiment with different ad texts to see what works best.

As always, you can visit the AdWords Help Center year-round to find ways to improve your ad performance. Retailers can also check out our optimization tips.

Posted by Christina, Inside AdWords crew

AdWords Optimization Tips: More on Ad Text

A few weeks ago, we asked you which optimization topics you wanted to learn more about. Many of the questions we received were on creating effective ad text, which is the subject of today's post.

If you aren't familiar with our six-part series on optimization tips, you may want to check out our previous post on ad text tips. You can read up on the importance of describing your offering clearly, using proper grammar and punctuation, having clear call-to-actions, and other basic tips when writing ad text. Today, our optimization team is back to cover more tips like including prices and discounts in your ad text, ideas for testing different messages in your ad text, and tracking overall performance of ad text.

Should I mention prices or discounts in ad text?
It depends. While the most important component of ad text is a good description of your offering, you may also want to mention a price. If you consider your prices to very competitive, it may be to your advantage to advertise them. Conversely, if you sell a high quality product and charge a premium price, you may also mention price to set the right expectations and discourage bargain hunters. And if you are only promoting a discount on one of your products, do not give the impression that there is a general discount. In summary, your best strategy is to be straightforward with your potential customers, so the right ones are clicking through to an offer they were expecting to find.

What should I be testing in my ad text?
You can test different descriptions, call to action phrases, promotions, and special offers. Here are a few different points you may want to test:

• Different emphasis: product description, call-to-action, or promotional offer
• Including the brand name versus simply describing the offering
• Including the price in ad text versus including a discount or other special offer to differentiate your business
• Including an audience-specific message such as 'Perfect for Couples'
• Placement of certain messages in your ad text: headline, line 2, or line 3
  

You can also find good ideas for messages to include in your ad text by taking a look at what visitors are searching for on your site. If your site has a search bar, try looking at the search queries to see what they are interested in. Similarly, if you have web analytics tracking on your site, you can also look through the search queries that are bringing people to your site to see which features of your business resonate most with your potential customers. For example, if you offer vacation rentals, you may find that visitors are interested in certain amenities -- you can then include descriptions like 'pet friendly', 'hot tub', or 'concierge service' in your ad text.

When testing different ad texts, be sure to control for some portions of the ad text, while experimenting with the other portions so you'll be able to assess how effective the message you are testing really is. For example, if you are trying to figure out whether the call-to-action 'Buy today' or 'Learn more' is more effective, be sure to keep the description of your offering the same. You can also learn more tips on effective ad text by reading our Editorial Guidelines.

How can I better track the overall performance of my different ad texts?
One easy way to look at the overall performance of your ad texts is to run an Ad Performance report. You can run an Ad Performance report from the Report Center and then use the results from this report to identify low- and high-performing ad texts. For high performing ads, you can try testing a small variation of that ad with a different messaging or a different landing page.

Depending on your goals for your account, you may use different metrics to measure your success. (If you have conversion tracking, don't forget to use the 'Add/Remove Columns' feature in order to include conversion data.) Remember that your ad text with the highest CTR may not have the highest ROI. And don't just pay attention to the conversion rate, but the cost per conversion as well.

For even more sophisticated tracking capabilities, you may want to try A/B testing on text ads with Google Analytics. To read on this topic, check out this article from the Google Analytics Conversion University.

We hope you've found these tips on ad text to be helpful. We'll be back soon with other topics that you emailed us. And in the meantime, please continue to send us your questions on optimization.

Posted by Feng, Inside AdWords crew

Search Engine Optimization İpuçları

Bugüne kadar ortaya atılan teorileri, şunu yaparsan işe yarar gibi lafları unutun, bu makale size katkı sağlayacak.Arama motorları için yapılan optimizasyonlar ülkemizde ne kadar önemli gibi gözükse de bu işi iyi yapan kişi sayısı ne yazık ki az. Çünkü herkes tarafından bilgili kabul edilen kişilerin yazdığı makaleler hiçbir işe yaramıyor. Adam kendisi biliyorsa bile bunu anlatmıyor. Çünkü anlatırsa herkes yapacak ve kendi hitinde, gelirinde azalma olacak. Ben tüm bunları geride bırakarak SEO açısından size katkısı olacağını düşündüğüm bu makaleyi neden yazıyorum ? Çünkü Türk internetinin gelişmesi için arama motorlarında daha yüksek yerlere gelmeli. Özellikle ingilizce kelimelerde bir Türk`ün sitesinin olması iyi olmaz mıydı ?
Tabi arama motorlarında üstte çıkmaktan bahsediyorum ama spam konusu Türk internetinin önünü kapattığı gibi, arama yapan kişinin de bilgiye ulaşmasını engelliyor. Spam yaparak aramalarda üst sıralarda çıkabilirsiniz, hatta hitte alabilirsiniz, fakat bu geçicidir. Çünkü spam report sayfası ile her an bir kullanıcı sizi şikayet edebilir. Edilmese bile sizin kimsenin gözünde zerre kadar değeriniz olmaz. Spam yapacaksanız şu yolu deneyin; Spam yapacağınız kelimeyi seçin ve o kelimeyle ilgili çeşitli bilgiler toplayın. O bilgileri sayfanıza koyun. Hem spam yapmış gibi tatmin olun hem de arama motorlarında üstte çıkın. Böylece arama yapan kişi hem sizin sitenizi ziyaret edecek, hem de istediği bilgiyi elde etmiş olacak.
Şimdi gelelim SEO (Search engine optimization) tekniklerine:
Şüphesiz internette en iyi hit getiren arama motoru Google`dır. MSN, Yahoo!, Altavista gibi arama motorları Google`ın yarısından bile az ziyaretçi getirir. Bunun nedeni internette en çok kullanılan arama motorunun Google olmasıdır. Bunu iyi bilen Google, site sahibinin bunun farkında olmasıyla Google`da üstte çıkmak için elinden geleni yapacağını ve bunu biraz zor kılmak gerektiğini açıklamış, bunu da gayet güzel uygulamışlardır.MSN ve Yahoo! gibi sitelerin arama sayfalarında pek kapsam bulunmamakta. Sayfanızın içeriğini bol bol doldurup, meta-tagları zengin tutarak üstlerde çıkabilirsiniz. Fakat Google böyle değildir. Arama sonuçlarında üst sıralarda çıkabilmek için bir çok engel koymuşlardır.
Bu engelleri sıralamak gerekirse;
- Title (Sayfa başlığı)- URL (Sayfa adresi)- İçerik (Sayfanın içeriği)- Meta-tag (Sayfada bulunan meta-taglar)- Pagerank (Sayfanın aldığı google pagerank değeri)- Aranan kelimeden çok link almış olmak (Örneğin; oyun kelimesiyle başka sitelerden ne kadar çok link alırsanız, “oyun” kelimesi aramalarında o kadar şansınız olur)
Pagerank en az etken olarak gözüküyor. Yine de az da olsa etkisi oluyor. Çeşitli akıl oyunları ile pagerankın önemini de kendiniz artırabilirsiniz.
Üstteki tüm etkenleri sağlıyorsanız, siteniz taşları yerine oturtmuşsa arama sonuçlarında üst sıralarda çıkmanız için önünüzde bir engel kalmaz. Size önerim en çok title ve URL etkenlerine dikkat etmenizdir. Her sayfada aynı başlık ve URL`leri kullanırsanız daha az katkı sağlar. Ama her sayfaya özgü title yapılırsa daha iyi optimize edilmiş olur.
Örnek vermek gerekirse;
Sayfanın içeriğinde “haberler” olsun. Google`da aranan kelimemizde “google piyasa değeri” olsun. Sizin sitenizde de böyle bir haber olsun.
Sayfanızı şu şekilde optimize etmelisiniz;
Title = Haberler / Google piyasa değeri açıklandıİçerik = Burası zaten haberinizde olacaktırURL = Programlama diliniz php ise ve kullandığınız scripte optimize uygulanmamış ise haber.php?id=4213 olacaktır. Bu şekilde de katkı olur fakat önerimiz şu şekilde;google-piyasa-degeri-aciklandi-4213.html
Ayrıca php bilginiz varsa meta-taglara haber başlığını entegre etmelisiniz, keywords kısmına da haberinizin ilk kısmını entegre ederek müthiş bir optimize elde edebilirsiniz.
Örneğin haber sitemizin tabloları şu şekilde olsun;
Başlık = $tabloismi[basliktablosununadi];Kısa metin = $tabloismi[kisametintablosununadi];
EÜstteki tablolara göre meta-taglarımız ve title şu şekilde olmalıdır;
“> Böylece title`de otomatik olarak “Google piyasa değeri” yazacak. Tabi bu her haberde değişecek. Her haberin kendi başlığı yazacak title kısmında. Meta-tag`larda da keywords olarak haberimizin bir kısmı gözükecek. Mesela; “Google`nin piyasa değeri açıklandı. Amerika`daki yetkililerin açıklamalarına göre piyasa değeri 180 milyar dolar olarak belirlendi.” Title = Google piyasa değeri açıklandı
Ayrıca .htaccess dosyamızı nasıl klasöre dönüştüreceğiz diye sorarsanız bu çok kolay;RewriteEngine OnRewriteRule ^(.*).html$ haberler/$1.phpRewriteRule ^(.*).html$ kategori_ismi/$1.php
Eğer sitenizi yeni açtıysanız biraz normal indexlenme sürecinde beklemeniz gerekiyor. Zira ilk başlarda Google bunları görürse sizi uzun bir sandbox yolculuğuna çıkarabilir.Siteniz indexlenirken sabırlı olmalısınız, sitemap kullanarak googlebotlarına yardımcı olabilir ve daha iyi sonuçlar alabilirsiniz.Öncelikle online sitemap hazırlayan sitelerden birine girin ve tüm siteyi indexlemesi için URL`nizi yazıp gönderin. Denemek için bir sitemi yazdım ve birkaç saat içinde indexlemeye başladı (1 haftada ancak 1-2 sayfa indexlemişti, sitemap sayesinde onlarcasını indexlemeye başladı)