Examining AdWords Reports to Make ROI Bid Decisions

When you run AdWords reports, you are often buried in data. The first step to analyzing the information is to use conditional formatting to put the data into a visual reference, as discussed earlier in this chapter in the section “Revenue per Click.” It can also be useful to put your ad groups into various buckets so that you can analyze similar ad groups together. Let’s examine an ad group report (Figure 13-36) and sort the ad groups into a meaningful organization.

Figure 13-36: Ad group report

You can do this analysis at the keyword, ad copy, landing page, or placement level. We will walk through it at an ad group level, but there are times you will want to go through this same exercise with different data points.

It is useful to add two columns to the AdWords reports. The first, Column F, is ROI. It is a percentage of how high the returns are for any ad group regardless of total dollars spent. The second data point is profit. Subtract cost from revenue to arrive at profit. In this case, we are assuming there are no margins involved. If there are, first calculate margins, then profit. Once we have those data points calculated, let us group these ad groups.

Low Cost, Low Return Ad Groups Ad groups 1 to 4 have zero conversions associated with them. They also have not spent much money. If you set a bid based on profits or ROI, these ad groups would have to be turned off, as the bids would be $0.00. First analyze if they are good keywords. Are they keywords that you tested and they failed? If so, delete them. Are they keywords that appear early in the buying cycle, and you like them, but they do not receive returns? If so, move them to a Budget Optimizer account.

Medium Cost, Solid Return Ad Groups Ad groups 6 to 11 have all spent some money and have decent revenue. A few of them have negative revenue numbers. For these ad groups, set bids based on profits or ROI. You should do some testing and tweaking of these ad groups over time, but they are not going to be top priority ad groups.

High Spend, High Return Ad Groups Ad groups 12 and 13 have high spends and excellent returns. While you might be tempted to significantly increase the bids on these ad groups based on profits, especially ad group 12, be careful about making dramatic changes in your profit centers. These two ad groups bring in more revenue than all of the other ad groups combined. It is not uncommon to find a handful of keywords or ad groups that are a large percentage of your overall revenue.

The AdWords system can be temperamental at times. In ad groups like these, change the bids by 10 percent or 20 percent and make sure your returns are the same at the higher bid prices. If the returns stay profitable, then raise the bids again by 10 or 20 percent. Do not make dramatic changes in these ad groups. In addition, on the home screen of your AdWords account you can set a watch list of items you want to keep a close eye on. Add these ad groups to the watch list. These are ad groups you should check on daily, as a slight change can cause a dramatic change in your profits.

High Spend, High Traffic, Medium or Low Return Ad Groups Sometimes the hardest part of AdWords is finding keywords with high search volume or keywords where you can drive a lot of traffic to your website. Ad group 14 has spent $19,046 and has only made $21,580. This ad group has a lot of traffic, but it barely makes money. However, it has potential to be a high revenue ad group. This is an ad group that you want to keep a close eye on because a slight change could cause you to start losing a lot of money instead of barely making money. Add this ad group to your watch list as well.

The best optimization you can take with an ad group like this is to start testing. In Chapter 15, we will examine how to test ad copy and landing pages to increase conversion rates. This ad group is a perfect candidate for testing.

High ROI Ad Groups The ROI of the first 14 ad groups does not break 330 percent. However, ad groups 15 and 16 both have over a 560 percent ROI. That is a significant difference from all the other ad groups. While these ad groups are not at the top in spend or profits, there is some combination that is leading to a fantastic customer experience. When you see ad groups like these, learn from them. Examine the keywords, ad copy, and landing pages to see if there are aspects of this search combination that you can utilize in other ad groups. With these ad groups, you can set bids based on profits or ROI; however, when you have outliers, examine and learn from the data.

Setting bids, controlling your marketing costs, and examining your profits are essential to making money with AdWords. However, it is equally important to understand how your customers buy from you so that you do not suddenly stop buying keywords that were indirectly leading to conversion or start making dramatic changes in your profit centers.

It is easy to end up in a paralysis-by-analysis scenario with AdWords as you have so much data available to you. Put your ad groups into meaningful groups so you can work on similar items together and continue to refine and improve your campaigns.