Chapter 12
Using Google to Test Prices for Free (or Almost Free)
In-a-Rush TipDon’t skip this critical chapter!
However, if you already have a Google AdWords account, you can skip steps 1–3 under “A/B Split Testing with Google AdWords.”
Two Methods for Almost-Free Testing!
You may not have to spend a cent to test prices. For this you can thank Google, a company that has done many wonderful things particularly for small businesses, but that now strides industries like Godzilla, squashing a few thousand people here and there as it passes by. If I was creating a slang dictionary, I’d list Google first under “love-hate relationship.”
Google has two different ways you can test prices:
1. A/B split testing (Note: You can test more than two choices, so A/B split testing can actually be A/B/C or A/B/C/D split testing.)
2. Google Optimizer (This is a form of multivariate testing, which used to require buying an expensive software package, or an even more expensive testing service. Now, thanks to Google, it is free to you.)
The advantage of A/B split testing is that it is easiest to set up; you won’t need help from a web designer.
The disadvantage of A/B split testing—and why you would instead use Google Optimizer—is that A/B split testing can only test one thing (e.g., prices or headlines) at a time. With Google Optimizer, you can test multiple items at the same time. But you might need webmaster help in setting up the test.
A/B Split Testing with Google AdWords
For a couple hundred bucks spent in search advertising on Google AdWords, you can easily and quickly find the answer to one—and only one—marketing question.
- It might be price: Which of these three prices should I run with?
- It might be ad headlines: Which of these three headlines will pull best?
If you have not done search engine marketing before, don’t worry about how much you will spend. You will be able to limit the total amount you spend each day to whatever number you desire. If you set the cutoff at $20/day, then if enough people click on your ad that you’ve run up $20 in charges, Google stops running the ad for the rest of the day, and starts it back the next day. And you can change this number at any time.
Following are the steps you need to take in order to test prices using Google AdWords and an A/B split.
If you already have a Google AdWords account, or already know how to set one up, you can skip steps 1–3.
1. Go to
Google.com. Under the search box, you will see a link for “Advertising Programs.” Click on it, then click on the “Sign Up Now” button under “Google AdWords” (
not AdSense!).
2. Allow yourself to just bumble along and figure it out as you go. Google guides you by the hand pretty well, and has lots of “Help” options, including a phone number if you really run into trouble. (You probably won’t need the phone number.) Notes:
a. You can work on this for days (or months) without it costing you a cent. Just click the “No thanks, I’ll set up billing later” whenever it asks.
b. Only when you’re completely done and ready to run ads should you go to the billing tab. At that point Google will charge you $5 for the setup and start running your ads.
3. You’ll set up a “campaign” for which you design an ad (go ahead and do a rough one—you can edit it later) and pick appropriate keywords. You’ll also link to the web page where you’re offering your product for sale.
4. Warning: Google wants you to let
it determine how much you should bid for an ad. This is like asking a fox to guard your hen house. Only if you have money to throw away should you do this! What you want to avoid is “automatic bidding.” You instead want “manual bidding.”
a. Click on the “Campaigns” tab. If you have more than one Campaign, you must do this separately for each campaign.
b. Click on the “Settings” tab.
c. Scroll down to “Bidding and Budget,” then look at “Bidding Option.” It should say “manual” and not “automatic.” If it says automatic, change it!
5. Scroll further down to “Advanced Settings” then to “Ad Rotation.”
6. Set Ad Rotation to this choice: “Rotate—show ads more evenly.” This option is necessary to do split testing. Otherwise, Google will start giving preference to one of your test ads over the others, which will risk the validity of your results.
7. Make as many copies of your web landing page (where you sell your product) as you have prices to test. Three prices? Then make three copies of your page, each with a different URL. For example:
a. YourCompany.com/new1.htm
b. YourCompany.com/new2.htm
c. YourCompany.com/new3.htm
Notes:
i. Don’t do something this obvious, or knowledgeable people seeing “new2” will search for “new” with other numbers to see if they can find a better price.
ii. Make sure they are all different from the page someone would go to if they clicked on a link to your home page. Your home page (or landing page people would find by going to your web site) must be separate from your three price test pages.
iii. Your home or “normal” landing page should carry your highest test price for the duration of the test. That’s because people seeing a test page might also go to your home page and find the offer there. Nobody minds having found a cheaper price offer. But online customers really resent (wouldn’t you?) finding their special offer is more expensive than the standard offer on your web site.
8. Make sure each of the three test pages is exactly the same—except for the price. Set up one test page for each of the prices you want to test. And set up your fulfillment/accounting system so that each test page gets billed for the correct amount and the product or service is provided. Make sure your accounting system can separately track sales from the highest price test page and from the non-test home or landing page (which should also have the highest price). As long as it can identify the source page of the order, you will be fine.
9. In your Google AdWords account, go to the rough ad you set up (under the tab “Ads”). If you put your cursor over it, a little pencil icon will appear. Click on that to edit your ad.
10. Revise and polish it until you think it will work great for people who are searching for the keywords you selected.
11. Notice the two locations at the bottom for your URL. The first one is the one that will show to searchers. Make it a direct link to your home page (which carries your highest test price). Example: YourCompany.com/NewBrandName. People will only go to that page if they type in your URL. Tips:
a. Don’t put in “www.” It takes up space and makes the URL harder to read and look longer to type in.
b. Make sure to capitalize the start of each word in your URL (see the example in step 11) so it is easier to read.
c. Note that some number of people will not click on your ad, but will type in the URL that shows. You want them to
not go to one of your test pages, because it could hurt your test reliability.
i. Because some will want to type in your URL, this shown URL should be as short and easy as you can make it.
12. At the second URL line, type in the URL for one of your price test pages (e.g., YourCompany.com/wiehelsiee or whatever you name one of your three test pages. Note that this can be a long URL because it will not be seen by anyone. It just designates where the person who clicks on that ad will be taken.
13. Click on “New Ad” then “Text Ad” to set up your second new ad. It should be exactly the same as your first ad, except for the bottom line with your web site test page location.
14. Set up as many ads as you have price tests, each pointing to one of the test pages. It’s important that all the ads look exactly the same to the potential buyer. The only difference should be the page they’re sent to.
15. Give Google your credit card number and go live.
a. Your accounting system will tell you how many sales you had from each of the test pages.
b. The “Ads” tab in your Google AdWords campaign will tell you how many people clicked on each of your three ads.
c. You should run the test until you get at least 40 orders at your most successful price. Run it until you get 75 orders if you can. That said, I know people who have made decisions based on fewer orders. But having under 40 responses raises the risk that your results are not reliable.
d. From the AdWords data Google provides, you will learn:
i. What percentage of those who clicked on each ad went on to actually buy from you. For example:
- What percentage bought at price A?
- What percentage bought at price B?
- What percentage bought at price C?
ii. The total dollars you earn (revenues) for each of the prices. For example:
- number of buyers at price A times price A
- number of buyers at price B times price B
- number of buyers at price C times price C
iii. How much profit you made from each, after subtracting your product costs.
iv. Your Google costs should be roughly the same because Google should be showing each ad about the same number of times. So you don’t need to calculate that into your price tests.
Using Google Optimizer to Test Multiple Things
Google Optimizer brings high level research tools (multivariate testing) to the average person and business. Specifically, it allows you to test multiple things at the same time (e.g., prices, headlines, photos, etc.).
This is especially valuable for new products and services because:
- You have so many things needing testing.
- You probably don’t have much traffic to your web site yet. If you were to test headlines, prices, and calls-to-action with A/B split testing, you would be running tests for a long time in order to get enough sales for the results to be statistically valid. With Google Optimizer, you can get all that information in just one test—thus much quicker. And the quicker you can start running your most profitable prices, headlines, etc., the quicker you’ll earn the most profits.
Google’s Website Optimizer is a free tool. You won’t need to buy search engine ads—if you already have a lot of traffic coming to your site. Otherwise, you will have to do something to drive traffic to your pages in order to run a successful price test. Translation: You may need to buy AdWords to bring in the traffic for the test.
Again, Google has great help for you in setting up and using the program. One problem is the complexity of the setup. Under the FAQs, here’s what Google says about needing a webmaster:
Q. “Will I need help from my webmaster?”
A. “If you don’t know HTML, or you don’t have access to edit the HTML source of your website, you’ll need some technical help to use Website Optimizer. Specifically, you might need technical help obtaining the original HTML content of your site and installing the experiment code on your site. Don’t worry—we provide in-depth instructions that will guide you or your webmaster through any technical portions of the experiment set-up.”
A complete overview of the program can be found at www.google.com/support/websiteoptimizer/bin/answer.py?answer=61144. In case this link no longer works when you read this, just search Google for “Website Optimizer Installation Guide—Multivariate.”
How to Get Started
There are a few steps to take in order to get started (before you even talk to your webmaster):
1. Understand the limitations of Google’s Website Optimizer. The most important is that it cannot test items that move around on your web page.
Examples:
a. You can test different prices, but they all have to be listed in the same place on the page. You cannot have one price at the top of the page tested against a price near the bottom of the page. Same with headlines—all the tests have to have the headlines in the same position on the page.
b. While you would normally keep headlines and prices in one location, this also means you can’t test different photos—or the same photo—in different locations on the page.
2. Decide what you want to test.
a. List the specific prices you wish to test.
b. List the specific headlines you wish to test.
c. Other possible things to test are photos, terms of the offer, guarantees. These are the additional things most likely to have an impact on your sales—after price and headlines.
3. Decide who’s going to do it for you:
a. Your webmaster. If so, e-mail the overview of the program link given previously and get a price from him or her.
b. Google has a list of “Authorized Website Optimizer Consultants” you can pay to do it for you. This is not as good, because it is a new person given access to your web site. If you don’t have a regular webmaster, it may well be worth it. Get a price from three or four of them.
c. You have two choices for doing it yourself:
i. Do it all yourself, if you are comfortable working with the HTML on your site.
ii. Do it mostly yourself, up to adding the HTML Google generates. At that point, bring in your webmaster.
5. From there, click on the “Start Testing Now” button.
6. From this page, you can either create a new account, or sign in with another Google account you have, including AdWords. (Note, however, that these are two separate programs.)
7. Once past this page you can access all Google help and FAQs if you run into trouble. There are also suggestions on setting up reliable tests.
Regrets!
Once you’ve set up and run your first test, you will be very upset with yourself that you weren’t doing it sooner.
I’m constantly telling my students that marketers don’t have to be rocket scientists. And there’s no reason to leave making profits to chance.
Smart pricers let the customer tell them (through their purchase behavior, not through their opinions) what they want and what they’re willing to pay.
The skill required in pricing is coming up with the best prices to test. That’s what this book helps you develop. The final step is seeing—through testing—exactly which of those prices will give you the most profits.
Once you have your answers, plan more testing to see if you can’t find prices/terms/offers that would be even more profitable.
Google Website Optimizer FAQs.
