Avoid the common pitfalls in paid search
Avoid pitfall #1: Not tracking return on investment
- The first mistake new advertisers make is forgetting to track return on investment. The great thing about online advertising is that everything can be measured. In addition to being able to see how many people have clicked on your ads, and how much it has cost you, you can easily see how many people then take action (i.e. how many conversions you have).
- Examples of conversions you could track include:
- Contact form submissions
- Online sales
- Live chat engagements
- Phone calls.
- This means you can easily see how many leads or how much revenue your ads have generated for you. All websites should have conversion tracking set up in Google Analytics so that you can measure which of your marketing activities bring the best returns.
Avoid pitfall #2: Running on all broad match keywords
- One of the most costly mistakes that new advertisers make is to only use broad match keywords because this is the default match type.
- As a result, ads are shown when people search for the advertiser’s specific keywords, but also hundreds or even thousands of other variations, some more relevant than others. Advertisers then blow through their budgets quickly and don’t see any sales or enquiries.
- Make sure you think about which match types to use and create a good negative keyword list before you begin.
Avoid pitfall #3: Focusing on activities not outcomes
- Most marketing campaigns that fail do so because they haven’t started with the end result in mind. Before you begin your paid search campaigns, it’s vital that you think about what you want to achieve.
- What are your goals – There are two very important questions you should ask yourself:
- How many new customers do you want?
- How much are you willing to pay for them?
- You might respond with “as many as possible for as little as possible”, but is that really true? Could your business handle 1000 enquiries in 1 day?
- Campaigns without specific goals are inevitably going to waste money. Without setting a target, how will you optimize your campaigns? If your cost/conversion is $50, how do you know if that’s good?
Avoid pitfall #4: Not calculating the conversion rate required
- Once you have set your goals, you can work out whether they are achievable by calculating the conversion rate required. The average website converts at around 2%.
- Safer
- If you are happy to pay $50 per conversion and you know the CPC is $1, then 1 in every 50 clicks will need to convert. The conversion rate required for this is 2% (1/50).
- Riskier
- However, if you were only happy to pay $5 per conversion, 1 in 5 clicks would need to result in a conversion, meaning the conversion rate required is 20%. This is much less likely to happen.
- Simply divide your target cost per conversion by your expected CPC to work it out. Many advertisers set out on paid search campaigns without doing this calculation and learn that a campaign is not viable the expensive way.
- Once you’ve done your keyword research, calculate the average CPC. Then look at your desired cost per conversion. From this you can calculate the conversion rate required. Below is a conversion benchmark for most brochure websites:
- Low risk: 0–2%
- Medium risk: 2–8%
- High risk: 8+%.
Avoid pitfall #5: Not forecasting your likely results before you begin
- By using some clear thinking and making some well-reasoned assumptions, you can predict potential outcomes before you invest.
- Use the Google Keyword Planner to see how many people search for terms relating to your business.
- This relatively quick calculation means that before we even begin our campaigns, we can predict whether the results are likely to meet the goals we set earlier. You can also use the ClickZ CPM Calculator to get an idea of the cost of a campaign.
- Most advertisers who claim that paid search doesn’t work have not done these two basic things:
- Set your goals: what do you want to achieve?
- Forecast: how likely are you to achieve them?