Conversion rate and cost per conversion

Another clever thing you can do with Google AdWords is track a ‘sale’ from a search term. This is helpful because you can track which search terms perform better than others. For example you may have the search term ‘blue widgets’ so not only can Google tell you:

• how many times your advert appeared
• how many times someone has clicked on your advert
• the average cost per click

but also the following:

The conversion rate

This is the number of times that after someone has clicked from a single search term they have actually bought from your site. In other words the click has converted into a sale. So you may have had 100 click thrus from the term ‘blue widget’ and three sales might have occurred from those 100 visitors. This would equate to a 3% conversion rate. You also may have had 100 visitors from the search term ‘red widget’ and one sale might have occurred from these 100 visitors. This would equate to a 1% conversion rate. So you could compare the search terms and deduce that the ‘blue widget’ search term converts better than the ‘red widget’ search term as three out of every 100 click throughs from the search term ‘blue widget’ result in a sale compared to only one out 100 click thus for the term ‘red widget’.

This is very powerful information. It means that you can bid higher for the term ‘blue widget’ because you know that it is three times more effective than the term red widget. So take for example that both blue widgets and red widgets give you a profit before advertising of £10 per sale you know that for every 100 clicks on blue widget you make £30 and for every 100 clicks on red widgets you make £10.

So to break even for blue widgets you can spend £30 per 100 clicks or 30p per click and for red widgets you can spend £10 per 100 clicks or 10p per click. So you can see that you can adjust your bidding strategy on the performance of the terms you choose based on how well they convert. In this example the term ‘blue widget’ is worth bidding higher than ‘red widget’ as it makes you £30 per 100 clicks compared to £10 per 100 clicks.

Cost per conversion

This means literally as it reads. This is the cost it took you in clicks to get one sale expressed as an average. So if you spent £200 on clicks and got ten sales then the cost per conversion would be:

£200 / 10 = £20.

So the cost per conversion equals £20. On average the spend on clicks to get a sale is £20. You can get this data over any time period by just adjusting the dates within Google AdWords, so you can track whether over a specific period of time has cost you more or less to get a sale.

This figure is very important as it can tell you whether you are spending too much to get a sale. For the same reasons as above if you are spending £20 to get a sale, but the profit on the item is only £10 before advertising, you are paying too much for the clicks because £10 - £20 = £10 loss!

So it is a good idea to monitor the cost per conversion for the last seven days and make sure it falls within your budget. Please note: gather the data for the last seven days because this will give you a decent average based on current sales. If you do it for the time since you began the data becomes less reliable because it averages it out over a longer period of time. Depending on the number of sales you get it may be that you can gather data for less than seven days (if you sell many items) or greater than seven days (if you sell very few items) so that you get a good sample size to make accurate judgements.

Where and how to set tracking up

The two statistics can be found in the last two columns on the campaign page after ‘Avgpos’. Setting up this feature is very easy. You just have to add a little text at the end of the destination url and a bit of copied code on the ‘success’ page. It’s very easy to do, and Google guide you through it and explain it in dummy fashion.

To do this go to www.MassiveAndPassive.co.uk/conversion.html.

The lazy man’s guide to Google AdWords

I sometimes create a Google AdWords campaign in ten minutes just to see how well an idea is received. So if you cannot be bothered to do what I have said above then do this, it will take you ten minutes or so:

• 1.Create a new campaign which is keyword targeted, give it a name and name your ad group anything you like. Choose the language as English and choose ‘countries and territories’ as the customer location and click ‘Continue>>’.
• 2.If you want to add countries other than UK then add them on this page and click ‘Continue>>’.
• 3.Write the advert with a punchy title and catchy text. When you add the URL make sure you use capitalisation, eg www.MassiveAndPassive.co.uk like I have with the M A and P and then click ‘Continue>>’.
• 4.Open another window and go to www.MassiveAndPassive.co. uk/get-keywords.html and type in a short keyword that is related to your site. So if you are selling soft cuddly toys then type in ‘teddy bear’ and click on the ‘>’ icon to start the search. A list of 100 keywords will be generated.
• 5.Copy and paste the whole list into the page being currently displayed by Google in the other window. You may have to clean the list generated as it will have the number of searches next to each keyword. I usually go into word and paste the table there, remove the first column with the numbers and then paste the table of keywords into Google. Google allows you to paste tables in their keyword text area.
• 6.Go back to the other window and search for another generic term and repeat for as many keywords you can think of. So you may do ‘soft toy’, ‘toys’, ‘baby toys’ etc. Remember: You can never have too many keywords! Then add these keywords as before until you have a list of over 500 keywords. Once done click on ‘Continue>>’ in Google.
• 7.Enter the daily budget of £1,000. Do not worry, you will never spend anywhere near that if you are bidding less than £1 per click. I recommend setting it at £1,000 because if you put the budget to what you really intend to spend your adverts get slowed (i.e. displayed less) when nearing your budget for the day because Google fear they’ll exceed your budget if it’s displayed normally.
• 8.Enter your maximum cost per click. A good figure I choose is 11p, but it all depends on your pocket; 11p is usually enough to get your advert displayed.
• 9.Click on ‘Save Campaign’ and that’s it. Your ad will be live straightaway.
• 10.After a few days check how many times you have been clicked. If you haven’t had many clicks then increase the number of search terms, increase the amount you are willing to pay for a click and try changing your advert.

Getting on Yahoo!, Ask, MSN and others

A question that should be springing to mind is - what about the other search engines? This is an excellent question. You have to ask whether it is worth advertising on the others. The answer to this is as always - it depends! It depends on one and only one thing: if it works on Google!

• If it does it will work on the other search engines.
• If it doesn’t then it has a very high chance of not working on the other search engines.

So I suggest you make it work on Google as this is the largest audience you’re going to get and Google is the easiest and cheapest way to get visitors to your site. Have a look at the split of searches performed on the top five search engines in the UK for the month of September 2006:

Search engine	Share
Google	50.0%
Yahoo!	23.4%
MSN/Windows Live	9.2%
AOL	6.3%
Ask.com	2.7%
All others	8.4%

So you can see that Google has a half share of the market. If you make it work on Google then I suggest you advertise on Yahoo! second (which includes you in Ask as well) and then MSN third. The others are worth doing if you are trying to squeeze every sale out of the searching population, which may be applicable if you have only one product that you sell.

You need to evaluate whether it’s worth trying to master a pay per click system over developing new products. I choose to develop new products, but others focus on their one or two products. Neither strategy is wrong or right! It will depend on you and where you want to take your website.

To find out how to get on to Yahoo!, Ask, MSN and the other search engine pay per click programs visit: www.MassiveAndPassive.co.uk /other-ppc.html.