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by Alec Sharratt on 29th June 2011
When it comes to outsourcing your AdWords or PPC account, it is worth ensuring that you have a keen eye on what stats you are being fed by your agency. Despite an agency giving you gospel truth data it may not be entirely relevant to your business goals. In fact, statistics can be interpreted in almost as many ways as the gospel has, with over 38,000 different denominations of Christianity! It can be easy for an agency to promote the value of one statistic in a report such as CTR whilst ignoring other statistics like conversions and conversion rate.
From Traffic to Profit
All of the elements of an AdWords campaign are interconnected in some way; I have explained this in a previous article on tips to improve your AdWords account. To offer some concrete examples; CTR is calculated by dividing the Clicks by Impressions then multiplying by 100 to get a percentage. So in order for CTR to improve you could either reduce impressions or increase clicks. In turn CTR helps to improve the quality score which affects how much you pay for a click.
However as many of you will be aware traffic does not equal profit, there are many intermediary steps between these two aspects. Some traffic converts better than other; this depends on the keyword, the landing page, the copy, the ad text among other elements. Every AdWords account is different, the industry you are in, the budget and the products / services / goals all vary between clients. As a result a clear understanding of the client’s requirements and goals is required to relevantly report to the client.
The bottom line is usually conversions, although this is not always true I will use this as an example to demonstrate the importance of relevant reporting. The mathematics behind PPC is not always obvious to the client, which is why we (AdWords Account Managers) should make this as transparent as possible to the client. Big figures like a 10% CTR and 50,000 clicks can seem impressive… But if the client turns say three conversions into one sale, the conversion rate is 4%, the value of a sale is £100 and the CPC (Cost per Click) is £0.50… The client will be losing £2777.78 per month or a return on investment (ROI) of -11%.
Continuing the example above it would be meaningless to focus on just CTR or just Conversion Rate, each data element influences the ROI. For example, reducing the CPC by 6p to £0.44 would bring the account into a profit of +£222.22 or an ROI of +1%. Alternatively; if the PPC account manager were to review the campaigns for keywords with a low conversion rate and remove them, bringing the average conversion rate up to 4.5% then the account would be exactly at breakeven point, neither making or losing money. If however the CPC rose by just 1p to £0.51, even with an improved Conversion Rate of 4.5% the client would be losing £500.00 per month.
Technique to “Trick”
There are a number of techniques that can be employed to improve statistics on an account; such as using dynamic keyword insertion within ads. This can very easily improve the CTR as ads will seem relevant to the searcher; this is very unlikely to improve the conversion rate though. These techniques can be turned into “tricks” to make an account appear to be more successful than it actually is.
Conversion tracking should be implemented on any account that is looking to get a ROI from PPC, again this is not always applicable but in over 90% of cases it is both relevant and achievable. Without this calculating ROI, profit, revenue, success or failure can be hard to impossible, leaving the account manager free to focus on meaningless statistics that do nothing to advance the client’s business.
Lying With Facts
Sounds impossible but if you have ever omitted a fact from a conversation with your partner, only to be rumbled at a later point the argument “I didn’t lie, I just didn’t mention it” holds about as much water as a sieve! Being sneaky with data and facts can go a lot further than simply omitting facts from reports.
For example, traffic may be up by 10% since last month, nice, but say the product is heavily subjected to seasonal fluctuations (like children’s toys) and it is peak season (Christmas). Google trends may show your main keyword’s search volume increase by 200% during this period, so an actual rise of 10% is about 190% less than what it should be. Emphasising a rise of 10% is not a lie, or even a blurring of the facts, but it is still nonetheless both unhelpful and misleading.
I hope that this demonstrates the dramatic difference a subtle change can make on an AdWords account and the importance that each element plays in delivering a return on investment to the client. As importantly though, this should highlight the need for relevant and targeted reporting. Note that I do not mention accuracy here, reports should always be accurate but accuracy does not guarantee relevance.
Because of the ease with which someone can spin a statistic or manipulate data, it is important to show the same (relevant) stats on each report, allowing the client to identify easily for themselves the success of their campaign. This creates reporting continuity and transparency which in turn will build trust with a client, trust and success will lead to repeat business.