Google Analytics insights for enhancing paid search performance

If you are not using web analytics to provide extra insights into your PPC campaigns, I suspect Louis Gossett Jnr is lurking somewhere in the background like in the Namibian brewer’s beer commercial, ready with his catch phrase: “What are you doing Quentin?”

The availability of a free and robust web analytics tools such as Google Analytics removes any excuse for viewing your paid search campaigns in isolation.  Paid search marketers often treat search campaigns as though they exist in a marketing vacuum.  A tool like Google Analytics will quickly help you understand how search campaigns perform as an integrated part of the greater marketing effort that may include SEO, e-mail and above the line campaigns. Furthermore, Google Analytics will provide you valuable behavioral data of the paid search traffic you are driving to your paid search landing pages.

Over the next while we will look at some simple but effective ideas for using Google Analytics to improve your paid search performance. Today we will start by looking at site search behavior.

Leverage the power of site search to improve the quality of your site links

In previous posts we showed how the inclusion of site links in paid search ad copy can improve the click-through rate on your high traffic terms.  It will typically be the brand search terms that will display site links, although Google has relaxed this recently.  You can use behavioral data from Google Analytics for suggesting effective site links.

Many customers will know your brand, and also that they can find their desired product on your site.  Many of them will navigate to your site using a search engine.  If the click on a PPC advertisement  you will typically land them on the home page and they will navigate their way to their desired product page, with the amount of effort depending on the quality of your site.  If you know what the above visitors are typically looking for, why not give them the option to make the journey to that conversion shorter?

With very little effort you can enable site search tracking in Google Analytics and create a custom segment to focus on brand search traffic.   The Search Terms Report for the above segment can then give you a quick overview of what most people that land on your site through a brand search typically search for on your site.  In the example report below it is clear that many of them are looking for iPod products.  This advertiser is also based in a geographical area that is currently experiencing winter, so heaters and dehumidifiers also seem to be in seasonal demand.  After looking at the e-commerce tab for this report (not shown here), it is also clear that these products are converting quite well.  By including site links to the relevant product pages you preempt visitor intent and shorten the conversion funnel, which is likely to improve conversion.

If Louis Gosset Jnr was selling paid search he would have said: “Always keep it real, use Google Analytics to enhance your paid search campaigns.”

Become a better keyword vintner

A key objective in PPC is to grow revenue within efficiency targets. This can be achieved through good bid management on the existing keyword set, as well as through the addition of new keywords. It is easy to add thousands of keywords using product feeds or a machine generation method. These keyword sets often add very little term value in a PPC campaign. Quantity is no substitute for quality. It is important to track the quality of keywords you add to a PPC campaign over time and possibly by the source of the keyword e.g. product feed, keyword research, search query mining etc.

Some questions you may want answer include:

• What is the average additional revenue we generate per keyword added (and is it within efficiency targets)?
• Is our initial evaluation period for new keywords sufficient, or are we potentially missing opportunities?
• What is the best source for new keywords?
• Is the quality of new keywords improving over time?

The answers to the above questions are not always apparent from traditional keyword performance reports. Keyword portfolios have already been compared to investment portfolios when it comes to keyword bidding. We use a similar analogy which compares keyword portfolios to loan portfolios. This allows us to apply the idea of a vintage curve for a loan portfolio to keyword portfolios. A loan vintage is a group of accounts that originated in a given time period.  For example, all new customers from 2009 make up the 2009 vintage. Vintage groupings can be monthly, quarterly, or annual, depending on the application or data available. Different groups of customers from the same vintage can also be compared to assess their relative quality (e.g. walk-in customers versus directly solicited pre-selected customers). A performance metric such as the proportion of accounts more than 90 days in arrears is often chosen to compare different loan vintages by time on book. If we make the analogy that new keywords represent new customers we can extend the idea of loan vintages to that of keyword vintages. Similar to loans, keywords are added at different time and can originate from different sources (e.g. product feeds or a break-down of search query reports). We can track performance metrics with “keyword age”, which may include percentages of new keywords with a click per impression or revenue per new keyword after a certain time period.

Below we will illustrate one application of a vintage analysis on real campaign data to gain some insight into new keywords. Many more applications are also possible. In figure 1 we consider 8,467 new keywords added to a PPC campaign from April to August 2009. Suppose we start a large set of new keywords on a fairly aggressive initial bid in order to gather performance data with which to optimize keyword bids. We would expect that a large proportion of them would be bid down over time in order to achieve an acceptable or agreed efficiency target, until we reach a stable overall bid level for these keywords as a group. When we study a larger set of campaign data across various advertisers, this seems to happen on average after about 3 months. A similar trend is apparent in figure 1 for our example campaign. It suggests that we achieved an average monthly long-term revenue of about $4 per original keyword added. It is clear how new keywords were bid down over time as performance was optimized.

Figure 1: Revenue per new keyword added versus Average Bid

There is an important variable we did not consider in the above view, and that is the efficiency metric for the new keywords over time. In the case of the above campaign the efficiency metric is cost of sales (i.e. PPC cost/sales). A target of around 8% (allowing for statistical noise) on non-brand terms is an acceptable benchmark for this campaign. In figure 2 below we show the average revenue per keyword (as shown in figure 1) against the cost of sales by keyword age.  Despite consistently decreasing bids on new keywords over time, the overall efficiency varied around the 8% cost of sales benchmark throughout. This suggests that we potentially did not give new keywords enough time to prove themselves before decreasing bids on them. If we kept the average bid higher for a longer period we can potentially achieve a higher average long-term revenue than $4 per keyword added, within the efficiency target. The keyword bidding in month 8 seems to try and address this efficiency by raising the average bid. Hopefully we have not priced too many of the original keywords out of contention by this stage.

Figure 2: Revenue per new keyword versus Efficiency

Similar to the above curves you can track the average revenue that you gain from each new keyword added for different cohorts of keywords. This often decreases over time if your inventory remains fairly stable over time, as the most relevant keywords are often selected upfront if your initial campaign setup and research processes are well developed. Treating your keywords as ‘vintages’ can provide useful insight about the quality and performance of your new keywords over time. It also gives you an approximation of the average revenue you can expect per keyword added and at what efficiency. I hope 2010 will be a good vintage for your PPC keywords!

The paid search keyword tail

There is no doubt that the keyword tail is important, provided it is effectively managed in a resource efficient manner, for example by using a bid management system.  The difficulty in assessing just how much the tail contributes lies in the exact definition of the tail itself.  The contribution of the tail to total campaign revenue is quite sensitive to this definition.   There are numerous definitions of the keyword tail and head out there.  A good practical view of the keyword head is to consider it as the number of keywords an analyst can manage manually with reasonable ease.  A number of 250 to 500 seem to be popular choices.  Other definitions specify fairly arbitrary click thresholds.  In this post we will consider a visual way for assessing the size of your campaign’s tail. It is also important to assess if your keyword tail meets your campaign’s overall efficiency targets.  The tail can add great value to your campaign, but it needs to be managed effectively, just like the rest of your campaign.

A useful way to view the tail is to sort all keywords by their traffic contribution over a specified period.  This enables us to divide keywords into different segments based on their contribution to total traffic, and then to compute the contribution of each of these keyword segments to total revenue and their relative efficiency.   The choice of segments need some care due to the discrete nature of keyword traffic for lower volume keywords. Figure 1 below shows how this data can be visually represented to give you an overview of an entire campaign.  This can then be visually represented as illustrated in figure 1.  The data represents the performance of all non-brand keywords for an online retailer over the last 3 months of 2009.  The blue bar represents about 3,818 keywords (23% of the 16,601 keywords with an impression over the period).  If we consider this group of keywords as the head keywords, it will provide a fairly conservative estimate of the tail.  In this definition the tail keywords still contribute about 24% of total revenue at an acceptable efficiency given the campaign’s efficiency targets.

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Effects of Site Links on Adwords Campaigns

One of the recent new features on Google Adwords has been the ability to add Site links to certain campaigns. These campaigns are the ones that Google deems eligible to display additional links in the Adwords advert (similar to what they’ve been doing for quite a while on the organic search results (see fig. 1). On the SERPS, these additional organic links provide the user with a quick way to navigate to subsections of a website without having to go the homepage first, effectively saving the user the effort of an extra click.

Fig. 1: Site links on organic results

So at first sight, it seems like a good idea for Google to implement the same feature on Sponsored Links because it adds value and relevance to the user. But could there be other motives behind Google’s action?

The first thing to point out is that in reality, Google (currently) only seems to display site links on ads with a very high Adrank, which basically means ads linked to brand (or trademark) keywords. Now there has been a lively debate in the search marketing world over whether or not one should bid on one’s own trademark. After all, why would you spend money on clicks that would find you in the (free) organic results anyway? That is a valid argument but unfortunately it is also a bit naïve. As Fig. 2 shows, if you don’t bid on your brand, someone else eventually will and no matter how good your organic rankings, you will lose clients to your competitors. Cause the truth is, Google does not make any money from organic results and if possible they will try to put a sponsored link above the organic results. Your competitor doesn’t even have to bid on your brand, Adwords’ Expanded Broad Matching might automatically match your competitor’s brand to yours. (Example: Google will match the keyword ‘Avis’ ,broad, to a user searching for ‘Hertz’ – i.e. without Avis actively bidding on the Hertz keyword). Have a proper look at your search query reports and you would be surprised at how frequently this occurs.

Fig. 2: Competitors reducing the effect of organic site links

With the site links feature, Google provides a trademark owner the ability to appear more prominently on the SERPs but only if they choose to bid on their trademarked keywords. If we look at fig. 3 it is obvious that site links make a sponsored link appear more prominent for a trademark owner, even as the organic results are being pushed lower down the page.

Fig. 3

This post is based on qualitative observations on popular brand that does not belong (or is related) to our client portfolio but we have quantitative data to back up our theories (more on that in a next post). Unlike in the organic results, site links are not only intended to increase user relevance, but also to increase Google’s revenue by making the competition for prime SERPs advertising space more fierce. Organic (free) listings are being pushed lower down the page, forcing lower ranking websites to start paying for more prominent sponsored listings. For trademark owners site links provide a competitive advantage but at the bottom of the ladder we suspect that competition and click prices will increase.

In a next post, we’ll take a more detailed look at the impact of site links on a campaign’s performance based upon our experience of the last few months.