At first glance, the Adwords dashboard can feel overwhelming. The multitudes of widgets and metrics make the information difficult to parse out, even to someone who has a basic knowledge of the platform. Even worse is that Adwords itself is not a science, and a complete comprehension of the platform’s utilities and features still wouldn’t inform you on how best to use it. Optimisation pathways simply vary too much from business to business, so there’s no direct recipe for success that you can follow.
You’re going to make mistakes on Adwords. But you don’t have to make certain mistakes. There are universally bad decisions that you can avoid, regardless of who you are and what you’re selling. Here are some of the most common of those decisions.
Customer Lifetime Value
A perennial question for Adwords campaigns is “what is the appropriate amount to spend on keywords?” If the amount spent is set too high, then you’re not generating an adequate ROI. If the amount is set too low, you risk your campaigns fading into obscurity. Many campaigns fall prey to this problem because they are in effect guessing on what the appropriate amount of money should be. They are not basing their proposed prices on anything other than whim. This is not necessary though, as you can base your keyword prices on customer lifetime value.
Customer lifetime value (CLV) is the amount of money a single customer is likely to generate over a lifetime of engagement with your brand. CLV is an aggregate value. Since customers vary widely in the amount of money they generate, CLV is determined by dividing your gross revenue by the amount of customers that engaged with your product.
A corollary to CLV is the cost to acquire customers (CAC), which is the amount spent to acquire the average customer. For most companies, a stable business model will be making sure that the CAC doesn’t exceed a third of the CLV. Since your Adwords budget is only a fraction of your total advertising budget, an appropriate Adwords campaign would spend less than a third of the total CLV.
Not using Negative Keywords
Adwords campaigns tend to focus on positive keywords, as they want to market to as many interested customers as possible. But as important as inclusion is in a campaign, exclusion is at least equally important. You don’t want to market to disinterested people, as every click on a paid ad incurs a cost. This is where negative keywords come in.
Negative keywords are a device you can use to exclude keywords that aren’t a good match for you. They are used to help minimise the amount of unwanted customers clicking on your ad, which in turn reduces your ad cost. Furthermore, if you create a list of negative keywords, it has the secondary effect of increasing your Google quality score.
In order to determine what negative keywords to employ, you should look to your search queries. Search queries are one of the most beneficial tools of Adwords. It lists the terms customers searched for before landing on your ad. Consequently, you can use it to find irrelevant search terms that customers have been using, which you can then implement into your negative keyword list.
Not Using Branded Keywords
Branded keywords are keywords that include your brand name, or a variation of your brand name. An example would be if Coca-Cola had the keyword “Coca-Cola” or “Coca-Cola.com” in their keyword list. It is an often forgotten Adwords technique, but is also one of latent potential.
The primary reason for bidding on a keyword is to launch your ad to the front page of Google’s search results. Naturally, you would want to bid on keywords that a higher number of people search for. However the more popular a keyword is, the higher your bids need to be to make any substantial impact. This is what’s great about branded keywords. Few (if any) other companies have your brand name, so brand keywords tend to be very cheap. Conveniently, your brand name is one of the most commonly searched terms for your business. It provides you a perfect opportunity to crowd out any potential competitors, all the while further establishing your brand.
Branded keywords are also necessary as a pre-emptive measure. Copyright does not apply to keywords, so there is nothing preventing competitors to put your brand name in their keyword lists. This problem becomes more prevalent as your brand gains momentum, as more and more businesses will attempt to steal prospective clients by hijacking your keywords. So it’s important to bid on your brand to prevent competitors ranking above you in organic search results.
At least in its immediate future, there is no sign of Google losing any of its market share. It has become a permanent fixture both in our technology and our culture. Like it or not, businesses are forced to engage with this platform, and Adwords have become a necessary aspect of advertising. With careful consideration and an intelligent approach, you can make the most of this platform, and establish a strong and reputable brand.