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johk

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Jul 21, 2013
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Hi,


I am trying to figure out the return of PPC with Google Adwords .

Say we use [coffee mugs] as our keyword which has an average monthly search of 27100


Where I get stuck is how do I ‘estimate’ the traffic to the site from a Adwods campaign?

Say I enter a bid of AU$1.0 which gives me 8.19 clicks/day
If we assume 1% conversion, which means I need 100 clicks/sale, it will take me 100 clicks/8.19 = 12.2 days to do 1 sale (with the current bid of AU$1.0)
My adwords cost for one sale is then AU$12.2
Is the above assumptions correct??!!

Also, what role does Ad position play?
In the above example the ad position is 2.86. If the bid is increased the Ad position goes up but so does the clicks - Is the Ad position already taken into account for the estimated clicks for a certain budget?

Thank you,

j
 
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JimClark

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100 clicks to get a sale? No way.. You can do a lot better than that! I convert 1 out of 7 clicks on average. Sometimes even better than that. Just make sure your site is built to sell.
 

Y.B.

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Sorry to hijack your thread but I was just researching something so if someone knows adwords, maybe they can help:

Can you use Product Listing Ads to sell digital goods?
 

johk

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Jul 21, 2013
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Hi,


Thanks MVDH for the link. There are a lot of good stuff on that site.

But I still couldn’t find an explanation on how you estimate the traffic to your site and then also amount of conversions?!

On a lot ‘places’ they recommend you assume a 1% conversion – as that is a very achievable conversion rate.

JimClark – does that mean then you have 14% conversion – that is pretty good.


I get all the stuff about targeting the ads, make sure the ad links to a relevant page etc. but I can’t get my head around how to estimate the traffic from ADWords.


Thanks,

J
 

Andy Black

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Hi,


I am trying to figure out the return of PPC with Google Adwords .

Say we use [coffee mugs] as our keyword which has an average monthly search of 27100


Where I get stuck is how do I ‘estimate’ the traffic to the site from a Adwods campaign?

Say I enter a bid of AU$1.0 which gives me 8.19 clicks/day
If we assume 1% conversion, which means I need 100 clicks/sale, it will take me 100 clicks/8.19 = 12.2 days to do 1 sale (with the current bid of AU$1.0)
My adwords cost for one sale is then AU$12.2
Is the above assumptions correct??!!

Also, what role does Ad position play?
In the above example the ad position is 2.86. If the bid is increased the Ad position goes up but so does the clicks - Is the Ad position already taken into account for the estimated clicks for a certain budget?

Thank you,

j

I presume you're using some Google traffic estimator.
Bear in mind that the numbers aren't very accurate.

I've just used used the Google Keyword Planner to pull back worldwide numbers for search term [coffee mugs].

Location = Everywhere
Monthly Estimated Searches = 27,100
Estimated CPC = €1.55

Here's the thing, that CPC is going to vary wildly from country to country.
So instead, use Australia as your location.

Location = Australia
Monthly Estimated Searches = 880
Estimated CPC = €1.27


Right... the Estimated CPC is for the top ad positions, you can bid less and appear in lower ad positions and not pay that much CPC.

The more you bid, the higher your ad position (where higher means higher on the page).

The higher the ad position, the higher your CTR (since more people look at the ad)
... and the higher your impression share (since there are less advertisers competing for the higher ad positions).


Rules of thumb:

1) If you're in a low enough ad position to start with, then doubling your CPC will quadruple your clicks (and increase spend by a factor of 8!). This is because you'll get a boost in CTR by being in a higher ad position, and you'll also get a boost in Impression Share.

2) Ad CTR is about 70% of the ad above it. So if you're ad is two positions below someone elses, then you're getting about 50% their CTR.

3) Your Ad CTR is 25% that of your competitor when you move from position 3 (bottom of the top 3 when there's a full complement of advertisers) to the top position on the right (position 4 when there's a full complement of advertisers).

4) Being in position 1 when there is a full complement of advertisers (the top ad position of the 3 above the organic listings) is therefore about 8 times the CTR as being in position 4 (top right when there's a full complement of advertisers).

(I'll add graphics another day... I'm in a rush to just post this).


These were the rules of thumb I used a while ago. Google has introduced many features to improve the CTR of the ads in position 1 - sitelinks, extended headlines, sitelinks that are "stacked" rather than in a row, etc. Smart move by Google, as it creates a bidding war for position 1. Sneaky feckers...


If you're bidding on your own brand, then expect a CTR for being in position 1 of 40% to 60%. And CPCs to be tiny as a reward. (Note: make sure you bid on your own brand to protect it, and track branded searches over time. You'll also be able to change the copy quickly for new offers, or testing.)


If you're in position 1 for non-branded searches, then you should be gunning for a CTR of maybe 20% to 40%. I'm hitting 30% for "washing machine repairs" types of searches in Dublin.

Sooo, if position 1 is 20%, then position 3 below it could be 10%. If think that's quite high and might estimate 5%.


So for your scenario, in Australia, I'd estimate that the CPCs are for position 3, and that you'd have a 5% CTR for that position, and a 100% impression share.

So your ads would show 880 times out of the 880 searches (that's the 100% impression share).

And I'd estimate a 5% CTR, to give 44 visitors (clicks).

At €1.27 each.



Except I don't bother doing this.

I just load up the campaign, and count impressions, calculate available searches based on impressions divided by impression share, get actual ad position for various CPCs, get ad CTR and those ad positions.

Adjust bids so you're breakeven, then start raising them and trickling more and more traffic through your funnels to find your leaks.

Keep fixing leaks, and keep pushing bids.

It's a continuous cycle of improvement.

It starts with my motto of "Launch and Learn".

Hope this helps.
 
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Andy Black

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Sorry to hijack your thread but I was just researching something so if someone knows adwords, maybe they can help:

Can you use Product Listing Ads to sell digital goods?
I don't know the answer to that one Yury... I've never used Product Listing Ads...
 

johk

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Jul 21, 2013
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Thanks Andy,

That is an EPIC response.
I have read it once and trying to digest all the info.

Thanks again for the reply

j
 

theag

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Sorry to hijack your thread but I was just researching something so if someone knows adwords, maybe they can help:

Can you use Product Listing Ads to sell digital goods?

Stop bullshitting us. You were too lazy to research anything. First result for "google shopping digital products" would have answered your question.

It depends on your product: https://support.google.com/merchants/answer/2770285?hl=en

Good luck with your business if this represents your work ethic. You'll need it.
 

Y.B.

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Stop bullshitting us. You were too lazy to research anything. First result for "google shopping digital products" would have answered your question.
It depends on your product: https://support.google.com/merchants/answer/2770285?hl=en
Good luck with your business if this represents your work ethic. You'll need it.

Nice response a**hole. I was searching using terms for PLA and Product Listing Ads and nothing was coming up hence why I asked.
 

smithsta

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Hi @Andy Black really great post above, very informative, I will definately be reading the articles on your site, as I am new to Adwords.

Is there any chance you could expand on how to find the leaks in your sales funnel? Would this be done by Google Analytics to determine the bounce rate for certain pages?
 
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Andy Black

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Hi @Andy Black really great post above, very informative, I will definately be reading the articles on your site, as I am new to Adwords.


The most important part in my post above is this:

Except I don't bother doing this.

I just load up the campaign, and count impressions, calculate available searches based on impressions divided by impression share, get actual ad position for various CPCs, get ad CTR and those ad positions.

Adjust bids so you're breakeven, then start raising them and trickling more and more traffic through your funnels to find your leaks.

Keep fixing leaks, and keep pushing bids.

It's a continuous cycle of improvement.

It starts with my motto of "Launch and Learn".

By the time you've spent produced those fancy estimates, you could have already loaded up a campaign and be getting real data.



Is there any chance you could expand on how to find the leaks in your sales funnel? Would this be done by Google Analytics to determine the bounce rate for certain pages?

Ack, I don't bother with Google Analytics. Bounce rate, time on site, average page views, etc... these are all vanity metrics. Some people will call them KPIs for Key Performance Indicators.

The key word in Key Performance Indicators is "Indicators". They aren't actual performance.

Actual performance is your revenue, profit, and margin / ROI.

If you've the direct response mindset (which you should have), then you'll simplify this so that you're looking at only four metrics:
  1. Clicks
  2. Cost
  3. Sales
  4. Revenue (Earnings)

From these metrics, you'll be able to determine calculated metrics such as your click-to-sale conversion rate, profit, margin, ROI, cost-per-click, and earning-per-click (EPC).

These are front-end funnel metrics. If you can track the customer sales, then you'll be better able to determine the average customer life-time-value, which you could use to calculate a higher EPC. Increasing your conversion rate, and increasing your LTV, will increase your EPC, to allow you to bid more.

You should watch these two videos:
The Most Important Formula In Business
Direct Response Metrics for PPC Traders


And read these posts:
Your Goal Is To INCREASE CPCs
Launch & Learn
 
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johk

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Jul 21, 2013
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Hi,
Andy, when you see clients that want to use Adwords to sell products – don’t they want to know how much Adwords is going to cost per sale? I realize that you shouldn’t see ADWods as a cost and maybe more like an investment, but still you do want to know how much of your profit per product is going towards your Adwords spend.


Maybe I am to ‘hung-up’ on it – but looking at our example above and your experience – what conversion rate would you get? I realize that it depends on the landing page, how well the ad is targeted etc. – but roughly?

The 44 clicks will in total cost you 55.88 and say of the 44 clicks you only get 5% sales – that is 2.2 sales.
The Adwords cost for each mug is about 25.4 – which ends up being an expensive mug.


Thanks

J
 

Andy Black

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Hi,
Andy, when you see clients that want to use Adwords to sell products – don’t they want to know how much Adwords is going to cost per sale? I realize that you shouldn’t see ADWods as a cost and maybe more like an investment, but still you do want to know how much of your profit per product is going towards your Adwords spend.


Maybe I am to ‘hung-up’ on it – but looking at our example above and your experience – what conversion rate would you get? I realize that it depends on the landing page, how well the ad is targeted etc. – but roughly?

The 44 clicks will in total cost you 55.88 and say of the 44 clicks you only get 5% sales – that is 2.2 sales.
The Adwords cost for each mug is about 25.4 – which ends up being an expensive mug.


Thanks

J

You can calculate your cost-per-sale from these metrics:
  1. Clicks
  2. Cost
  3. Sales
  4. Revenue (Earnings)

Yes, of course you want to know what your cost-per-sale is, and keep it below your revenue-per-sale.
It's the same as keeping your cost-per-click lower than your revenue-per-click...
 

Andy Black

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Hopefully this video explains it: Direct Response Metrics For PPC Daily Traders

Example:
You're spending $100 a day for 100 clicks, and making $50 revenue from 2 sales.

Metrics:
Cost = $100
Clicks = 100
Sales = 2
Revenue (Earnings) = $50

Calculated metrics:
Profit = -$50

cost-per-sale = $50
revenue-per-sale = $25

Or another way:
cost-per-click (CPC) = $1.00
earning-per-click (EPC) = $0.50

You're losing money. So drop bids until your CPC is $0.50. Then you're running breakeven. (This assumes that the traffic quality remains constant and doesn't get worse.)

You'll lose ad position, and your Impression Share and ad CTR will both drop.

I'd guess you'd end up with an 8th the volume of inbound clicks. So about 12 clicks.

So you're breakeven, but have lost volume.

Now get into a continuous cycle of fixing leaks in your funnel, and increasing visitor life-time-value (LTV) so that your EPC increases. Each time you do that, you can increase your bids and drive more volume.
 

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