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PPC Keyword Optimization: Cost Per Conversion

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When first starting pay-per-click (PPC) ad campaigns, many people have a hard time of grasping as to when and why you should make keyword changes or “optimizations.”

Keyword optimization is one of the most important aspects of PPC management. If you think you can just “set it and forget it,” you couldn’t be more wrong!

Before making keyword changes, you should have a goal in mind, in order to know if changes should be implemented and that there is enough data to begin making changes.  Most basic goals that advertisers have are around cost per conversion and/or clickthrough rate. For example:

  1. Cost per Conversion < $100
  2. Clickthrough Rate > 2%

Let’s look an advertiser who has a goal of a cost per conversion of less than $100 as an example, and assume that we’re trying to optimize keywords with a current cost per conversion higher than $100.

Step 1

Once you’ve identified what you’re looking for, it’s important to save time and sort through 100’s to 1000’s of keywords by using FILTERING (see example below).

CastroCostPerConversion

Your keyword cost per conversion is higher than $100.

Step 2

After having a list of keywords that match your filter, you must understand the degree to which each keyword is fitting the criteria selected. Different keyword buckets will most likely need a different action taken. You could categorize them  as below:

  • Borderline Keywords – Could be keywords within 20% or so of goal, so perhaps keywords with a cost per conversion greater than $100 but less than $121.
  • Questionable Keywords – These might be keywords that are within 50% of goal (i.e., $150 Cost/Conversion). They are much higher than you can afford, but they are converting.
  • Ineffective Keywords – These keywords are possibly double the cost you’re want to pay for conversion (i.e., $200 or more) or perhaps haven’t converted at all and have spent a lot of money.

Step 3

Understand the options you can take to optimize the keywords. “Borderline” keywords usually require a different action than “ineffective” keywords, for example.

  • Use SQR to Find Negatives — Although this is a best practice and should be frequently done for broad match keywords especially, this is a great tactic to try when you’re dealing with “borderline”  and “questionable” keywords. If you can find a couple of queries that make the user very unlikely to convert, you can save money and perhaps the keyword would be converting at or even under goal.
  • Lower the Max CPC — This is another tactic that might be taken with “borderline” or even “questionable” keywords, especially if your average position is in the top couple of positions (1-3.5 or so). It’s possible that the keyword might not be profitable at that high of an average position and average CPC. Lowering the Max CPC slightly will allow you to drop your position and average CPC and potentially lower your cost per conversion.
  • Change Match Types — This tactic is much more aggressive when it comes to keyword optimization. In addition, if you’re trying to lower the cost per conversion, it won’t work if the keyword is already in exact match. Generally, you change match types because you’re still getting too many irrelevant keyword (i.e., negative keywords) matched with broad or phrase match. By changing match types from broad to broad match modifier or phrase, and phrase to exact, you can cut out a ton of the garbage. This tactic is mostly done for “questionable” keywords, and could be tried for even “ineffective” keywords. If a keyword is in broad or phrase match, you can see (by segmenting by match type) how the keyword would actually be preforming if you were to change the match type. This is a cool trick to help you make the right decision.

CastroMatchTypes

 

CastroPPC KWOP3

The example above (click to englarge the chart image) shows that changing the keyword from broad match to phrase match would most likely help accomplish our goal of cost per conversion under $100.

  •  Pause the Keyword — The most aggressive action you can take is pausing the keyword (besides deleting the keyword completely. You are essentially giving up on the keyword, and this is usually a last resort.Remember, if the account goal cost per conversion is $100, that doesn’t mean each keyword has to be at or below that. It just means collectively, the cost per conversion should be under. This is very important when you are contemplating pausing off a keyword completely. It’s always better to look at what hasn’t converted at all or only has converted a few times rather than keywords with higher cost per conversions that might account for a large portion of your overall conversions.

Other options that might help you achieve a better cost per conversion are ad copy optimization and landing page optimization. However, the above tactics are good choices for attempting keyword optimization with PPC.

What other ways do you go about optimizing your keywords?

Images:  Optimizing Results — Original Billboard Image from Shutterstock

About the Author

Joe Castro is the Director of Online Advertising at Fathom. He has worked at Fathom since January 2008 with a concentration in search engine marketing (SEM) and display advertising. Joe’s worked with a variety of clients across various industries including education, healthcare, ecommerce, and hospitality. His background in business and marketing from the University of Dayton has allowed him to quickly help grow Fathom’s Online Advertising department.

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One Comment

  1. PPC Optimisation certainly is a hands on process, bad news if you think it can be left to run itself!