Monday 5 October 2009 | 10:44
In August, we posted a Conversion Optimiser case study and Patrick left a comment asking how to manage campaigns effectively once you have enabled Conversion Optimiser. So today we are responding with tips on how to manage your bids to find the most cost-effective solution for your business. Thank you all for your comments to date, keep them coming!
On average, advertisers using Conversion Optimiser see a 21% increase in conversions while decreasing their CPA by 14%*. However, to get the best results for your business, you will need to set your maximum CPA (cost-per-acquisition) carefully, potentially trying a few different CPAs before deciding what level works best for you.
*This analysis compares the performance of Conversion Optimiser campaigns with a control set of campaigns and represents the average impact of Conversion Optimiser. The actual impact will vary from campaign to campaign
How do I decide on a maximum CPA?
In order for your business to be profitable, you will have a maximum amount that you can spend on each sale or lead before advertising costs exceed the value from the successful conversion. This is your break even point.
Take time to work out how much you can, or are willing to, spend securing conversions, while still returning a profit. Once you know this, you can set a maximum cost-per-acquisition (CPA) bid and Conversion Optimiser will manage your CPCs for maximum results. There's no hard and fast rule when setting CPAs - but you will know your business best.
Remember, the lowest cost-per-acquisition may not always lead to maximum profits for your business. If you can get more conversions at a higher price-per-conversion, do the total additional profits outweigh the additional costs?
A simple example...
Say you make €10 profit on each t-shirt you sell before AdWords costs. If your average cost-per-conversion is €2, and you are getting 100 conversions per week at this cost, then you would make €800 profit on the sale of t-shirts after advertising costs.
However, if you raise your maximum CPA to get an average cost-per-conversion of €3 you get 200 conversions per week, because by bidding more you get more conversions. You would then make a profit of €1,400 after advertising costs.
Let Conversion Optimiser run for a few days at each CPA level that you want to try, then monitor the results.
Do I focus on specific problem areas?
As CPAs are set at the ad group level, changes to the maximum will affect all keywords in the group. If you find that some of your keywords are performing well at your current CPA, but you would like to improve the performance of others, you may consider breaking out your ad group into smaller groups.
Try leaving your top performers in the current ad group and placing some of the weaker keywords into a new ad group within the same campaign. Now you can adjust your CPA on your top performers to get additional conversions, while monitoring and tweaking keywords with less traffic to ensure that they are profitable for you.
Alternatively, create a new ad group, with new keywords, for your campaign. Conversion Optimiser allows you to test broad match keywords to see what your potential customers are searching for, while still looking to only show your ads when a conversion is likely. Using the search query report, find out what specific keywords are leading to conversions and add these directly to your campaign for maximum results.