5 Ways to Instantly Increase ROI of Your Pay Per Click Campaigns

July 5, 2009 by  
Filed under Featured, Search Marketing

Increase Paid Search ROIRunning a profitable paid search campaign can be an art. Although many believe you must have a complete understanding of the search engines in order to be successful however, this is not always the case.

Increasing your return on investment from paid search is not as difficult as it may seem. It is true, you need to consistently keep a watchful eye on your analytics and always be aware of your opportunity vs. expense. Despite that seemingly daunting concept, you can run a successful paid search campaign if you pay attention to the right metrics.

Having said that, with a little knowledge at your fingertips you might not become an expert at paid search but your efforts will deliver a positive ROI if you follow the following 5 tips.

1) Focus on Conversion Rate not Click Through Rate (CTR).

Too often people focus on how many visitors (clicks) they receive from a paid search campaign. It is their belief that the more clicks they get, the more sales they should get. To make matters worse, there are companies out there who actually measure paid search success on CTR (click through rate) alone.

Any of these beliefs is a recipe for disaster. These methods often result in spending more money than you actually make on paid search. In other words, you spend more advertising dollars than you generate in sales.

To correct this problem, you should focus on the Conversion Rate metric as it pertains to sales generated when running paid search. This is a more realistic indicator of whether your campaign is moving toward success or not.

The formula for calculating conversion rate is:

Completed Actions (sales) / Total Number of Visitors (Sessions)

One reason many people overlook this metric might be because in order to calculate your Conversion Rate metric you often need to install the proper tracking code on the thank you page of your website. For ecommerce sites this is most often the page a customer arrives at after completing a successful sale. The tracking code placed on this page gathers data on completed actions which as I have illustrated is used to calculate conversion rate.

All major paid search providers have code similar to this at your disposal. For Google Analytics this is called “conversion tracking” and is obtained from within your Google AdWords account. This tracking number is different from that which is provided to you through the use of Google Analytics alone.

Your conversion rate is a measure of unique visitors to completed actions on your website. Alone it will not guarantee you make money from your efforts, but combined with the remaining elements outlined below, it is one of the key metrics toward running a successful paid search campaign.

2) Know your Value per Visitor.

Your Value per Visitor is the revenue you generate from each pay-per-click visitor to your website. In other words, it is a measure of how effective your website generates sales from the visitors it receives. The higher your value per visitor, the more effective your website is at converting them into sales.

You calculate your value per visitor using the following formula:

Revenue Generated / Total Number of Visitors (Sessions)

Value per visitor can be confusing for many. Take for example a site with a value per visitor of $.95. Given this measurement we could accurately say that the site owner makes 95 cents for every visitor who arrives at their website. It gets confusing for some because they ask “how can I make $.95 for each visitor when not every visitor buys from me?”

The answer is found in the way the metric is perceived. It shouldn’t be looked at as each visitor actually completing a “transaction” with your site, but rather each visitor being worth an amount that ideally should be less than your CPC (cost per click).

To further illustrate, if your Average CPC was $1.25 and your value per visitor is just $.95 then you are losing $.30 for each visitor you drive to your website! In other words, you spend on average of $1.25 to get one click that is only worth $.95 to you. At this rate you will never profit and should consider reworking your paid search campaign, hiring an expert ppc marketer, or shutting it down until you can do one of those options.

3) Keep your Average Cost per Conversion in check.

Your Average Cost per Conversion (sometimes called Cost per Action) is the average amount of funding it takes to generate one action (a sale in the case of ecommerce sites.)

It is calculated using the following formula:

Advertising Cost / Total Completed Actions

In its simplest form, your average cost per conversion should be lower than your average order value or you are losing money.

To illustrate, if your average order value is $35 and your average cost per conversion is $40 then you lose $5 each time a sale is completed on your site. In other words, you are spending $5 more in advertising than you are receiving from a sale.

This one can be hard for many to see as they look at only the end result … the completed sale. They neglect the advertising cost which went into achieving that sale and therefore often end up continuing to run paid search campaigns which are not profitable to their business.

The exception to the rule is a company who has built in average lifetime value of a customer and is willing to lose money or break even on the first sale in order to gain future sales from that same customer. With careful planning and proper implementation this strategy can successfully be used to build a viable business online.

4) Use long tailed keywords and exact match instead of shorter more generalized keywords and broad match.

When internet users begin their search for more information on a product or service, they often use what are called general or broad keywords. They do not know exactly what they are searching for but do know they need more information on a given item of interest. As a result, the keywords tend to be shorter and more general.

Searches result in terms like “shoes”, “running shoes” and “nike” for example. While these terms would likely return data relating to a given product type, they would likely not return data on a specific shoe.

These terms would yield traffic on a broad level with all visitors looking for information yet few looking to buy. Not only would these search terms yield broad scale traffic, but they would come at a high price. Often times the more broad the keyword is, the more competition there is for it and the higher CPC you will pay.

Consider now the user that has already done their research and is ready to buy. They have performed all the searches, learned what is the best running shoe for their needs, and are now in the hunt to find out where they can get it.

As the user narrows their search and has gathered more data about a given product their search shifts to a more exact methodology. They begin to use what are called long tailed keywords to find more specific results. Terms like “Nike airmax running shoe” or “Nike airmax size 7 running shoe” are used.

You can see just by looking at the search terms utilized, the user is more qualified to buy. They know exactly what they want and now they want to know where to get it.

Although there will be competition for these keyword types, the competition will likely be less than what is seen at the broad level. As a result, you’ll achieve lower CPC prices and in turn more qualified traffic by bidding on these types of “long tailed” terms.

5) Build smaller lists of keywords targeted across more specific ad groups and campaigns.

One of the most common mistakes made by non-experienced paid search marketers is “dumping” large lists of unrelated keywords into a few ad groups across a few campaigns.

While this tactic may save you time, it will ultimately be the iceberg that sinks the ship in the end. Trying to save time and money in the beginning will only result in losing money at the other side.

Take your time upfront, perform your due diligence and structure your paid search campaigns to take advantage of the opportunities that smaller, more targeted keyword groupings can do. In case you are asking “what can they do?” here’s a list.

  • Provide more control over ad presentation.
  • Increase click through and typically increase quality of traffic.
  • Increase quality score.
  • Increase relevancy.
  • Increase Quality Score which decreases bid cost and increases placement.

Paying attention to these 5 tips might not make you an expert at paid search, but it certainly will put you on the right track toward achieving higher ROI from your efforts.

New Release: Export Shipping and Order Information v1.2.4 for Zen Cart

For those who follow my Zen Cart add on modules I just released a new version of the popular Export Shipping and Order Information add on. The new version is 1.2.4 and contains a bugfix as well as a new feature.

Specific updates included with this release are:

Bugfix: Corrected issues with export button not showing up on some users installs. (if you made any manual fixes to this yourself based on the forum feedback suggestions you’ll want to upgrade to this new version as the changes suggested by others in the forum were not accurate.)

New Feature: Added the ability to export the ISO country code (both 2 character and 3 character) per request.

You can get the contribution from either of these locations:

My downloads page

Zen Cart download page

10 Proven Methods to Decrease Your Shopping Cart Abandonment Rate

July 3, 2009 by  
Filed under Shopping Cart Abandonment

Moving customers through the checkout process effectively is a critical element toward closing any sale online. Providing your customers choose to order directly from your website rather than over the phone, the information you present to them during checkout is ultimately what will help them decide whether or not to complete the purchase.

Throughout this process you will need to continually reassure them, providing them with the necessary elements essential to developing trust and security. These elements are commonly called customer assurances. Their job is making the customer feel comfortable enough to complete the intended action (i.e. buying your product.)

Cart abandonment is a problem that all eCommerce sites see in some degree. The rate at which your visitors abandon depends on how effective you have structured the checkout process. Shopping cart abandonment is an important statistic that needs to be tracked as it could mean the difference between a profitable eCommerce store and a potential loss.

According to industry publications, average shopping cart abandonment rates are between 60% – 70%. Put in to sample numbers, if you have 100 people start the checkout process and 65% abandon it, you just lost 65 sales. To take that further, if your average order value is $49 you lost $3185 in revenue.

To further demonstrate the hit your business just took, not only have you lost revenue but you lost 65 potential new customers as well. This translates to an undeterminable amount of future recurring revenue through repeat orders.

Many factors that contribute to cart abandonment are out of the merchant’s control; however there are a number of factors you can concentrate on that will help reduce the overall effect on your store.

1. From a technical perspective, make sure your cart is working properly and is free of bugs. As elementary as this may sound, it is a vital component that often is not given the weight it deserves. Simple logic tells us that if a cart is not working correctly it will prevent a customer from being able to order. To alleviate this potential problem you should go through your order process and ensure it is free of bugs and works as you expect. It would be a good idea to also have others go through and test it periodically – especially after any updates to code or structure have been made that involve the checkout process.

2. Keep your pricing competitive. Customers are also shoppers. What I mean is they are always searching for and comparing similar products prices. Unless your product is totally 100% unique and not easily duplicated, you must be aware of the price you assign to it. With the increase use in shopping comparison sites by consumers and in light of the current state of the economy, competitive pricing is more critical than ever. If your prices are out of the ball park your customers won’t stay to watch the game.

3. Decrease the steps in your checkout process. If your cart has the ability for a one page checkout that is fantastic. However, if you don’t have that luxury, don’t worry. Test have shown that shorter checkout processes which aren’t one page only work just fine to convert visitors into sales providing a few elements are met. A good rule of thumb to follow here is to combine logical steps during the checkout process (shipping and billing address information as an example) and eliminate any extra steps. If you can get your checkout process down to four steps or less you’ll be ok in most cases.

4. Add process indicators to checkout procedure. You don’t want a customer to wonder how much longer it will take to checkout or what part of that checkout process they are in. This is an easy fix. Simply adding process indicators in a graphic format near the top of the checkout process will help keep customers in the checkout until the end.

5. Clearly provide proper customer points of assurance at the right locations. There is one word which makes customers buy and that word is “trust.” Customer points of assurance provide information to the end user which build trust and answer questions. Things like security seals, customer service phone numbers, live chat, and privacy policy are examples of a few customer points of assurance. These should be displayed and easily seen especially at times when you are asking the customer to act.

6. Clearly display your security and trust seals. Customers want to ensure the information they submit during an order is secure and protected. Make sure you clearly and plainly tell them that their transaction is secure and show them the seal to prove it. Don’t hide the seal at the bottom of a page or make it hard to find. Tests have shown that adding a security seal within the user eye flow at critical times during checkout can improve conversion.

7. Offer multiple payment methods including PayPal. Offering multiple payment methods opens up the number of people who will do business with you. Customers like to choice and control. Providing them with the choice of multiple payment methods in addition to PayPal will help keep them in the checkout process. In fact, 1 in 3 shoppers expect to be able to pay with PayPal or at least be given that option in addition to other methods.

8. Enable customers to order over the telephone if desired. No matter how perfect a site is, there are going to be customers that prefer to complete their order over the phone. Whether they start the checkout process and have a question that needs to be answered or simply don’t feel comfortable providing their personal information over the internet, you must give them the ability to call you to complete the transaction. Placing a customer service phone number in a clearly visible location with the text “Prefer to order by phone?” will help decrease cart abandonment.

9. Clearly state return and shipping policies. In survey after survey, shoppers say one of the big reasons they abandon the checkout process is due to the shipping charge or return options. Many sites don’t provide the shipping and return information to the customer until they are in step two or three of the checkout process. If the information they find there does not appeal to them they will leave. You can prevent this by offering them the shipping and return information at the first step of the checkout process or better yet from the page they are viewing their shopping cart from.

10. Don’t require registration to checkout. This is difficult for some stores to implement because of the architecture their cart is built upon. However, if you have the ability to offer what is often called a “guest checkout” feature you should do so. For privacy reasons, there are a number of people out there who do not want the information they provide you with saved and it is those people who will leave unless you provide them with an option to checkout without registering.

Following these principles will not completely eliminate shopping cart abandonment at your site but it should help in reducing it to a more reasonable level thus increasing sales.

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