If you’re looking to add Google Adwords to your ecommerce marketing strategy but don’t know where to start, then you’re in luck. Check out this guest post for a step-by-step guide to increasing your online success with Adwords at your disposal.
Many ecommerce businesses who have invested in SEO find that they’re able to rank on the first page of Google for a range of valuable, product-specific keywords fairly easily. They often reach a point, however, where they’re unable to surpass larger, more established competitors who occupy the first few positions in Google. Because websites that rank in the highest positions on the first page for a keyword receive a disproportionate amount of traffic, these smaller businesses lose out on sales and revenue to these competitors.
When ecommerce sites are in this situation, we recommend that they identify their most valuable organic (non-paid) search keywords where they are losing traffic to higher ranking competitors, and then compare the value of visitors to the business from each keyword to the cost of purchasing additional traffic through Google Adwords. By supplementing their organic search presence with an Adwords ad in a more prominent position on the search results page, businesses can profitably increase revenue on their most valuable keywords with very little risk.
In this post, we’ll explain why you should consider buying traffic that you’re already receiving for free, and walk you through how to use this technique to identify the organic search keywords where you have the greatest opportunity to immediately increase profit using Adwords.
What you’ll need to use this technique
Here’s what you’ll need to have the best results with this technique:
- First page rankings in Google’s organic search results (rankings outside of the first page usually don’t receive enough traffic to reliably determine the value of a visitor), ideally outside of the top three results (the traffic increase from using Adwords when you have an organic search ranking in the top three is usually considerably lower). The more keywords you have that meet this criteria, the more likely you are to identify keywords where you can profitably increase revenue by supplementing your organic search presence with Adwords.
- Google Analytics set up with ecommerce tracking
- A reasonable amount of historical organic search performance data in Analytics – ideally at least 500 visits for each keyword that you’ll analyze. It’s possible to use this technique with a smaller data sample, but your organic search performance data will be less reliable as a predictor of paid search performance.
- Microsoft Excel, or similar spreadsheet software
Note: Because this technique relies upon analyzing the historical performance of keyword-level organic search traffic, it tends to be more effective for ecommerce businesses that already have a considerable organic search presence.
How it works
Using historical organic search data in Google Analytics and information from the Adwords Keyword Tool, ecommerce businesses can identify keywords where:
– The cost of purchasing traffic in Adwords on a cost per click (CPC) basis is less than the value of a visitor to the business (Per Visit Value).
– The amount of traffic (and therefore revenue) that the business receives from the keyword could be increased by supplementing the organic search ranking with an Adwords ad.
An online retailer of digital cameras is ranking in the 6th position in Google’s organic search for the keyword “canon 600d”, which has an average of 4400 searches per month. The business identifies the keyword as meeting the above criteria (higher Per Visit Value than the cost of purchasing additional traffic with Adwords), and decides to test the effect on profitability of using Adwords to supplement the organic search listing.
Over a period of three months, the results from using organic search only were as follows :
The business begins bidding on the keyword using Google Adwords, paying a CPC of $0.80 for an ad appearing in the second position of the paid search results. After three months, the results are as follows:
Although the addition of the Adwords ad has “cannibalized” the volume of organic search traffic considerably, the overall volume of traffic is considerably higher because of the ad’s more prominent position on the search results page. And while the business has spent $950 to purchase this additional traffic, overall profit (before product profit margins) from the keyword has increased by $8,197, or 157%.
Note: Although this is a fictional example, the numbers are in-line with results we’ve seen running similar tests for clients. For the sake of simplicity, these figures do not include product profit margins which should be taken into account, particularly for businesses with lower margins. While paid and organic search traffic do not always convert at the same rate for a keyword, each provides a far more reliable indication of profitability using the other than testing a new keyword. Paid traffic often converts more profitably than organic, because you have more flexibility with ad copy and are able to use custom landing pages that aren’t constrained by SEO requirements.
How to do it
1. We’ll start in Google Analytics’ Organic Search Traffic report. Using the menu in the left sidebar, navigate to Traffic Sources > Sources > Search > Organic.
Set the date range to the largest possible range so that you have the largest data sample to work with. Don’t forget to take into account any factors which might have an effect on historical performance, such as seasonality.
Be sure to select the Ecommerce tab, which will give you the following information for each keyword:
- Visits: The number of visitors to your site.
- Revenue: The total revenue from ecommerce transactions. Depending on your Analytics implementation, this may include tax and shipping.
- Transactions: The total number of completed purchases from visitors.
- Average Value: The average value of transactions from visitors.
- Ecommerce Conversion Rate: The percentage of visits that resulted in a transaction.
- Per Visit Value: The average value (based on ecommerce revenue) of a visitor to your site.
2. Next, we’ll need to increase the number of keywords that are included in the report. To do this, scroll to the bottom of the page, and in the Show Rows drop-down box, increase it to the maximum of 5000.
3. You’re now looking at a complete list of all organic search keywords from which you received at least one visitor over the during the date range selected. We want to filter this list (which is probably very large) into a much smaller list of keywords where you have the greatest opportunity to profitably increase revenue using Adwords. We’re going to do this by using Filters to identify that have:
- A minimum number of Visits. The more visits a keyword has, the more reliably you’ll be able to use this historical data to predict future performance over a larger number of visitors from Adwords. We generally suggest using a minimum of 500, however if your business has less accumulated organic search history data, you might need to reduce this figure to build a reasonable size list of target keywords. Businesses with a very large organic search presence might need to increase this number to filter their list of target keywords to a manageable number.
- A minimum number of Transactions. Again, the larger this number, the more reliable your data will be as a predictor of future performance. We generally suggest using a minimum of at least 10 transactions.
- A minimum Per Visit Value. This number reflects the value to your business of a visitor to your website from this keyword in terms of immediate transactions (but doesn’t include revenue from visitors who return to your website to purchase after their first visit, lifetime value of a customer, etc.). Average Per Visit Value for ecommerce businesses can vary drastically depending on average order values and conversion rates, so this figure will vary as well. The minimum that you use here should however be sufficient to filter your complete keyword list down to only the most valuable, and an easy way to do this is to take your Average Per Visit Value and double it.
4. Once you’ve determined your Filter values, click the “Advanced” link next to the search box above your data sample.
Open the green drop-down box that is labeled Keyword, and instead type the word Visits into the search box that will appear, and select Visits under Ecommerce. In the box next to Greater than, enter your desired minimum number of visits. In our case, this will be 500.
Repeat this for your minimum number of Transactions and Per Visit Value using the Add a dimension or metric link.
Once you’re done, you should have something like what you see below, and can click Apply.
5. You’re now looking at a filtered list of your organic search keywords that meet the criteria outlined above. By default, Analytics shows ten rows of data per report. If your filtered list includes more than 10 keywords, use the Show rows drop-down box again to increase the number of results, then export the report to Excel using the Export drop-down in the grey navigation bar under Organic Search Traffic. (If you’re an experienced Excel user, you might prefer to download your entire organic search history report to Excel, and then use Excel Filters to filter your dataset by the above criteria).
Open the exported report in Excel, noting that your dataset might appear in a second tab.
6. Open the Google Adwords Keyword Tool. Firstly, check that the Advanced Options and Filters setting match your target location, language and devices, and under Match Types in the menu on the left side of the screen, uncheck Broad and check Exact. In the Columns drop-down menu, ensure that you have Approximate CPC (Search) selected.
7. Copy the keywords from your spreadsheet into the Word or phrase text box in the Keyword Tool. They should copy across into the Keyword Tool with one keyword per line. Click the Search button, and once the results have been generated, click the Keyword Ideas tab. Click the Save all next to Search Terms. Download the selected keywords to a new Excel file, using the Download drop-down box, being sure to select My Keyword Ideas.
8. Open the Excel file that you’ve downloaded from the Keyword Tool, and highlight the values under Approximate CPC (Search), and copy them across to a new column in your original spreadsheet. The order of your keywords shouldn’t have changed, so you’ll be able to copy them straight across.
9. You now have your historical organic search Per Visit Value for each keyword alongside the approximate cost of purchasing additional visitors with Google Adwords. In the next column, use a simple formula to subtract the Approximate CPC from Per Visit Value, to identify keywords with the greatest margin between the value of a visitor to your business and the cost of buying additional traffic in Adwords. Remove any keywords that have negative value, which means that the cost in Adwords is higher than the value to your business.
You now have a list of your organic search keywords which have the greatest potential to profitably increase revenue using Google Adwords.
Although using this technique is an excellent way to identify advertising opportunities that have a very high likelihood of being profitable, we recommend running a test using Adwords on each keyword (similar to the one outlined above) to determine the effect on overall keyword level profit. Typically, the lower the keyword is ranking in the organic search results, the greater the increase in profit, because the increase in traffic from a more prominent position on the search results page will be higher.