Paid Search Marketing

Learn How You Can Improve Your Pay-per-click ROI with Google AdWords' Conversion Optimizer

By John Lee January 05, 2010 Posted In: Paid Search Marketing Comments: 4

As a long-time PPC manager, one of my biggest pet peeves is automation for the sake of automation. Yes, we’re all looking to save some time and make our processes more efficient. But efficiency will only benefit you if it means you are still getting great results from your pay-per-click campaigns! For a long time I naively avoided bid management tools or anything that “stank” of blind automation. Then Google AdWords went and created Conversion Optimizer, which switches the bidding process from cost-per-click (CPC) to cost-per-acquisition (CPA). Not only that, but it automates keyword level bids. With some trepidation on my part, I decided to give Conversion Optimizer a shot and I haven’t looked back since!

You still pay per click, but you no longer need to adjust your bids manually to reach your CPA goals and can benefit from improved ROI.

Before I discuss some of the physical results from one of my campaigns, I’d like to explain Conversion Optimizer in more detail. Traditionally, Google PPC advertising is based on keyword-level maximum CPC bids. These bids factor into everything from ad position to the actual price you pay for each click. The more keywords you bid on, the more challenging it becomes to effectively monitor those bids to achieve your campaign’s goal metrics. This is where Conversion Optimizer comes into play. With Conversion Optimizer, you no longer bid at the keyword-level – instead you set a maximum CPA per ad group. Google automates your keyword bids to generate an optimal number of conversions within the scope of your maximum CPA target.

How does Conversion Optimizer work?

  • Conversion Optimizer automatically finds the optimal CPC for your ad each time it is eligible to appear.
  • This “optimal CPC” is derived by a predicted conversion rate per ad auction (i.e. per search query).
  • The predicted conversion rate takes into account your ad’s conversion history, the search query, the user’s location and even conversion rates from Google’s search and content partner sites.
  • And don’t forget Quality Score. Your final ad rank is determined by combining your CPA bid, Quality Score and the predicted conversion rate.

The ultimate goal of Conversion Optimizer is to aid advertisers in achieving better return-on-investment (ROI) through lower CPAs. I was initially a skeptic that this could actually be the end-result. But after doing a test for myself, I found that it actually works quite well!

Conversion Optimizer First-Run Test Results

I launched Conversion Optimizer on November 3rd. Based on discussions with other advertisers who already had their hands dirty in this feature, I set my maximum CPA targets around $5 higher than my actual CPA goal (just like your CPC bids – you set a maximum as a cap). Within the first day I saw a marked decrease in my CPA. To showcase the success of my Conversion Optimizer test, I have pulled stats for October 2009 and November 2009.

Conversion Optimizer Performance Oct-Nov

You can see the downward trend in CPA or in AdWords vernacular – cost-per-conversion (1-per-click). Note the sudden drop at the 11/5/2009 mark. This illustrates the effect that Conversion Optimizer had on my CPA, but the direct comparison of stats is much more effective:

Tabe of Conversion Data Oct - Nov

With Conversion Optimizer, conversions increased, conversion rate increased and my CPA dropped. This trend continued in December for this campaign, too. I have since had my hands in several other AdWords accounts where Conversion Optimizer is running – and by-and-large, the results are the same. That being said - as with all things PPC, approach Conversion Optimizer with caution. There are no guaranteed wins, no perfect system for achieving your goals. Test Conversion Optimizer on one campaign, get a feel for how it works in your account with your product/service. But don’t fall into the trap of “set it and forget it.” Just because some of your CPC bid management work will go by the way-side, you still have to monitor your performance and adjust your CPA bids to find success.

AdWords Performance Grader




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Comments

Tuesday January 05, 2010

Richard (not verified) Said:

Time to Restart my Google Ads

After reading your article I think it's time to turn on some of my older Google ad campaigns and try Google's conversion optimizer...

In reading your article, I was hoping that you were selling your own product (in which case you would be flying from Boston to the Caribbean on weekends to spend your new found wealth). The improvements were significant.

I did a quick search on Google and couldn't find anything with data regarding PPC:Gross Revenue ratios. All I know is that once upon a time for every dollar I spent on Google PPC, I grossed $2 for an ebook I sold.

Depending on your gross profit per acquisition, I can understand why Google's conversion optimizer is now standard procedure for you.

But anyone reading this should know that you can only make money with PPC (or SEO) efforts if they're selling a product that has good value.

Thanks for the article John. It's time for me to dust off some old Google campaigns and try them with conversion optimizer.

Wednesday January 06, 2010

Anonymous (not verified) Said:

To optimise conversions you should employ a web analytics provider such as clicktale to show you how your customers enagage eith your site. From the results fo the aggregate behaviours, real time videos and heatmaps you can mend any deficiencies and make it easier for visitors to your site to become buyers.

Wednesday January 13, 2010

Where Did Bakedwheat Web Go? | Bakedwheat Web Enterprises (not verified) Said:

[...] Learn How You Can Improve Your Pay-per-click ROI with Google AdWords’ Conversion Optimizer [...]

Monday July 02, 2012

Sarah (not verified) Said:

Hello John,

Is there a direct e-mail address for you?

Thanks,

Sarah

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