For every search on Google there is 1 click to be had; sometimes it goes to the organic (SEO) search result and other times it goes to paid advertising results (PPC). The companies with a product to sell who are participating in either organic search or PPC are competing for this 1 click. So, if you know there is only one click to be had, what are you willing to do to get that click? Your answer is likely “whatever it takes,” but reality is likely more “I hope whatever I am doing now will catch that click.” There are mind blowing facts within the PPC world: Companies will spend time, resources, and efforts on exploring SEO strategies to get the click; and they will engage in off-the-deep-end strategy discussions with their agencies and advisors for how the relationship with SEO and PPC works, how the search funnel should be capitalized, and how branded terms should or should not be part of the PPC effort. Those are the facts, but what is so mind blowing about them?
Those facts are mind blowing because they are the little things that only need to be fine-tuned later on. What companies are missing out on it this: The PPC world lives by the CPA model (cost per acquisition/conversion). The more competitive the industry, the more insane this gets. Take the travel or insurance industry; prime examples of why the CPA model is a key illustration of what is wrong with an entire industry. Everyone is setting a target on how much they are willing to pay for a conversion/sale, and of course this is based on the cost of the conversion (click costs divided by number of conversions for your site) in relation to what you are selling. This makes perfect sense and is why everyone is doing it. There are two problems with it: (1) Everyone is doing it (and likely have somewhat the same metrics in the big picture), and (2) It depends on averages which are worthless unless you have one product (one price) to sell.
Am I saying that everyone using CPA as a measurement is doing it wrong? YES!!!
Most companies selling products online have a range of prices for their products. Would you be willing to have a higher CPA for a $5,000 sale than a $50 sale? Of course you would! Chances are that you are in the 95%+ of the companies we encounter that track conversions, but not the Value (Google’s terminology for dynamic tracking of sales or profits). Picture this: Most companies with significant ad spend have had multiple people managing or involved in their campaigns over the past years, and the tracking codes usually illustrate this clearly. Action codes (tracking) get added and sometimes result in double or triple tracking on the conversion count, yet most are not tracking what matters the most (sales and/or revenues).
Do this today: Check your conversion tracking codes (in AdWords go to Reporting, Conversions) and look at what you are tracking. If you have a shopping cart on your site, find the Action that is tracking those conversions, and look in the Value column to the far right to see what the number is. If it is zero (0) or matches the number of conversions by some fixed amount, you need to fix it by inserting the variable that sums up the items in the shopping cart before checkout into your tracking code. You will now be able to associate the revenues each click generates. Why? Because this single action is the key to outsmarting your competitors when you bid for the next click (remember, Google is a live auction for companies that bid on the click from a given keyword, and the display of your ad is a function of how much you are willing to bid and your quality score combined).
Now, back to the example of the $50 product and the $5,000 product. If you did the above, now you will at least track the revenues that are resulting from your live auction bidding on a click. How in the world can you enter an auction to bid on a click if you do not know what that click is worth to you???
Knowing how much the next click is worth when you have thousands of keywords, thousands of products, and thousands of ads gets complicated very quickly and is not a task for humans. It is a task for computerized bidding. Are you doing it? Are your competitors? Find out more about Finch and how computerized bidding can help your online sales at finch.com.
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