In Conversion Rate Optimisation Tips, Google AdWords Tips, PPC Tips

CTR is up, positions are better, your AdWords campaign is getting more traffic. So why did conversion rates go down, not up?

It’s more common than you might expect. Luckily, tools in the AdWords account help to understand, measure and resolve the problem; budget.

Example A:

There are 5 keywords that get 1,000 searches a day, a 5% CTR at £1.00 per click (let’s keep the maths simple). This uses all of the £50 per day budget.

Also, for these keywords, we’re getting 90% impression share (ads are showing almost every time for the keyword set).

We want to increase traffic and generate more sales but we’re buying all the clicks we can, so what do we do?

Usual optimisation steps; split test ads to increase CTR, find more relevant keyword variations, increase bids to improve ad positions and CTRs.

The result? More traffic. Excellent.

But wait, conversion rates went DOWN! What happened?

Example B:

As example A, but improved ad copy gets a 10% CTR. Again, keeping the maths simple, the clicks still cost £1.00 and we still have a £50 per day budget. There are still 1,000 searches per day, so we’re using the budget much faster. In fact, we’re now doing so well on CTRs, we could be buying £100 worth of traffic per day.

Here’s what happens (at least sometimes); Search Funnels.
SearchFunnel

People don’t always buy, enquire or register from the first search or on the first click. Analysing your Search Funnel will reveal how many impressions, how many clicks and how much time it takes from the first ad impression (or first click) to the conversion. Pretty powerful stuff.

Now, let’s say your average conversion needs 3 ad impressions and two clicks to convert and this process takes two days, on average.

Because we increased CTR in Example B, the budget is now too low to show ads for every search. The impression share is now 50% rather than the 90% enjoyed in Example A.

ImpressionShare

Which means; the customer only has a 50% chance of seeing ad impression #2 and a further 50% chance again of seeing ad #3 to complete the average conversion path. That’s a 25% chance of completing the Search Funnel, in case you’re not paying attention.

Because there’s only 25% completing the impressions and clicks required to convert, the conversions drop.

Now here’s a difficult decision. Conversion costs went up and to fix it needs some guts; increase the budget. It sounds counter-intuitive. It sounds insane. But it’s necessary if you want to convert those clicks in to sales.

An alternative might be to reduce geographic coverage using location targeting for a short time to prove the theory. A higher impression share for a limited audience would also work, gradually increasing the budget and the geography together whilst maintaining high impression share.

The same result occurs if the keyword set is increased, or search volume naturally increases because it’s Christmas or Summer or some other reason.

If keyword increases are the cause, there’s a solution that requires less of a leap of faith; reduce the keyword set a little, gradually increasing the budget and the keyword set to prove it as you go.

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