Chapter 8: Measurement and Optimization

Chapter 8: Measurement and Optimization

Unlike TV and radio advertising, online advertising campaigns are highly measurable. Using advertising like AdWords can help you automate your ads and bidding to give you a positive ROI.  As long as you can generate a positive ROI, it may make sense to capture all the traffic you can.

You must track your return on investment ROI so you know how much money you're making (or losing) with AdWords. You need to be making more than you're spending to have a positive ROI.

You may also need to figure out the costs related to the products or services you sell and factor that in to get a good measure of your ROI. The value of a conversion needs to be more than what you're spending to get it.

Conversion tracking will help you measure your ROI. You can use conversion tracking to figure out the profitability of a keyword or ad.  You can monitor your ad campaign performance and determine if campaigns are meeting your overall marketing and conversion goals. When establishing goals, you'll want to keep your target market in mind to help you figure out which goals are the best for you to measure.

Measuring Brand Awareness

If you want to create brand awareness then you'll need to show your ads everywhere your target audience is at.  You want your ads to be seen whether people buy or click through to your site.  CPM campaigns are the best bidding model for branding awareness.

Measuring Traffic to Your Website

If you want to get more traffic to your website then you should use CPC bidding. The biggest factor for increasing your traffic is to increase your CTR. This will get you more clicks and more traffic to your site. 

You need a good ad with relevant keywords. Make your ad compelling by figuring out what sets your product or service apart based on what your prospective customers are interested in. 

A good strategy is to pause or delete keywords that have a low Quality Score (below 5) or a CTR below 1%.

To improve your campaigns performance, you might try using keyword matching options and run a keyword diagnosis to see your Quality Score.

When you use broad match settings your ads appear for variations of the keyword. You can see what these variations are by visiting the keywords tab.

You can add keywords that are resulting in a high CTR to the appropriate ad group and track their performance in your main control panel.  If they're giving you a low CTR, you may want to use them as negative keywords and keep your ads from showing on those search queries.

If you have good traffic, but not enough buyers you'll need to set up and use conversion tracking to measure which ads and keywords are resulting in sales and conversions.

Measuring Sales and Conversions

If you're trying to measure sales or other conversions then you'll need to use conversion tracking to see your ROI.

You decide what the conversion is; purchase, call, email submission, or download. 

As long as you have conversion tracking set up correctly, you will be able to see your conversion rates. That means you'll know how many clicks (including their costs) lead to actions. You'll also be able to see exactly which keywords are resulting in your conversions. And you'll be able to see which URLs are leading to the most conversions.


You can even assign a value to conversions like your sales price. If your product is $200 then you can see how much you're spending to sell a product (hopefully it's less than $200 + the costs to create it). This is called your cost per conversion.

Improve Your AdWords Results

Often you can improve the results of your campaigns without raising your costs. This can be accomplished by:

• Improve your keywords. You can modify the match type for ones that aren't helping you meet your goals, try to increase their Quality Score, or remove low performing keywords from your campaign.
• Adjust your bids by lowering or raising them depending on how they impact your conversions and overall ROI.
• Improve your ads for higher CTR or conversions by highlighting what makes your products and services stand out, including prices and promotions with call to actions like 'purchase', 'sign up now', or 'call today'. You can also include at least one of your high performing keywords in your ad text.
• Improve your landing pages and make sure to match your ad text to the text people will see once they read your website.
• Split your campaigns up into more targeted ad groups.

The ultimate focus should be on improving your return on investment (ROI). This is usually accomplished by using highly relevant keywords and ad text, using a landing page that's most relevant to your ad, making sure customers get what they expect, and making sure the site is easy to navigate.

Often you can improve your ROI by spending your budget smarter.  Understand the relationship between cost and quality involving your quality score for each keyword. 

Organize Your Account

A well-organized account will enable you to make changes quickly, target ads effectively, and reach more of your goals.

Your campaigns should be structured by theme, with sets of ads and keywords that are directly related to each other. This helps improve your Quality Score and allows you to easily see which ads are converting at the highest rates. You'll also be able to monitor your account and ad spends easier which helps you maintain better control over your budget and costs.

Optimizing Keywords

AdWords has several tools to help you optimize your keywords. These include:

• The keyword tool which can help you find ideas for keywords.
• The keyword diagnosis tool which can help you see an in-depth view of your keywords performance, including quality scores, and run a search terms report to see all the search queries that triggered your ads.
• The traffic estimator which can help you find keyword traffic and cost estimates.

In order to optimize keywords for a better CTR you can delete keywords with high impressions, but low numbers of clickthroughs.

To optimize keywords for better ROI you first need to have conversion data. Once you accumulate enough data, you can identify and delete the keywords that cost a lot, but don't lead to many conversions. You can also use keyword matching options like broad, phrase, and exact match.  In addition, you can find and add negative keywords to your ad groups.

List Suggestions Tab

The List Suggestions tab will present you with the negative keywords or placement exclusions that appear in two or more campaigns.  This will allow you to figure out if you should include negative keywords in more than one campaign.

Ad Preview and Diagnosis Tool

The Ad Preview and Diagnosis Tool allows you to see what your ad looks like and make sure it's running. Use this tool instead of searching for your ad on Google because if you search for it, you'll increase your impressions without increasing your clicks, and that results in a decrease of your CTR. 

You can also check your AdWords account and make sure your ad is enabled. Once the ad has had a chance to run, check your account stats and see if you're receiving traffic. You can also visit the keywords tab and make sure your keywords are triggering ads.

Location Targeting Strategies

It's smart to focus your ads where you get the most business. You can look at your geographic performance data to figure out if there are certain areas that are performing better than others.  If you see a region or area with better conversions, increase your budget for that area. Here are a few more suggestions:

• Use location specific landing pages.
• Use location extensions to highlight your business address.
• Write ad text that stands out in certain geographic areas.
• Run promotions in certain areas only.
• Exclude regions that don't perform well.

Optimization Tools

Improve your campaigns performance with the following AdWords tools:

• Keyword planner; search for keyword and ad group ideas.
• Display planner; helps you plan your display network campaigns.
• Google analytics; shows how people found your site and how they explored it.
• Conversion optimizer; uses AdWords conversion tracking to get more conversions at a lower cost.
• Website optimizer; helps you design a page that maximizes the effectiveness of your site.

Opportunities Tab

You can get help improving your ad campaigns by using the Opportunities tab. You need an account history to work with this tool. It looks at ways to make reasonable changes that could have an impact on your account. All you need to do is choose a goal, then it goes out and gives you ideas.

Conversion Tracking Basics

Conversions are actions customers take on your website that have value. This allows your clicks to be converted into measurable business results.

The conversion tracking tool keeps track of what people who click on your ad do on your site.  This allows you to know which keywords are good for your business so you can increase your ROI.

You do need to put a small snippet of HTML on the page customers see after they complete action on your site. You can also enter a value to the conversion (like the price of the product, etc ...).

The following are the two ways conversion tracking works:

• 1-per-click is a conversion for every AdWords click resulting in a conversion within 30 days. With this measurement, conversions after the first one will not count.
• Many-per-click counts a conversion every time a conversion is made within 30 days following an AdWords ad click. With this measurement, multiple conversions per click (within 30 days) are recorded.

As an alternate to conversion tracking, you can use CPA measurement.  If your ad costs $1000 and you get 10 sales then your CPA for that ad is $100. 

You wouldn't want your CPA to be more than the profit you make from each sale. So if your product only brings in $100 revenue you're not making any profit. If your product brings you $200, then this is a positive ROI of $100.