The Ecommerce Expert

Successful Ecommerce Businesses Start Here

  • Home
  • Services
    • Ecommerce PPC Management
    • Conversion Rate Optimization
    • Ecommerce Consulting
    • Website Design / Redesign
  • Free Resources

5 Ways to Instantly Increase ROI of Your Pay Per Click Campaigns

By Eric Leuenberger 1 Comment

Increase Paid Search ROIRunning a profitable paid search campaign can be an art. Although many believe you must have a complete understanding of the search engines in order to be successful however, this is not always the case.

Increasing your return on investment from paid search is not as difficult as it may seem. It is true, you need to consistently keep a watchful eye on your analytics and always be aware of your opportunity vs. expense. Despite that seemingly daunting concept, you can run a successful paid search campaign if you pay attention to the right metrics.

Having said that, with a little knowledge at your fingertips you might not become an expert at paid search but your efforts will deliver a positive ROI if you follow the following 5 tips.

1) Focus on Conversion Rate not Click Through Rate (CTR).

Too often people focus on how many visitors (clicks) they receive from a paid search campaign. It is their belief that the more clicks they get, the more sales they should get. To make matters worse, there are companies out there who actually measure paid search success on CTR (click through rate) alone.

Any of these beliefs is a recipe for disaster. These methods often result in spending more money than you actually make on paid search. In other words, you spend more advertising dollars than you generate in sales.

To correct this problem, you should focus on the Conversion Rate metric as it pertains to sales generated when running paid search. This is a more realistic indicator of whether your campaign is moving toward success or not.

The formula for calculating conversion rate is:

Completed Actions (sales) / Total Number of Visitors (Sessions)

One reason many people overlook this metric might be because in order to calculate your Conversion Rate metric you often need to install the proper tracking code on the thank you page of your website. For ecommerce sites this is most often the page a customer arrives at after completing a successful sale. The tracking code placed on this page gathers data on completed actions which as I have illustrated is used to calculate conversion rate.

All major paid search providers have code similar to this at your disposal. For Google Analytics this is called “conversion tracking” and is obtained from within your Google AdWords account. This tracking number is different from that which is provided to you through the use of Google Analytics alone.

Your conversion rate is a measure of unique visitors to completed actions on your website. Alone it will not guarantee you make money from your efforts, but combined with the remaining elements outlined below, it is one of the key metrics toward running a successful paid search campaign.

2) Know your Value per Visitor.

Your Value per Visitor is the revenue you generate from each pay-per-click visitor to your website. In other words, it is a measure of how effective your website generates sales from the visitors it receives. The higher your value per visitor, the more effective your website is at converting them into sales.

You calculate your value per visitor using the following formula:

Revenue Generated / Total Number of Visitors (Sessions)

Value per visitor can be confusing for many. Take for example a site with a value per visitor of $.95. Given this measurement we could accurately say that the site owner makes 95 cents for every visitor who arrives at their website. It gets confusing for some because they ask “how can I make $.95 for each visitor when not every visitor buys from me?”

The answer is found in the way the metric is perceived. It shouldn’t be looked at as each visitor actually completing a “transaction” with your site, but rather each visitor being worth an amount that ideally should be less than your CPC (cost per click).

To further illustrate, if your Average CPC was $1.25 and your value per visitor is just $.95 then you are losing $.30 for each visitor you drive to your website! In other words, you spend on average of $1.25 to get one click that is only worth $.95 to you. At this rate you will never profit and should consider reworking your paid search campaign, hiring an expert ppc marketer, or shutting it down until you can do one of those options.

3) Keep your Average Cost per Conversion in check.

Your Average Cost per Conversion (sometimes called Cost per Action) is the average amount of funding it takes to generate one action (a sale in the case of ecommerce sites.)

It is calculated using the following formula:

Advertising Cost / Total Completed Actions

In its simplest form, your average cost per conversion should be lower than your average order value or you are losing money.

To illustrate, if your average order value is $35 and your average cost per conversion is $40 then you lose $5 each time a sale is completed on your site. In other words, you are spending $5 more in advertising than you are receiving from a sale.

This one can be hard for many to see as they look at only the end result … the completed sale. They neglect the advertising cost which went into achieving that sale and therefore often end up continuing to run paid search campaigns which are not profitable to their business.

The exception to the rule is a company who has built in average lifetime value of a customer and is willing to lose money or break even on the first sale in order to gain future sales from that same customer. With careful planning and proper implementation this strategy can successfully be used to build a viable business online.

4) Use long tailed keywords and exact match instead of shorter more generalized keywords and broad match.

When internet users begin their search for more information on a product or service, they often use what are called general or broad keywords. They do not know exactly what they are searching for but do know they need more information on a given item of interest. As a result, the keywords tend to be shorter and more general.

Searches result in terms like “shoes”, “running shoes” and “nike” for example. While these terms would likely return data relating to a given product type, they would likely not return data on a specific shoe.

These terms would yield traffic on a broad level with all visitors looking for information yet few looking to buy. Not only would these search terms yield broad scale traffic, but they would come at a high price. Often times the more broad the keyword is, the more competition there is for it and the higher CPC you will pay.

Consider now the user that has already done their research and is ready to buy. They have performed all the searches, learned what is the best running shoe for their needs, and are now in the hunt to find out where they can get it.

As the user narrows their search and has gathered more data about a given product their search shifts to a more exact methodology. They begin to use what are called long tailed keywords to find more specific results. Terms like “Nike airmax running shoe” or “Nike airmax size 7 running shoe” are used.

You can see just by looking at the search terms utilized, the user is more qualified to buy. They know exactly what they want and now they want to know where to get it.

Although there will be competition for these keyword types, the competition will likely be less than what is seen at the broad level. As a result, you’ll achieve lower CPC prices and in turn more qualified traffic by bidding on these types of “long tailed” terms.

5) Build smaller lists of keywords targeted across more specific ad groups and campaigns.

One of the most common mistakes made by non-experienced paid search marketers is “dumping” large lists of unrelated keywords into a few ad groups across a few campaigns.

While this tactic may save you time, it will ultimately be the iceberg that sinks the ship in the end. Trying to save time and money in the beginning will only result in losing money at the other side.

Take your time upfront, perform your due diligence and structure your paid search campaigns to take advantage of the opportunities that smaller, more targeted keyword groupings can do. In case you are asking “what can they do?” here’s a list.

  • Provide more control over ad presentation.
  • Increase click through and typically increase quality of traffic.
  • Increase quality score.
  • Increase relevancy.
  • Increase Quality Score which decreases bid cost and increases placement.

Paying attention to these 5 tips might not make you an expert at paid search, but it certainly will put you on the right track toward achieving higher ROI from your efforts.

Filed Under: Featured, Search Marketing Tagged With: paid search conversion, pay per click advertising strategies, ppc, ppc roi, return on advertising spend, roas

Categories

  • Blogging
  • Conversion
  • Customer Retention
  • Design & Usability
  • E-Commerce Optimization
  • Email Marketing
  • Featured
  • Google Adwords
  • Increase sales
  • Marketing Strategies
  • Mobile Commerce
  • Search Engine Optimization
  • Search Marketing
  • Security
  • Shopping Cart Abandonment
  • Social Media
  • Website Analytics
  • Zen Cart
  • Zen Cart Contributions
  • Popular
  • Recent

About

The Ecommerce Expert offers products and services that help move ecommerce businesses toward growth and success. Our products and services help store owners maximize their ROI, decreasing expenses and increasing revenue. The net result is sustainable growth and stability with above average results.

Services

  • Conversion Rate Optimization
  • Search Engine Marketing (SEM)
  • Ecommerce PPC Management
  • Social Media Marketing
  • Ecommerce Consulting
  • Website Design / Redesign

Copyright © 2023 | Privacy Policy

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
Do not sell my personal information.
Cookie SettingsAccept
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT