If you’re using Google Adwords for your business, as record numbers of businesses are, you may be getting terrible results without even knowing it. There might be many reasons for this, but I’ve seen more money wasted by more clients and advertisers who focused too much on what their competitors were doing than from any other single mistake. My advice–ignore your competitors.
A Brief History Of Adwords
When Google Adwords came into being, it was a godsend for companies that couldn’t afford to hire a marketing firm or ad agency, but needed a way to get the word out about their products and/or services. All one had to do was create an account, link a credit card to the account, set up some ads, and all of a sudden sales would come flowing in. Optimizing a campaign focused mainly on managing bids, auction style, for keywords. The basic idea was if you wanted to get the most business, you outbid all your competitors for the #1 spot.
Google Adwords has gotten considerably more feature rich (read “complex”) in the past few years. Just take a look at Larry Kim’s Top 10 Google Adwords Updates of 2013. It’s a great list, but I’m convinced if every Adwords user read through the list, 50% of Adwords users would either give up managing their own campaigns and turn it over to a professional, or just give up on Adwords altogether. Running a successful Adwords campaign, for many people, has become anything but intuitive.
Keep Your Eye On The Competition?
Here’s what tends to happen if you pay close attention to your competitors’ ad positions:
“Alright, I’ve got my ad in the #1 spot for my most valuable keyword. I’m winning the race, I’m taking all the business, I’m beating my competitor!”
“Oh no, my competitor took the #1 spot away from me! Now he’s getting all the business! I better up the bid on my ad.”
“Yes, I’m in the #1 spot again. Take that!”
“No! He’s #1 again, I better up my bid again.”
“Wow, these ads are really expensive, and I’m barely getting any business from this. What gives?”
The problem is that over time your budget is getting exhausted faster and faster, so your ads are showing up less and less. You are paying more, for less. The same is happening to your competitors. You might think this is great for Google, but even Google recognizes that in the long-term, this will hurt their bottom line as well as advertisers ditch the system in favor of marketing that provides a better ROI.
The #1 Spot Isn’t Always The Best
One myth amateurs fall prey to is the idea that the #1 spot is always best. But ranking higher in Google Adwords search results isn’t always better. Chris Sparks of search marketing competitive intelligence company iSpionage recently showed how some companies have found success targeting their ads to the 2nd page of search results.
A Better Way
It goes against every principle you learned in business school, but for many, if not most, Adwords advertisers, the first step toward optimizing your campaigns is to ignore your competitors. I only mean this in a limited sense, that is, that you should ignore their ad positions, or whether their ads are showing up and your ads aren’t. You should not ignore the facts your competitors are using Adwords, or what keywords they’re targeting. But if you don’t focus on competitors, what should you focus on? Conversions.
What Is A Conversion?
A conversion is not just when someone clicks your ad and comes to your website, but when they do what you want them to do on your website. If you run an ecommerce website, you want the person who clicked on your ad to buy something. A hotel would want someone to book a room online. If you run marketing for a law firm you might want them to call a certain number. Or your business might want people to fill out a form online. All these forms of conversion can be tracked, and all other activities in online marketing are a means to this end.
As Andrew Lolk puts it, by focusing on the click-through rate (CTR), conversions, cost per conversion, and value per conversion, an advertiser will get the most traffic with the most conversions at the lowest price while bringing in the highest overall revenue. Simply put, conversions, together with other data, can tell you how your campaign is truly performing whereas benchmarking against competitors may give you the wrong data and lead you off-course.
By focusing on conversions you will also focus on the total customer experience, rather than only the part that happens before a potential customer clicks on your ad. A decrease in online lead flow might be due to revisions you’ve made recently to one of your online forms. The solution is to fix the form. And there may be opportunities to increase how much business you’re getting, without spending an extra dime, by redesigning your landing page. But if you’re focused on what position your competitor has in ad results, you’ll be paying less attention to both risks and opportunities.
I have seen clients with campaigns so backwards that with a few tweaks monthly spend was cut in half while conversions improved. If you have been managing your campaign to compete for position with your competitors, there might be similar opportunities to spend less and get more in your Adwords account.