Remember when the Google SERP looked like this?

How boring was that? And did you see how much real estate those organic results took up, including unpaid shopping results? That’s no way to run a profitable search engine.

I hope the sarcasm here is obvious, especially for my dear SEO friends that have an increasingly hard time showing up above the fold.

As you’ve noticed, things have changed and now the SERP for the same search looks like this:

To use Google’s own words, they have been “Giving customers more reasons to click your ad”.
Most of these reasons come in the form of Ad Extensions. I’ll leave the prominent Shopping results for a later post in this series.

Ad Extensions come (and go) in a fast pace. Since 2010, Google has been releasing one extension after the other and there always seems to be at least one extension in beta at any given time.

How different each of these extensions may be, they all have one thing in common: they increase the CTR of your ads. How much depends on the extension, but it’s usually in the 5-30% range.

As I do not know an advertiser that isn’t interested in a higher CTR (for the same position & CPC), the advice here is simple: use any extension that makes sense for your business. And besides, Google wants you to use extensions so badly, they explicitly made it part of Ad Rank recently.

This was big news in the PPC industry, and interesting posts have been written about the effects, recommended strategies and why Google adjusted the Ad Rank Algorithm.

The best practice however, hasn’t changed due to this Ad Rank update: if you aren’t already using all extensions that are relevant for your business, you definitely should by now.

To help you get a quick feel for the current Ad Extensions, when to use them and what to expect of them, I’ve created the features comparison chart below.

You won’t find product or offer extensions, since these have been quietly retired. You also won’t find image extensions as only a very small minority of advertisers seems to be eligible to use these. Neither will you find Dynamic Search Ads, even though it can be found in the Ad extensions tab in AdWords, I consider it more of a campaign type that will be covered in the Testing part of this series.

However, you’ll find 8 other extensions (of which 1 is currently in beta) that will provide you with more than enough possibilities to stand out and increase your CTR.

You can also download a pdf version over here

The CTR improvement numbers above are the numbers that were published by Google when releasing that specific extension, based on their initial (but significant) findings with beta users.

The actual numbers will vary by country, industry, advertiser and it will especially be dependent on how many competitors are already using a specific extension. For example, if you’re the only advertiser with seller ratings for a specific search query, chances are this will greatly benefit your CTR.

On the other hand, if you’re the only one without seller ratings, you’ll still stand out, but probably not in a way that increases CTR.

As I mentioned in the introduction part of this series, implementing Ad Extensions can be considered a quick win. That’s why it’s pretty high up in the order of priorities in this audit series: it doesn’t take a lot of time to add, but the benefits will come immediately after adding the extensions.

Let’s dive a bit deeper for some recommendations for each extension.

Sitelinks

The mother of all extensions and the one anyone can use. Well, anyone except single page websites. You can learn all about how to set them up on the sitelinks support page and make sure you follow sitelink extensions policies as well.

The best practices for sitelinks can be summed up as following:

• Make sure each of your search campaigns has at least 4 sitelinks.
  You can always add more if you want to, especially if you want to compare how the ad performs when different sitelinks appear (just make sure the position stays the same for a fair comparison).

• Add descriptions to the sitelinks of your branded campaigns or add at least 6 sitelinks without descriptions to your branded campaigns.
  You could add additional descriptions to all of your sitelinks, but so far they seem to appear only on branded queries. So if you want 4 sitelinks with descriptions on your branded queries, add descriptions to those sitelinks.
  However, if you’d rather have 6 sitelinks without descriptions instead, well then add 6 sitelinks without descriptions.
  Either way, there’s no need to spend a lot of time adding sitelink descriptions in non-branded campaigns.

• Create ad group level sitelinks for ambiguous and/or high volume ad groups.
  All paid search practitioners rejoiced when it became possible to add sitelinks on the ad group level with enhanced campaigns. However, it would be pretty time consuming to create a unique set of sitelinks for each of your ad groups.
  So the best course of action is to create ad group level sitelinks when the campaign level sitelinks aren’t optimal, given the keywords in the ad group. Especially in ad groups with:
  • Many impressions in the top positions.
  • Ambiguous queries, so you can narrow down the user’s intent. Read all about those (including an interesting case study) in Should You Create Ad Group Sitelinks in Enhanced Campaigns? by Brad Geddes. The good news is that by now, AdWords Editor fully supports ad group sitelinks (version 10.2 and higher).

• Don’t worry too much about individual sitelink performance
  • Whenever you analyze the data in the Sitelinks Extensions view under the Ad extensions tab, you should realize that you’re looking at the performance of the whole ad unit whenever that particular sitelink appeared, not at the individual sitelink performance.
  • If you want to be shocked and see that, click the Segment drop-down menu and select ‘This Extension vs. Other’. You’ll see that very few users actually click on the individual sitelinks. What I usually see is a CTR of less than 0.10% per sitelink for non-branded campaigns and 1-2% for branded campaigns, but you should check your own numbers to be sure. Sam Owen at PPC Hero had similar findings in his Case Study: Do People Actually Click Sitelinks?

However, sitelinks significantly increase the CTR of the ad as a whole. So that’s how you should treat them: additional description lines that take up real estate and give you an opportunity to show additional options, features, benefits and USP’s. Even if most of the searchers won’t click on the sitelinks themselves, they will see them and they will impact the performance of the ad as a whole.

So the question is not so much: how many people click on this particular sitelink and what happens after that? But more: which combination of sitelinks generates the best performance for my ad as a whole?

Call Extensions

If you value calls to your business, you should definitely add call extensions to your campaigns, especially if you’re also advertising on mobile devices and have a local business. As Google research shows “70% of mobile searchers use click to call”.

And in case you’ve missed it, since April 2013, you’re no longer allowed to use phone numbers in the ad text, so the only way to show your phone number is by using call extensions.
The call extensions support page will show you how to set them up and monitor their performance.

Just a couple of best practices to keep in mind:

• Consider a Google forwarding phone number, currently only available in the U.S., U.K., France and Germany. This way you can track phone calls as conversions when they last longer than a number of seconds of your choosing.
  • The question remains if you’ll value such a ‘conversion’ just as much as any other conversion you’re tracking in your account. If you’re an e-commerce advertiser, that’s probably not the case. On the other hand, if you’re a lead-gen advertiser or a local business, phone calls may be your primary conversion. So, as is often case, it depends on your business goals whether you should choose a forwarding number or your own phone number.
  • If phone calls are really important to your business, you should also consider a call tracking solution that tracks calls to phone numbers on your website, as mentioned in the Measurement part of this series.
  • Also be aware of possible gaps in call tracking data, as discussed in Call Extensions: Beware the Data Gaps by John Lee.
• Schedule your call extensions, so you only show the phone number (or call button) when there’s someone there to answer the phone.

 Location Extensions

If you have (a) brick and mortar business location(s) you’d like (mobile) searchers to visit, you should add Location Extensions. Just like call extensions, location extensions are especially effective for local businesses.
The easiest way to do this, is to link your Google Places and AdWords. The exact set up depends on whether you’re using upgraded or legacy location extensions, you can see how both work on the location extensions support page. And of course, make sure you comply with the with the location extensions policy. Once you’ve added location extensions to all relevant campaigns, there’s not much to it except monitoring the performance.

Though, there’s an extra option you may want to consider, especially for mobile searchers: apply a bid adjustment when people are searching within a specified radius around your current location extensions. Here’s how to do that:

• Go to the Settings tab of the campaign you want to use such a bid adjustment.
• Click ‘Edit’ next to Locations
• Click ‘Advanced search’.
• Click on the Location groups tab.
• Select ‘Location extensions’ in the drop-down menu as location group type:
  

• Specify the radius around each location extension.
• Click the Add and Done buttons.

Now this radius has become a location for which you can apply a bid adjustment, under the Locations tab of your campaign settings:

Seller Ratings

Although you won’t find seller ratings as extension under the Ad extensions tab in the interface, it’s one of the most powerful extensions out there.

To get these coveted stars in your ad, you’ll need to meet a couple of requirements:

• Your business must have at least 30 unique reviews in the past 12 months and an average rating of at least 3.5 stars. These reviews should reflect customers’ overall experience with your business, not so much with particular products you sell.
  • You can find a list of review websites Google uses as sources for these stars on the seller ratings support page. Besides, you can see which reviews Google has currently aggregated for any domain (yours or a competitor’s) by inserting the domain after this URL: https://www.google.com/shopping/seller?q= e.g. https://www.google.com/shopping/seller?q=amazon.com
• At least 10 of these reviews must be in the customer’s Google interface language. Seller ratings currently show on Google.com, Google.co.uk, Google.de, Google.fr and Google.nl.

Once you meet these criteria, seller ratings will automatically show up in your ads. Obviously, the more reviews you have (compared to other advertisers on the same SERP), the more effect this extension will have.

So if you want those stars in your ads, the best thing to do would be to open an account with one of the mentioned review websites and solicit reviews (through e-mail) from your customers after they’ve received your product / done business with you. I’d recommend reading How Ratings Extensions Gave a Boost to CTR for Shop Bedding for an interesting case study on how to do this.

You could also join Google Trusted Stores, as this is one of the services that powers seller ratings.

Social Annotations

Just like seller ratings, social annotations are a trust signal that automatically appear in your ads when you meet certain requirements. These are:

• You have to have a Google+ page with a verified URL.
• The domain of your Google+ page URL has to match the domain of your ad’s URL.
• Your Google+ page needs to have recent, high-quality posts and a significant number of followers. At least 100 followers for most companies.

And just as with seller ratings: the social annotations will appear automatically in your ads once you meet these criteria and the more followers you have, the better.

App Extensions

If you have an iOS and/or Android app you want to promote on tablets and/or mobile devices, you can add links to your app in the app store (Google Play or the Apple App Store).

The cool thing is that Google will detect the searcher’s device, so it shows the Android link to Android users and the iOS link to iOS users.

Learn all about how to set them up on the app extension support page.

Review Extensions

If you have a positive third-party review, award or ranking in English and are able to fit the quote and the source in a total of 67 characters (and of course, meet all requirements in the review extensions policy), then you could add this as a review extension. Individual customer reviews won’t be accepted, that’s what seller ratings are for.

Especially if you’re in an industry people are skeptical about (think: weight loss, quit smoking, hair loss treatments, etc.), this extension could boost your credibility and definitely be worth the trouble. But so far, Google seems pretty strict in which sites they accept reviews from.

All the necessary info on how to set these up can be found on the review extensions support page.

Form Extensions

This extension is currently in beta, so no official support page here. However, you can read the following article where it was spotted: Google Testing New AdWords Site Search Extension.
We’ve been using it for a couple of clients and seen positive results, especially on branded and generic terms for e-commerce advertisers.

This is how the Form Extension works:

• It allows you to place a field and button in your search ads, in order to direct users to a landing page based on a URL parameter.
• You choose the text in the field, on the button and the URL parameter you want to use.
• When users fill in a keyword (or zip code) in the field and click the search button in your ad, what they’ve filled in will populate the parameter to create the landing page.

If you’re interested in this extension, ask your Google rep for more information.

I’m sure this post will need an update soon, so keep your eyes open for any new extensions that will be released.

In the meantime, if you have any recommendations or questions you want to share, please do so in the comments!

Ad Extensions: Your Audit Checklist

Do all your search campaigns have at least 4 sitelinks?
Do the sitelinks of your branded campaigns include descriptions or do these campaigns have at least 6 sitelinks?
If you value phone calls: have you added call extensions to your campaigns? Use a Google forwarding number if you want to count calls as conversions in your account.
In case you’ve added call extensions: have you scheduled these to match your operating hours?
If you have brick and mortar business locations you want (mobile) searchers to visit: have you added location extensions to your campaigns?
Do you encourage customers to write reviews on reputable sources (as defined by Google) in order to obtain seller ratings?
Do you have a verified Google+ page with more than 100 followers in order to obtain social annotations?
If you have an iOS and/or Android app you want to promote: have you added app extensions to your campaigns?
If you have third-party reviews, awards or rankings in English that meet Google’s requirements: have you added these as review extensions?
In case your website supports a search parameter to be dynamically populated: have you asked your Google rep to join the form extensions beta?

Opinions expressed in the article are those of the guest author and not necessarily bgTheory. If you would like to write for Certified Knowledge, please let us know.

One of the first high level checks you should do when performing an AdWords audit is check the campaign settings. There are a couple of reasons for this:

• The default settings as suggested by Google often aren’t optimal.
• Suboptimal settings apply to all keywords and ads in the campaign, which means it can cause a lot of (hidden) waste or missed opportunities.
• Since enhanced campaigns a lot has changed in the settings tab, and chances are your campaigns aren’t fully taking advantage of all the new settings and options.
• It’s relatively easy and quick to fix.

To get a quick feel for the current campaign settings, go right to the Settings tab in the interface, select All enabled campaigns and add all possible columns in this view (except campaign start & end date):

Now you can scroll through your campaigns in this view and answer the following questions:

• Are the location and language settings as they should be?
• Do any campaigns target all networks (search and display, which is never good)?
• Is there any ad scheduling in place?
• Do the bid strategies make sense?
• Does the delivery method (standard or accelerated) make sense?
• Which ad rotation setting is being used?
• Are there any active bid adjustments in place?

I’ll cover the different bid strategies in the Bid Management part of this series. For the rest of the settings, how I see it, there are three kinds of campaign settings and each need their own approach to be set optimally:

• Settings you should always apply.
• Settings you should usually apply, but may have good reasons not to.
• Settings where you need statistically significant data before you should apply or change them.

Let’s walk through each of these categories.

Settings you should always apply

These are the no-brainers you still want to check, just to be sure:

Use the ‘All features’ setting when selecting your Search campaign type. This will give you access to all the advanced options you really need to get the most out of your campaign settings.

Never target the Search & Display Network in the same campaign. You know this already as it’s in every best practice list and for reasons of completeness I also have to mention it in this post.
It’s quite strange Google still gives you this option, just be sure to never actually use it. Search and Display are so totally different that analyzing aggregate performance is meaningless and optimizing for both networks from a single campaign would be a huge pain without the well-deserved rewards. Even the recently launched Search Network with Display Select doesn’t convince me this campaign type should be used by advertisers that want full control and quick insights of their search & display performance.

Target the right locations. This may sound utterly obvious, but there are still many accounts out there spending money in the wrong places. So make sure the geographic locations you’re targeting are in line with the reach of your business. And if you’re an international advertiser, it’s probably best not to target multiple countries from a single campaign.
For example, the US and the UK are both English-speaking countries, but by targeting them in the same campaign, you’ll show the same ads to American and British users, which makes it impossible to create ads that take the many differences between British and American English into account.
Also, be sure to understand how ads are matched to geographic locations and how you can refine this with the advanced location options.

Target the right languages. You may be inclined to just target the language of the ads in the campaign, and this is also what Google recommends. If you’re only targeting the US, selecting English is usually good enough. However, if you’re targeting countries outside the US it’s important to know that users use Google.com as well as their local Google domain. So in those cases it’s advisable to target English (even if you advertise in the local language) as well as the native language (even if you advertise in English). Of course, keep monitoring your search queries and your geographic performance (in the Dimensions tab) to ensure you’re showing for the right queries in the right places.

Settings you should usually apply

You should usually set your delivery method to accelerated and rotate your ads. However, there are some exceptions and implications you may want to consider before blindly using these settings.

Delivery method: for mature and profitable campaigns with no budget constraints (and they shouldn’t, as they’re profitable), accelerated is the way to go. That way, you’ll be sure to capture any (temporary) increase in search volume, as long as your daily budget allows it. One such example would be your branded campaigns, always set those to accelerated with a more than high enough daily budget.
If you’re on a tight budget or just launched a new campaign, you can set your delivery method to standard to spread your ad display throughout the day.

Ad Rotation
Most experts probably expected this to be in the ‘Settings you should always apply’ section where it should say to use rotate indefinitely (or evenly).
Indeed, if you want full control of your ad testing (and you should), rotate is the way to go. This also means you’ll have the responsibility to take the time to regularly pick the winning ads in each ad group.

If you know beforehand you don’t have the time (or the click volume) to frequently do this in a specific campaign, this could be a reason to choose for one of the optimize settings. Of course, this isn’t optimal, but it’s better than letting a terrible ad run 50% of the time because you’ve set the campaign to rotate and didn’t come back soon enough to analyze the results.

Whatever setting you choose, you should regularly pause the significant worst performing ad in each ad group and write a new one to beat the control. In other words: you should always be testing.

Google could make our lives much easier by automatically treating each ad test as a campaign experiment, showing us how significant the differences in performance are and even warning us when an ad group has a significant worst performing ad (in terms of CTR or conversions per impression / revenue per impression). That way, we’ll always know when and where it’s time for a new ad. So for any Googlers reading this, feel free to consider this a feature request.
In the meantime we’ll have to do this ourselves when rotating and luckily there are some useful tools out there to help us, which I’ll cover in the Testing part of this series.

• Optimize for clicks is usually not the way to go, as it doesn’t take conversion rate into account. Even if CTR, clicks or Quality Score is your main objective, many users feel Google chooses a winning ad before it’s really statistically significant.
• Optimize for conversions takes both conversion rate and CTR into account to pick the ads that deliver the most conversions. However, if there isn’t enough conversion data, ads will rotate using the optimize for clicks data. So this is actually a worthwhile setting to try out in campaigns with many conversions in each ad group.
• Rotate evenly (for 90 days). For most ad groups, you should be able to pick a winner within 90 days (often much sooner). In campaigns with enough clicks and conversions, this setting will provide you enough control, but prevent low performing ads to run evenly more than 90 days.
  If ads in an ad group are unchanged for 90 days, the campaign will automatically begin to optimize for clicks or conversions (the latter in case the Conversion Optimizer or Enhanced CPC is enabled).
• Rotate indefinitely. This is the setting where you keep full control of the split testing process by keeping your ads delivered evenly into the auction forever. Especially in low volume campaigns, you might need more than 90 days before you can pick a winner in an ad group.

Settings that need statistical significance

Before knowing which bid adjustment to set, whether or not you should enable search partners and whether or not you should enable close variants, you need some actual data to see what works best in each campaign.
This means waiting for statistically significant performance data about mobile devices, locations, day-of-week and time-of-day for your bid adjustments. It also means trying out Search Partners and close variants and disabling them in campaigns where they significantly underperform compared to respectively Google Search and their exact and phrase match siblings.

Bid Adjustments

One of the most welcomed improvements of enhanced campaigns is that we can bid differently for different locations in the same campaign. Ad scheduling principally got a facelift and devices, well, I won’t go into the lack of control on devices as many have rightfully done before, I just hope your website is very responsive. Let’s see how you could best determine each of these bid adjustments.

Location Bid Adjustments

From the moment you have a significant amount of data on the performance of a specific location compared to the campaign average (or your target), you can set a bid adjustment for this location. What metric you compare depends on your goals, it could be conversion rate, CPA, ROAS, Revenue per Click, etc. For example, if the average CPA of your campaign is $100 (and you’re happy with that) and Chicago has a CPA of $80 you could adjust the bid for Chicago to (100/80) – 1 = +25%. You’ll find this data in Geographic view of your Dimensions tab.

For further reading, these great posts will provide you all the details you need to determine this bid adjustment: How To Determine Your Mobile & Geo Bid Multipliers For Enhanced Campaigns & Smart Geographic Segmentation & Bidding With Enhanced Campaigns by Benjamin Vigneron and Geographic Targeting In An Enhanced Campaign World by Brad Geddes.

Ad Scheduling

The idea is the same as for locations: get the campaign data from the Dimensions tab (Time: Day of the week and Hour of Day) and look for statistically significant differences from your average performance. To be even more precise you should combine the day-of-week and hour-of-day performance data by downloading a report and adding a segment like this:

With this report you’ll get a combined insight of the performance of each hour of day on each day of the week instead of the average performance of one of both which could lead to suboptimal bid adjustments.

And don’t forget: ad scheduling is based on the time zone of your account, not of the user!

Mobile Bid Adjustments

In case you have a website that provides a bad mobile experience, it’s probably best to set this adjustment to -100% and make it a top priority to create a responsive or mobile website in the meantime. While you’re at it, make sure your site provides a great experience on tablets as you’ll advertise on them anyway.
If your websites provides a decent or even great mobile experience, you’ll want to advertise on mobile devices. The hard part is gauging the full value of mobile, which is not just the macro conversion on the mobile site. Many advertisers say: “My CPA is twice as high on mobile devices, so my bid adjustment should be -50%”. That’s only the case if the only thing you care about are direct mobile online conversions.

Before applying this logic you may want to consider that mobile value is also generated by:

• Calls: see the previous measurement post on how to track phone calls.
• Cross-device conversions: these are now included in the recently released Estimated Total Conversions column (if Google has enough conversion data to give an estimate, currently set at 50 a day on the account level).
• Apps: see the previous measurement post on tracking app downloads and/or use App Analytics to track in-app conversions.
• In-store: also see the previous measurement post about tracking in-store conversions. Google will also include these as part of Estimated Total Conversions soon.

Not all of the above may apply to you, but the ones that do should be taken into account when setting your mobile bid adjustment. Google even created a fancy Full Value of Mobile Calculator to help you with this.

The best way would be to determine a value for all types of mobile conversions that apply to your business, add those values together (also see the micro conversions part in the goal setting part of this series) and use this to estimate the value from mobile devices. Then apply your mobile bid adjustment based on this total value. And just like with geo bid multipliers, Benjamin Vigneron’s post can help you on your way, even including an Excel file that will do calculations for you.

Search Partners

Search Partners, the blackest of the black boxes in AdWords. For some reason Google won’t show us performance by search partner so we can optimize based on this data. That leaves us with two options:

• Let the Conversion Optimizer do the bidding, as the Search partner site is one of the factors the Conversion Optimizer takes into account when setting bids.
• Simply keep Search Partners enabled when they meet your goals and disable them when they don’t.

The performance of search partners can vary strongly per campaign, sometimes it’s great, sometimes it’s terrible and sometimes it’s pretty close to performance on Google (in terms of CPA or ROAS). As they can easily provide an additional 10% to 20% search volume, I wouldn’t recommending opting out by default, unless you’re on a very tight budget.

There’s an easy way to find out if you should keep Search partners enabled: choose a long time range in the AdWords interface (e.g. the last 12 months) in the All online campaigns view, sort by Cost and click on the Segment button to show the segment: Network (with search partners):

In this case we compare the CPA (this could also be ROAS) on Google search with Search partners and we see Search partners have a lower CPA, so we’ll leave them enabled in these campaigns. But if Search partners are significantly performing worse than Google search (let’s say 50% worse or more), you could improve the performance of your account by disabling Search partners in those campaigns.

Also note the much lower CTR on Search partners, this is usually the case and no reason for concern as the CTR on Search partners doesn’t influence your Quality Score on Google.

Keyword matching options

Many advertisers didn’t like the liberty Google took in May 2012 by matching phrase and exact match keywords with plurals, misspellings and other close variants and therefore disable this matching option by default to keep full control.

I’d say that’s fully justified if you’re 100% certain that all your phrase and exact match keywords also have active (modified) broad variants in your account. In that case you’ll want the broad matches to catch the close variants. In other cases: data beats opinion. In many campaigns I’ve seen these close variants delivering additional conversions for an acceptable (or even good) CPA or ROAS. Besides, you can (and should) always add the unwanted queries as negatives.

If you want to know how these close variants perform on average on a campaign level, there’s a way to find out:

• Include these variants in the Keyword matching options setting. This is the default setting.
• Compare the performance of close variants with the performance of exact and phrase match per campaign with a Pivot Table.

To create this Pivot Table go to the Dimension tab of your account, select a long enough time frame and select view: Search Terms. Then only select the following Columns (Total conv. value if you’re an e-commerce advertiser tracking revenue with AdWords):

Now download this report and open it with Excel, if it gets too big you can add a filter before downloading it to only include search terms with at least 10 impressions (or any number higher than 1 to get rid of unique queries).
In Excel we need to re-label the match types to make a comparison on an actionable level. This means comparing the average performance of close variants (both phrase & exact) with the average performance of phrase & exact. To do this replace as following in the Match Type column:

• Replace all ‘exact (close variant)’ by ‘Close Variants’
• Replace all ‘phrase (close variant)’ by ‘Close Variants’
• Replace all ‘exact’ by ‘Exact & Phrase’
• Replace all ‘phrase’ by ‘Exact & Phrase’, make sure you only replace this in the cells that contain ‘phrase’, not in the cells that already contain ‘Exact & Phrase’

Now we can create a Pivot Table that will show us the aggregate performance of these match types (and broad match) per campaign.

The fields of your Pivot Table should be as following where CPA is a calculated field you created by dividing Cost by Conversions (and in case of ROAS you would divide Total conv. value by Cost):

Your Pivot Table should look something like this and now you can compare the aggregate performance of close variants with the aggregate performance of exact & phrase:

In the example above you can see close variants perform worse in Campaign A, but perform better in Campaign B. So we could disable them in Campaign A and keep including them in Campaign B.

Campaign Settings & Bid Adjustments: Your Audit Checklist

Are the search and display network always targeted in separate campaigns?
Are all search campaigns set to include ‘All features’?
Are all campaigns targeting the right locations?
Are all campaigns targeting the right languages?
Does the delivery setting make sense for each campaign?
Is the ad delivery set to rotate by default? You can try optimize for conversions in campaigns with many conversions.
Are location bid adjustments set based on significant performance differences?
Is ad scheduling set based on significant performance differences?
Are mobile bid adjustments set based on the full value of mobile?
Have Search partners been tried in every search campaign and have they been disabled where they significantly underperform?
Have close variants been tried in every search campaign and have they been disabled where they significantly underperform?

Opinions expressed in the article are those of the guest author and not necessarily bgTheory. If you would like to write for Certified Knowledge, please let us know.

Once you’ve set your goals as discussed in the previous post, you have to find a way to measure them. If you can’t measure your goals, there is no way of telling if you’re reaching them and which parts of your campaigns are profitable and which parts aren’t.

In this post I’ll go into measurement best practices, which will mostly be based on AdWords conversion tracking and Google Analytics. You may use another analytics tool, and there are many great tools out there, but when it comes to integration with AdWords, Google Analytics has some unique features:

• No need for manual tagging of your URL’s to get all campaign data into Analytics by using auto-tagging.
• Show Analytics engagement metrics like bounce rate and visit duration right within the AdWords interface. You can even create AdWords filters and automated rules based on these metrics.
• Create Remarketing lists based on Google Analytics dimensions and metrics, more about this in a future Remarketing post.
• Bid Adjustment reporting.
• Import your Analytics goals and e-commerce transactions in AdWords, although I prefer to use AdWords conversion tracking in AdWords whenever possible.
  However, you should always set up goals and Ecommerce tracking (if applicable) in Analytics to measure the results of your other traffic sources. And of course, don’t forget to tag the URLs of your non-AdWords campaigns with UTM parameters.
• Seeing AdWords data in other reports such as Multi-Channel Funnels.

To enjoy all these features, your AdWords and Analytics accounts need to be linked, which has recently been made a lot easier. You’ll need administrator rights to link accounts, and this guide from Google will show you how to link accounts. So even if you use another Analytics tool, it’s worth installing Google Analytics alongside as it’s free and you get the extra features mentioned above.

If you want to learn more about how AdWords and Analytics work together (and how their reports are different) I’d recommend watching the Combined Power of AdWords and Analytics webinar.

How to check your current conversion tracking

To check how the account is currently tracking conversions, go to the Tools and Analysis menu and click on Conversions.

This will show you which conversions AdWords is tracking and the values and conversion pages for these conversions. In the example below of an e-commerce website, we see just 1 conversion being tracked (Sale) and that no activity has been recorded within the last 30 days:

So in this case we need to investigate if the conversion script is still placed correctly on the thank you page after a sale or maybe the account just didn’t generate any sales during the last 30 days.

Tracking the variable revenue seems to be working correctly as the value of the sales divided by the number of conversions (AdWords only shows many-per-click in this view, which often inflates the number of conversions) comes close to the average order value.

This advertiser is not tracking any other conversions with AdWords and as discussed in the previous post about goal setting, it’s very probable that there are other valuable actions on the website a visitor could perform. These actions should be valued and tracked as well.

So when looking at this view, check for the following:

• Does the list of conversions look complete to you, including macro as well as micro conversions? Visit the website to get an idea of the valuable actions visitors could perform.
• Does every conversion have a value that corresponds as closely as possible with the (eventual) revenue it’s generating? In case of e-commerce sales this revenue should come directly from the shopping cart system.
• In the Webpages tab: do you see a complete list of the correct thank you pages corresponding to the conversions?
• Make sure there are no goals imported from Analytics that are also tracked by AdWords conversion tracking, this will mess up your conversion data.
• In the Advanced tab (after selecting a specific conversion): are the view-through conversion settings as you want them to be? This is only relevant if you use image or rich media ads on the Display Network and want to somehow value view-through conversions. For example, you may want to lower the conversion window (do you remember which banners you saw 3 weeks ago?) and enable search de-duplication. By the way: Google Analytics goals aren’t compatible with view-through conversion reporting, so if you want to see these conversions, you’ll need to install AdWords conversion tracking.

In the sections below, I will discuss how each conversion type could best be measured in your account.
You can find details on how to set up conversion tracking in AdWords in this guide from Google.

Need for cross-account conversion tracking?

In case you have a MCC (My Client Center) with multiple accounts all advertising for the same website and/or trying to achieve the same goals, it is recommended to use the cross-account conversion tracking Google released in late August 2013.

One of the main benefits is that you’ll more accurately track the generated conversions. The drawback of account-specific conversion tracking is that you’ll risk to count the same conversion more than once when a user clicks on ads from different accounts before converting. Each account will count this conversion as long as it happened within 30 days after the click (or another conversion window if this was customized).

So if this applies to your situation, learn more about cross-account conversion tracking and how to set it up.

Determine your conversion window

Until September 23 2013, the conversion window of AdWords was 30 days and this couldn’t be changed. But now you can set your conversion counting window from 7 to 90 days after a click.

So you definitely want to think about how many days after the last AdWords click you still want to count conversions. This could be 30 days and then you don’t have to change anything. But if it’s shorter or longer than that, you can easily change your conversion window.
Of course, you could question what role an ad click 90 days ago played in a purchase made today, but that’s actually an attribution issue I’ll touch upon later in this post.

To find out what window to choose, Google recommends to check out your search funnels time lag report, which is a good place to get this data from.

You could also take a look at Google’s Customer Journey to Online Purchase and look up your industry and country (if it’s one of the 7 countries in the list). It doesn’t show you the average number of days before a purchase, but it does show interesting multi-channel statistics and what percentage of revenue comes from purchases made in more than one day. For example, for CPG in the US this is only 20%, but for Retail it’s 50%.

Measuring a fixed (assigned) value conversion with AdWords conversion tracking

For all non e-commerce conversions that result in a thank you page (like filling in a form) you can simply create an AdWords conversion script and enter the assigned value into the Conversion value field and place the resulting snippet on the thank you page after the conversion.

Measuring variable e-commerce revenue with AdWords conversion tracking

This is similar to tracking fixed value conversions, with one important difference. You’ll need to edit the code snippet afterwards as described in the ‘Track transaction-specific values’ part by inserting the variable from your shopping cart system to get the revenue into AdWords.

If you don’t know what this variable looks like, contact your shopping cart provider and ask what variable is used for the total cost of goods (excluding taxes and shipping).

Measuring app downloads

If you have an app and consider downloads of this app as one of your goals, you can easily track these downloads as conversions in AdWords. Just choose App download as Source when creating a new conversion. You can track downloads of Android and iOS apps:

• Android Apps: just choose Android as mobile platform and fill in the Package name, which is the part of the Google Play URL right after https://play.google.com/store/apps/details?id= and before &. In the case of WhatsApp (https://play.google.com/store/apps/details?id=com.whatsapp&hl=en) the package name would be: com.whatsapp. Save and you’re done. No need for scripts.
• iOS Apps: this is a bit more work than Android Apps. After choosing iOS as mobile platform you’ll be given a snippet that needs to be installed in the app. Instructions on how to do this can be found the conversion tracking for iOS guide. Unfortunately, Google currently only tracks iOS app downloads driven by ads served in mobile apps (so no downloads from search or regular GDN campaigns). Hopefully these will be tracked as well in the near future.

Measuring Events with Google Analytics

Not all conversions lead to a thank you page. For example downloads, outbound links, likes, shares, clicking on ‘add to cart’ (but not checking out), live chat and video plays could be valuable actions you’ll want to track. AdWords conversion tracking can’t help you track these kind of interactions, but Google Analytics event tracking can. The good news is Google recently launched Auto-Event Tracking with Google Tag Manager, which means you no longer have to add custom JavaScript code to your website to track these events. To learn all about how this works and how to set it up read Justin Cutroni’s thorough walkthrough.

If you use such events as goals you can import these goals into AdWords and then you’ll measure these special clicks as conversions.

Measuring the quality of your leads

If the goal of your campaigns is to generate leads it is important to realize that leads have no intrinsic value. Of course your leads have an average value you’re probably using to calculate your CPA. But the percentage of these leads that actually converts to customers differs per marketing channel, keyword and practically every possible segment you can think of.

How does he know the Glengarry leads are gold?

Using the average value will lead you to undervalue some marketing channels and keywords and to overvalue others which hurts your eventual profit.

Until September 2013 lead-gen websites had to use a process similar to the one described in How to measure ROI for lead-gen websites to tie the sales resulting from their leads back to the online source.

And this is still a great way to track the value of your leads, especially from your non-AdWords campaigns.

But now you can track offline conversions within AdWords. Using the Click ID as primary key, you have the possibility to import offline sales back into AdWords. It requires some implementation and additional steps to set up, but it’s an absolute must-have. Not just for lead generators but for any advertiser who wants to incorporate what happens offline (like returns) into AdWords.

Measuring phone calls

There are a couple of ways for tracking phone calls resulting from your AdWords campaigns:

• Call Extensions with Google forwarding numbers. At the moment of writing this is only available for advertisers in the U.S., U.K., France and Germany. This is how it works: Google automatically generates unique phone numbers that are displayed with your ads. If a potential customer calls this phone number, AdWords will route the call to your business phone number. You’ll then be able to see detailed reports about calls generated from your ads. You can set a minimum call duration to make a phone call count as a conversion. If phone calls are important for your business you should absolutely set this up for your campaigns.
• Call Extensions without Google forwarding numbers. If you’re not advertising in one of the countries that supports forwarding numbers you can still see how often mobile users clicked on the phone number in your call extensions by using the Segment -> Click type menu in the AdWords UI. Then look for the following click type: Mobile clicks-to-call (although with these clicks, we have no way of knowing how long the call lasted and what happened after the call).
  To learn all about how call tracking works in AdWords and how to make sense of the call reports (which has been made easier now phone call conversions are added to regular conversions) I can highly recommend reading Demystifying Call Tracking In AdWords by Frederick Vallaeys.
• Third party call tracking solutions. A lot of potential customers will only call your business after having visited your website. As AdWords call extensions only track phone calls from phone numbers in the ad, they don’t help you track calls to phone numbers on your website. Call tracking vendors can help you measure these calls as well. If your campaigns generate a lot of phone calls it may be a worthy investment to use such call tracking software. You can find vendors in this comparison sheet and in the Google Analytics Application Gallery.
• Phone calls from your mobile website. In this case AdWords can measure these calls, provided users click on your phone number with their mobile device. You can find how to set this up in the conversion tracking set-up guide by folding out the ‘Track conversions on a mobile site with a phone number’ part.
• You can find even more inventive ways to measure phone calls in 5 Ways To Track Phone Calls Generated From PPC Clicks by Brad Geddes.

Besides the possibilities mentioned above, we can expect Google to provide us more insight in phone call conversions as part of Estimated Total Conversions: “In addition to cross-device conversions, both phone calls and store visits will be included as part of Estimated Total Conversions in the coming months.”

Measuring in-store conversions

If your website isn’t the only place where you sell your products or services, you have the additional challenge of measuring the impact of your online campaigns on the sales in your physical stores or offices.

First off, you could try out Google Offers to create coupons users can redeem in your store(s).

Another way to get an idea about online users coming to your stores is by using location extensions and look at the ‘Get direction’ click type by segmenting by click type or by going to the Dimensions tab and change the view to Free clicks (yes, these get direction clicks are free). Free clicks can also include interactions with video and image ads.

Another (high tech) way of tying online to offline behavior is using the Google Analytics Measurement Protocol (part of Universal Analytics). Justin Cutroni wrote two articles that I highly recommend to get a better idea about the possibilities with Universal Analytics: Universal Analytics: The Next Generation of Google Analytics and How Universal Analytics will Drive Strategic Marketing.

And as always, Avinash Kaushik shares great tips for measuring the offline impact of your online channels in Multichannel Analytics: Tracking Offline Conversions. 7 Best Practices, Bonus Tips. The 7 best practices mentioned are:

• Track your online store locator, directions, other direct offline dimensions.
• Use unique 800 (toll free) numbers on the website.
• Use unique coupons, offers, promotions online.
• Marry / mine online and offline data.
• Leverage onexit online surveys (or Point Of Sale surveys).
• Conduct controlled experiments.
• Primary research baby!

Tracking the offline impact of your online campaigns is probably one of the hardest things to do in online marketing, but hopefully you’re now better equipped to do so.

And as mentioned earlier in this post, we can also expect Google to include store visits as part of Estimated Total Conversions in the coming months.

Not to forget, it works both ways: if you’re advertising on tv, radio, in newspapers or any other offline marketing channels, this also impacts your online results (especially direct traffic and searches for your brand), so you should also track the online impact of your offline campaigns.

Attribution Modeling

The only use for last click attribution now is to get you fired. Avoid it.
Avinash Kaushik

Well, that statement might be a bit bold, but at least it forces you to seriously question last click attribution, which is still used by many advertisers. Actually, according to an Econsultancy & Adobe report, only 54% of businesses carry out any form of attribution, of whom 28% only use last click.

And that isn’t necessarily bad, as Siddharth Shah lays out in Attribution: Busting The Myths, especially if you’re primarily doing search.

But the more (paid) channels you are using to generate conversions on your website, the greater your attribution problem is.

To get a quick feel for you attribution problem you can take a look at the Multi-Channel Conversion Visualizer in Google Analytics. To see this go to: Conversions -> Multi-Channel Funnels -> Overview and select your most important (paid) traffic sources. If it looks like this:

You have less of an attribution problem compared to this situation:

But even in the first the scenario, the very least you should do is to ignore the last branded search click (paid or organic) and give credit to the keyword(s) or channel(s) that preceded this click.

There is no one perfect answer to how you should divide credit for the conversions amongst your online marketing channels. But last-click probably isn’t it and neither is first-click. So if you’re still valuing your channels based on one of these models now is the time to read this great guide by Avinash Kaushik: Multi-Channel Attribution Modeling: The Good, Bad and Ugly Models including the valuable follow up comments by Brian Clifton. As he says: “The more you think about attribution modeling, the more complicated it becomes.” But it needs to be done if you want to make smarter decisions about how much to invest in each of your channels and keywords.

Measurement: Your Audit Checklist

Are all defined macro and micro conversions tracked correctly with AdWords Conversion tracking?
In case of conversions without a thank you page: have you set up event tracking, used them as goals and imported these into AdWords?
Are AdWords and Google Analytics properly linked (including auto tagging and engagement columns in AdWords)?
In case of multiple accounts in a MCC advertising for the same website and/or goals: is cross-account conversion tracking installed?
Does the AdWords conversion window make sense considering the buying behavior of your customers? Check time lag reports or research on customer journeys to gain insights.
Do the view-through conversion settings make sense?
In case of lead generation: do you have a system in place to track the quality of your leads by source, channel or keyword (type)? For AdWords this can be done by importing offline conversions.
In case phone calls are valuable to your business: do you have system in place to track the phone calls generated by your campaigns?
In case you have brick-and-mortar business locations: do you use Google Offers, location extensions and other ways to gauge the offline impact of your online campaigns?
Do you have an attribution model in place that looks beyond the last (or first) click and ignores the last branded search click?

Opinions expressed in the article are those of the guest author and not necessarily bgTheory. If you would like to write for Certified Knowledge, please let us know.

Why advertise?

Why do you invest in paid search? This may sound like a strange question if you’ve been doing it for a while, but it really is the question that precedes all others and therefore, where our audit starts.

As you will be working towards reaching your goals while optimizing your account and making decisions about keywords, bids, ads, campaign settings and landing pages based upon your goals, you’ll want your goals to be as sophisticated and as closely tied to your business objectives as possible.

When asked why they invest in paid search, people often initially give answers along the lines of “to generate revenue” or “to get new customers”.

Stated as such, these aren’t goals yet. Although they may define the purpose of the campaigns, we can’t use them in our daily optimization as they miss a crucial element: at what price should these goals be achieved?

Assuming you’ll want to run profitable campaigns, you need to find out how much you can invest to achieve each of those goals while still making a profit (or even maximizing profit).

Unfortunately, many advertisers don’t have a complete picture of how actions on their website deliver value to their business. They need your guidance to set better (and usually more) goals.

Beware: they may sputter when you confront them with all the things they haven’t valued (correctly), but this is the time to give some tough love as everything else depends on it, including what the results of your campaigns look like.

So let’s walk through the necessary steps to create specific and profitable goals. By the way: it’s perfectly fine to have multiple goals (just make sure to prioritize them) and to refine them over time.

Economic value on your website

Firstly, make sure you have a clear and complete picture of the ways in which your website generates value for your business.

Online conversions: macro & micro

Is there just one valuable action (conversion) a visitor can perform on your website or are there more? The main conversion on your website is probably a sale or a lead. Those would be the macro conversions.

But there may also be other valuable actions a visitor can perform: the micro conversions. You’ll get a much more complete picture of the total value generated on your website (and with paid search) if you identify micro conversions as well and assign goal values to them (preferably in terms of revenue).

Examples of macro and micro conversions (including example values), to give you an idea:

The value you assign to the micro conversions should be as closely related to the average revenue they’ll eventually generate as possible, or their opportunity cost, like what it would cost you to send a brochure to an interested prospect in the physical world.

For example, if you’re doing e-mail marketing and you know that when you send out a newsletter to 5,000 addresses, this mailing will generate $100,000 in revenue, then you could say that a sign-up is worth $20.

Offline Conversions

If your website (and therefore your campaigns) can also drive orders to the call center and/or offline stores the valuation gets more complex, especially from a measurement standpoint. But this shouldn’t be a reason to ignore these conversions, as doing so may lead you to (greatly) undervalue the results of your online advertising.

I’ll go into the measurement best practices, both online and offline, in the next post about tracking results.

For now, if phone calls or offline purchases are important to you, you should be placing a value on actions on your website that indicate such offline conversions.

Lifetime value

Are the values you assign to conversions based on just one interaction or do you consider the lifetime value (LTV) of a customer? Using the LTV (or at least a longer time value than just the first sale or interaction) will allow you to be more aggressive with your advertising, which means you can reach a greater audience.

Just to give you an idea of how lifetime value could be calculated, see this impressive infographic by KISSmetrics. This demonstrates how LTV increases the value of a new Starbucks customer from $5.90 (average spend per visit) to an LTV of $14,099 (average spend during customer lifespan).

Your calculation doesn’t have to be that complex or far-reaching and you can also find great guidance by Avinash Kaushik in his post on computing lifetime value (including an Excel file to help you make the calculations).

You could even go one step further and try to quantify and incorporate the referral value of happy customers that tell their friends about you.

By including micro conversions, offline conversions and taking the lifetime value into account you will have a much more complete picture of how your website and campaigns are creating value for your business, which will give you an advantage over competitors that are less sophisticated in determining this value.

Efficiency targets in paid search:

AdWords (and Google Analytics) can track click cost (obviously), conversions and the revenue (or goal value) generated. But to know what ratio between advertising costs and generated revenue or number of leads is profitable for you, you also need to know:

• Your effective margin. This is defined as: revenue – COGS (cost of goods sold) – variable cost of the additional order. Make sure you only factor in costs related to generating additional sales / leads, not all your costs, as is clearly laid out in Efficiency targets: don’t short-change your marketing.

• The part of this margin you’re willing to invest in acquiring additional revenue (or leads). This is your biggest strategic decision and obviously you’ll want to know which percentage will maximize your profits, expressed in real dollars. Some have found that 50% is a good rule of thumb to maximize profits, which could make it a good starting point for you.

  Higher percentages will enable you to advertise more aggressively and generate more revenue or leads, but at a lower profit per dollar of generated revenue or per lead. Lower percentages will do just the opposite.

So this means your efficiency targets should change whenever one of these two factors (or both) change. Which is why it would be wise to regularly check if your targets are still in line with your margins and the part of the margin you want to invest in advertising. On the other hand it’s unwise to change your targets too often, as it’s hard to hit a moving target.

As you can’t load your margins into AdWords (you can in sophisticated bid management tools) to directly bid on margin, you’ll have to calculate an efficiency target like CPA or ROAS that will ensure you’ve set a profitable target, considering your margin.

Lead generators or single conversion websites: CPA as an efficiency target

If you have just one conversion (type) with a fixed value, you can work with a CPA (Cost per Acquisition) target, which simply is your total advertising cost divided by the total number of conversions generated.

Other terms for this metric are CPL (Cost per Lead), CPO (Cost per Order) or CPS (Cost per Sale), but it all amounts to the same.

However, if your website generates variable revenue (e-commerce) and/or you have defined multiple conversions with different values (like the micro conversions mentioned before), the best thing would be to work with a ROAS target instead of a CPA target.

Working with multiple CPA’s (e.g. lower CPA’s for lower value interactions and higher CPA’s for higher value interactions) could be a way to refine CPA targets. However, from an optimization standpoint it’s a bit cumbersome to separate the cost and conversions for each conversion type, as AdWords will show you total cost, total conversions and the average CPA of all conversions.

The only way to see the metrics per conversion type is to use the Segment –>Conversions menu in the AdWords UI. And what do with a keyword that, in terms of CPA, over performs on one conversion type and underperforms on another?

How to calculate a profitable target CPA?

To calculate a profitable CPA target, you’ll need the following data:

• Average profit margin (in $) on the revenue generated by a customer (use lifetime value if possible).
• The part of this margin you’re willing to invest in acquisition.
• The lead to sale conversion rate: what percentage of your leads do actually become paying customers?

  This can differ greatly per marketing channel and keyword, so try to monitor the quality of your leads for your most important channels and keywords, as each lead is not created equal (so neither should its CPA target be equal). More on this in the next post about measurement.

An example & calculation:

• Average profit margin: $500.
• Part of this margin you’re willing to spend on advertising: 50%.
• Lead to sale conversion rate: 30%.

You get your target CPA by performing the following calculation:

(profit margin x investment in advertising) x lead to sale conversion rate

In this case, that would lead to the following CPA: ($500 x 50%) x 30% = $75

This means that you’re willing to pay up to $75 for a lead generated on your website.

E-commerce or multiple goals: ROAS as an efficiency target

From the moment you can track variable revenue on your website and/or have defined multiple goals with a different value for each goal, you’ll want to use an efficiency target that considers this difference in value for each conversion. There are different names for this metric, but it’s all about the ratio between advertising cost and revenue (or goal value) generated by this same advertising:

Return on Advertising Spend (ROAS): the generated revenue divided by the advertising cost.

Effective Revenue Share (ERS) or Ad Cost to Sales (A/S) ratio: this is simply the inverse of ROAS, which is calculated by dividing the advertising cost by the revenue generated.

I personally prefer ROAS as it’s a column in the AdWords interface (Conv. value / cost) which makes it easier to use in daily optimization. Besides you can also use your target ROAS as a flexible bid strategy.

Oftentimes people and tools (and people that are tools) refer to ROAS as ROI (Return on Investment), but ROI is fundamentally different as ROI = (revenue – cost) / (cost) and ROAS = (ad revenue) / (ad cost). For ROI you should take into account the full cost of marketing (like product cost and agency fees), not just the ad cost.

As we factor in the relevant costs into our ROAS target and AdWords (or Analytics) can’t show you real ROI directly, we’ll use ROAS instead.

How to calculate a profitable target ROAS?

You’ll need the following data to calculate a profitable ROAS target:

• The profit margin (in %) on the revenue generated.
• The part of this margin you’re willing to invest in acquisition.

An example & calculation:

• Profit margin: 40%.
• Part of this margin you’re willing to invest in acquisition: 50%.

You get your target ROAS by performing the following calculation:

1 / (profit margin x investment in acquisition)

In this case, that would lead to the following ROAS: 1 / (40% x 50%) = 500% (or 5.0 or 5:1). This means that for every dollar you invest in paid search, you’ll want at least $5 in revenue.

As ERS or A/S is just the inverse, you get these targets by multiplying your profit margin with the part of this margin you’re willing to invest in acquisition: (40% x 50%) = 20%. This means that you’ll want to invest no more than $0.20 in paid search for every dollar of generated revenue.

What if your margins differ?

You could simply work with the average margin for all your products, but it would be better to work with different ROAS targets (each based on the calculation above) for each of your product categories with different margins.

The account should stay manageable though, so there’s a trade-off between having a perfect ROAS for each product (category) and the time it will take the account manager to steer different keywords on different ROAS targets.

To further complicate things, users don’t always buy what they seek, they might buy something with a very different margin from the product they were looking for.

If you have thousands of products with greatly varying margins and invest heavily in paid search, it might be best to look for a bid management solution that can incorporate your back-end system (with margin data) with AdWords so you can directly bid on margin for each keyword, based on the products it’s selling.

What about volume, budgets and forecasts?

Volume

Of course, a great CPA or ROAS isn’t the only goal, because volume matters as well. You’ll probably be more interested in 1,000 conversions for a CPA of $85 than in 100 conversions for a CPA of $75. And of course you’d rather have 1,000 conversions for a CPA of $65. But as George Michie states in Maximizing ROI: The Wrong Game: “Volume and efficiency are always at tension.” More of one usually means less of the other.

As you don’t put percentages in the bank, you should manage your budgets and targets in such a way that you maximize total profit, expressed in real dollars, instead of just maximizing ROAS or minimizing CPA, which could actually hurt total profit.

Budgets and forecasts

If your campaigns generate directly measurable revenue and you have a well-defined profitable CPA or ROAS target, working with fixed budgets doesn’t make a lot of sense. To quote George Michie once again, from The Paid Search Uncertainty Principle: “You can’t control both spend levels and efficiency metrics. The more you predetermine one, the less control you have over the other.

This fundamental law of paid search may be its least understood, as many companies determine an efficiency target and then simultaneously fix a rigid budget for how much they will spend in media.”

So what you should do is place your efficiency targets first and let ad spend rise and fall with the market opportunities. This way, you’ll be able to seize opportunities when conditions are favorable and avoid flushing money down the toilet in order to spend your budget.

Putting the budget first can make sense if your returns are uncertain (brand building) or delayed (lead generation).

If your boss or client can’t let go of this idea of fixed budgets and would also like you to forecast results while you’re at it, please let him or her read Overthrow The Tyranny Of Paid Search Budgets and PPC Agencies Promising/Forecasting Results. If you’re lucky, afterwards he or she will better understand the dynamics of paid search and why budgeting and forecasting are often futile exercises in this field of marketing. That way, you can go back to doing work that actually improves results.

Work with non-branded targets

I’ll be short about this one, as there’s already an excellent post out there about the horrors of mixing branded and non-branded results, appropriately called The Cardinal Sin of Paid Search.

Hopefully this (very typical) segmentation of branded and non-branded results will quickly convince you that the average of these two segments is the biggest lying average you might have ever seen:

So when defining a CPA or ROAS target, use this target to evaluate and manage your non-branded campaigns, as you have very little control over the volume and conversion rate of branded queries.

However, to prevent undervaluation of your non-branded campaigns, use a proper attribution model to credit non-branded keywords (or display campaigns) that assisted conversions that ended with a branded search query. One such solution is ‘last touch with brains’.

There’s one exception to this rule: your brand name could behave like a competitive term if you’re a manufacturer competing with your own channels (e.g. Sony, Lego, Nike, Adidas).

Let the results from your branded queries guide you: if you see competitive statistics like higher CPC’s, CPA’s (lower ROAS), then you can treat your branded keywords as non-branded competitive terms.

But if you see branded results like in the table above, your brand name isn’t competitive and its results shouldn’t be included in your targets.

Setting Goals: Your Audit Checklist

Have you defined the value of all macro and micro conversions on your website (including indications of possible offline conversions)?
Do you base these valuations on the lifetime value of a customer?
Do you work with a non-branded CPA or ROAS target?
Is this target placed first and budget second (if the campaigns deliver direct cash returns)?

  
Opinions expressed in the article are those of the guest author and not necessarily bgTheory. If you would like to write for Certified Knowledge, please let us know.  

Over the years great books, articles, webinars and podcasts have been released about AdWords best practices and how to evaluate your account to improve its quality and performance.

Done well, an exhaustive audit may be one of the highest value activities in paid search. And done well, it takes quite some time, especially for larger accounts.

This post is an introduction to a series that attempts to put all these best practices together in a prioritized order, providing a step by step guide to perform your own AdWords audit. Hopefully saving you time with your audit whilst improving its contents.

It is an ambitious objective, but as the saying goes, I will be standing on the shoulders of giants. So whenever I’ve found a source that will provide you clarification and guidance for a specific best practice, I will simply try to summarize it as shortly as possible and link to these ‘giants’. One of these summarizations will be a checklist at the end of each post and a complete checklist at the end of the final post.

So obviously, I’m not trying to reinvent the wheel here, but I do hope to provide a useful contribution to the paid search and online marketing community that has been so generous in sharing its knowledge over the years. Consider this series as an effort to tie this shared knowledge about AdWords best practices and audits together.

I’ll focus specifically on Google AdWords, but lots of these analyses and recommendations can also be applied to Bing Ads and advertising on other search engines.

Let’s start with the why, when, who and what of PPC Audits, which will largely be based on The Who, When & Why Of PPC Account Audits, Learn How to Audit Your PPC Account with Joe Kerschbaum and The Complete PPC Account Audit Guide.

No account is perfect. Especially if the same person or team has been working on the same account for a long time, opportunities and best practices may have been missed. By stepping out of day-to-day activities and letting a fresh pair of eyes evaluate every aspect of your paid search program (over a longer time frame), you will generate a list of possible improvements, expansions and fixes that should increase the quality and performance of your account.

So it’s not about daily (or weekly) optimizations like bid changes and keyword research, but it’s looking at the bigger picture and making sure no opportunities are missed.

When To Audit?

This depends on the size and monthly spend of the account. As a rule of thumb: comprehensive audits should be done twice a year for smaller and mid-sized accounts and quarterly for larger accounts.

As you should get a (long) list of actionable recommendations to improve your account, you’ll also need the time to implement these recommendations before performing another audit.

If you work at an agency and inherit an account from another agency (or the advertiser’s in-house team), this would also be a good time to perform an audit.

Who Should Audit?

As said before, it’s best not to have the one(s) managing the account perform its audit. As the account should be challenged and questioned during an audit, you’ll need a fresh perspective to truly do that.

And of course, the one(s) performing the audit should be at least as experienced and knowledgeable about AdWords as the one(s) managing the account. Preferably more.

So this could be an experienced colleague (if you work at an agency or within an in-house PPC team), an external agency or a consultant that is also able to clearly communicate his or her findings.

What Should be in an Audit?

Below you will find the list of topics that this series will cover, so in this case, all these topics will be part of the audit. For each area of your account you should get:

• An Analysis: how are you currently measuring up in terms of best practices and performance?
• Recommendations: what should be done to improve, expand or fix wherever this is needed? These recommendations should be actionable and specific.

Areas I’ll cover in this audit, which will be the future posts of this series:

• Goal Setting
• Measurement
• Campaign Settings & Bid Adjustments
• Ad Extensions
• Impression Share
• Quality Score
• Account Structure
• Keywords and Match Types
• Ad Copy
• Lin-Rodnitzky Ratio
• Testing
• Product Listing Ads
• Bid Management
• Landing Pages
• Remarketing
• Display Network
• Mobile
• YouTube & AdWords for Video

This is the order in which I like to audit (and fix) accounts. First of all, goal setting and measurement should be optimal to get a complete picture of what you’re trying to achieve and if you’re actually achieving it. Both affect everything else you do in your account, so if these first 2 areas aren’t optimal, you should fix this before doing anything else.

I imagine the order of the rest of the list above is up to discussion. For example, some might say account structure is more important than ad extensions (and I agree), but the reason ad extensions are checked first is because they can be considered a quick win. Usually you’ll want to implement the quick wins as quickly as possible so you can move on to the harder, more time-consuming wins, while already benefiting from the quick wins.

I’m looking forward to provide you a guide that is as complete as possible and give credit where credit is due for further exploration of the discussed topics.

This completeness will clearly be a temporary thing as not a month goes by without Google releasing new AdWords or Analytics features. Sometimes these fundamentally change best practices, like no longer separating campaigns for mobile devices. But usually these features are additions and improvements that don’t really change the essence of established best practices.

So this guide will be as up-to-date as possible (fully enhanced of course), but you can count on Google and Bing to release something great right after you’ve published an article about it.

But as a reader of this blog I’m sure you’ll be in the know of the newest features and how they may affect your accounts.

To further enhance the value of the series, I’m hoping that you’ll use the comments section for any questions, omissions found or suggestions for improvement you may have!

 
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