Blindly chasing click-through-rates (CTR) could be negatively impacting your paid search account’s performance.
Conventional paid search wisdom dictates that higher CTR results in a lower cost-per-click (CPC), which will allow you to drive more traffic at a lower cost and hopefully reduce your cost-per-action (CPA). While for some clients, mainly brand clients, lower CPCs are the end goal of all search optimisations, the majority of clients measure search against an action, be it booking a holiday, opening a bank account, or something less ‘involved’, such as downloading a voucher or signing up to a newsletter. For these clients, CPC only tells half the story. Their CPA will be driven by the amount they pay per click (their CPCs) and the number of clicks it takes to get a conversion (their conversion rate).
What’s important to understand is that optimising to CPC can quite often not deliver the best CPA for your client’s business – that is to say, following widely published best practices does not necessarily deliver the best results for your client.
To explain this in a practical manner, let’s imagine a major airline running a DR campaign and bidding on their own brand terms. We know that for every 100 searches (using an identical search query), the more people that click on the client’s ad, the more relevant the search engines will presume them to be and, in time, the client will be rewarded with lower CPCs.
Now let’s take an (imaginary) look at those 100 searches. 10 could be people checking for flight arrival times to pick up friends or family. 20 could be existing customers looking to check-in online or choose a seat. Straight away almost one-third of the total available ‘clicks’ are not potential customers and will never convert, regardless of how good the landing page is.
The problem here is that despite 100 people searching on exactly the same keyword, there could be any number of intentions driving the searches. So how can you try to filter out the searchers who aren’t looking to purchase?
This is where you can implement a pre-qualification strategy to your ad copy. Instead of running with a branding message (integrated with offline communications, of course!) try removing the ‘official site’ type messaging and replacing it with acquisition focused ad copy. This approach has been proven to increase conversion rates, as those not searching with purchase intent will be actively discouraged from clicking on the ad.
The smart search marketeers amongst you will have already spotted the flaw with this plan – your CPCs will rise. As your CTR goes down (which is what you want – it isn’t called pre-qualification for no reason!) the search engines will start to see you as less relevant and will start to increase your CPCs.
If you run this test you will need to keep a close eye on both the percentage increase in conversion rate and the percentage increase in CPCs. For pre-qualification to be successful you will need to see your conversion rate increase more dramatically than your CPCs.
As with everything in paid search, different approaches will work for different clients, on different engines. In some cases the increase in conversion rate will more than make up for the increase in your CPCs and your CPA will fall. In others the rise in the CPC will grow faster than the increase in your conversion rate and your CPA will increase.
Either way, pre-qualification is something that every paid search manager should at least be thinking about.
Blindly chasing click-through-rates (CTR) could be negatively impacting your paid search account’s performance.
Conventional paid search wisdom dictates that higher CTR results in a lower cost-per-click (CPC), which will allow you to drive more traffic at a lower cost and hopefully reduce your cost-per-action (CPA). While for some clients, mainly brand clients, lower CPCs are the end goal of all search optimisations, the majority of clients measure search against an action, be it booking a holiday, opening a bank account, or something less ‘involved’, such as downloading a voucher or signing up to a newsletter. For these clients, CPC only tells half the story. Their CPA will be driven by the amount they pay per click (their CPCs) and the number of clicks it takes to get a conversion (their conversion rate).
What’s important to understand is that optimising to CPC can quite often not deliver the best CPA for your client’s business – that is to say, following widely published best practices does not necessarily deliver the best results for your client.
To explain this in a practical manner, let’s imagine a major airline running a DR campaign and bidding on their own brand terms. We know that for every 100 searches (using an identical search query), the more people that click on the client’s ad, the more relevant the search engines will presume them to be and, in time, the client will be rewarded with lower CPCs.
Now let’s take an (imaginary) look at those 100 searches. 10 could be people checking for flight arrival times to pick up friends or family. 20 could be existing customers looking to check-in online or choose a seat. Straight away almost one-third of the total available ‘clicks’ are not potential customers and will never convert, regardless of how good the landing page is.
The problem here is that despite 100 people searching on exactly the same keyword, there could be any number of intentions driving the searches. So how can you try to filter out the searchers who aren’t looking to purchase?
This is where you can implement a pre-qualification strategy to your ad copy. Instead of running with a branding message (integrated with offline communications, of course!) try removing the ‘official site’ type messaging and replacing it with acquisition focused ad copy. This approach has been proven to increase conversion rates, as those not searching with purchase intent will be actively discouraged from clicking on the ad.
The smart search marketeers amongst you will have already spotted the flaw with this plan – your CPCs will rise. As your CTR goes down (which is what you want – it isn’t called pre-qualification for no reason!) the search engines will start to see you as less relevant and will start to increase your CPCs.
If you run this test you will need to keep a close eye on both the percentage increase in conversion rate and the percentage increase in CPCs. For pre-qualification to be successful you will need to see your conversion rate increase more dramatically than your CPCs.
As with everything in paid search, different approaches will work for different clients, on different engines. In some cases the increase in conversion rate will more than make up for the increase in your CPCs and your CPA will fall. In others the rise in the CPC will grow faster than the increase in your conversion rate and your CPA will increase.
Either way, pre-qualification is something that every paid search manager should at least be thinking about.
Tagged as:
Conversion Rates,
CPA,
Paid Search Ad Copy,
Pre-Qualification
