Improve your return-on-investment (ROI)
Now that you understand what ROI is, how to calculate it, and how important it is to your business, it's time we talk about how you can improve it. In general, you'll want to focus on improving your conversion potential through attracting the right customers to your business. We'll outline some basic strategies and also share very specific tips about keywords, ad text, and bidding and budgeting.
Basic ways to improve your ROI
If you find that a large percentage of visitors have clicked your ad but haven't made a purchase or performed an action you'd like them to take, the following steps may help you increase your conversions and ROI:
- Use a landing page that's most relevant to your ad
When customers click your ad, they expect to see a webpage highlighting the exact product, deal, or information described in your ad. If they don't find what's promised as soon as they arrive, they're more likely to leave your site without making a purchase or signing up for your service. Be sure that any promotions and discounts mentioned in your ad text are visible on your landing page. Check out more landing page tips.
- Make sure your website is easy to navigate
Evaluate your site's overall design, layout, and function. If people can't navigate through your site easily, they're less likely to stick around and make a purchase.
- Use highly relevant keywords and ad text
If you use general keywords and ad text, a customer may arrive at your site expecting to find something that you don't offer. Highly targeted keywords and ad text help ensure that your ads show only on searches relevant to your product or service. Learn how to create targeted ads and keywords.
- Adjust your bids
The bottom line for any keyword is how much value it generates compared to its cost. For keywords that show a profit, increase the bid to increase exposure and generate more traffic. For keywords that aren't profitable, decrease the bids to lower your costs or even consider removing those keywords. Learn about bidding strategically and setting bid adjustments.
- Add successful sites as placements
View your Placement Performance Report to find placements where your ads are earning the most clicks. If you find that your ad converts particularly well on a given website, try adding that website to your ad group as a placement, with a higher placement bid to help your ad appear on that site more often.
If you sell cameras, but not underwater cameras, you can add the negative keyword underwater to make sure your ad doesn't show to someone searching for underwater cameras. Because that person seeks something you don't offer, he isn't likely to make a purchase from you. By filtering out those unwanted impressions, negative keywords can help you reach the most appropriate prospects, reduce your costs, and increase your return on investment.
You can use negative keywords to filter out certain searches for a number of reasons:
When constructing a negative keyword list, try to be as exhaustive as possible. Remember that not using negative keywords can mean that your ads show to customers who aren't interested in your business or service. However, be careful that none of your negative keywords overlap with your regular keywords, since this will cause your ad not to show.
It's also important to remember that over-using negative keywords can result in a very limited advertising audience. Bottom line: Consider all your potential keywords carefully, including negative keywords, before you add them to your account.
Tool: The Keyword Planner and search terms report are two great ways to find potential negative keywords for your ad group.
Here are a few basic tools to help you identify which keywords are in need of optimization. Once you identify low performing keywords, optimize or replace them with more relevant alternatives.
- Use negative keywords to eliminate unwanted clicks
Negative keywords are a core component of a successful keyword list. A negative keyword prevents your ad from showing when that word or phrase is included in a search query.
- Filter out different products or services: A real estate agent who is focused on selling homes may wish to include not only the negative keywords rent and renting, but also use Keyword Planner to find ideas for variations to use as additional negative keywords, such as rents, rental, and rentals.
- Filter out irrelevant searches: An advertiser may discover that the name of one of his products also happens to be the name of a musical group. In this case, it's a good idea to include negative keywords such as music, band, concert, ticket, lyric, album, mp3, as well as the plural versions of these words.
- Filter out non-buyers: A seller of digital cameras may want to filter out searches by people who are researching cameras but who aren't ready to buy yet. The seller could add negative keywords like review, rate, rating, compare, comparing, comparison, as well as the plural versions of these words.
- Remove duplicate keywords
It's good practice to avoid having duplicate keywords in your account. Google shows only one ad per advertiser on a particular keyword, so there's no need to include the same keywords in different ad groups or campaigns.
Make sure you use a keyword only once throughout your whole account, including variations on the same broad-match keyword. For example, the broad-matched keywords red car and car red are duplicates and will compete against each other. Since the better performing keyword will trigger your ad more often, remove the duplicate that performs worse.
- Optimize low-performing keywords
It's essential to regularly review your keywords to ensure that they're all performing well and providing you with a good ROI. If a keyword is not directly related to your business, website, and ad text, it'll trigger irrelevant impressions and clicks that are not likely to convert into actions you care about like purchases or signups.
Moreover, irrelevant keywords negatively influence the position of your ad and, as a consequence, your overall campaign performance. Here are some key measurements to look for to identify whether a keyword is performing well or not:
- Clickthrough Rate: To get an immediate idea of how well a campaign is doing, check the clickthrough rate (CTR) -- how often people click your ad after seeing it. As a rule of thumb, a CTR under 1 percent indicates that your ads are not targeted to a relevant audience. If you find that your CTR is low, we suggest optimizing your account per our Optimization Tips.
- First Page Bids: Another way to evaluate the effectiveness of a keyword-targeted campaign is to check your keywords' first page bid estimates. Low bid estimates typically indicate that your ads are performing well, while high bid estimates can indicate that your ads are not as relevant as they could be after optimization.
- ROI: To measure your advertising ROI, you'll need to get data from tools like our free conversion tracking tool or Google Analytics.
- Keyword diagnosis: Performing a keyword diagnosis will give you a detailed view of each keyword's Quality Score along with tips for improvement. To diagnose your keywords, hover over the speech bubble icon next to the status for any keyword in the Keywords tab. You'll see a help bubble appear with information. You can also select Diagnose keywords from the More Actions drop-down button to diagnose multiple keywords at once and set parameters for the diagnosis. Learn more about keyword diagnosis.
- Conversion Tracking: An effective way to track your results is to implement AdWords conversion tracking. This is an easy way to see precisely which clicks (and which keywords) are leading to sales or other desirable actions.
- Add a call-to-action to your ads to encourage conversions
Use a strong call-to-action verb (such as "buy," "sell," or "sign up") in your ads whenever you can to tell potential customers what they can expect to do on your site. For example, calls-to-action such as "Buy now!," "Sign up today," or "Order easily online" encourage customers to take the action you value most once they reach your landing page.
A clear call-to-action is especially important if your goal is to maximize your ROI. Guide customers to what action they should take once they reach your site (such as "Buy flowers for Mom!"). This makes your ad feel actionable and suggests to customers what they can accomplish by visiting your website. The call-to-action should reflect the action that you consider to be a conversion, whether it's a sign-up, a request for more information, or an actual sale.
- Understand the buying cycle
To maximize your ROI, try to understand what stage within the buying cycle a customer might be in: the awareness stage, the research and comparison stage, or the buying stage.
Use keywords to separate the serious buyers from the online equivalent of window shoppers. For instance, customers searching with terms like "reviews" or "ratings" are probably still researching the product and might be less likely to make a purchase at that stage. By understanding the buying cycle for your specific product or service, you can filter out such customers by including those words as negative keywords. To entice serious buyers, you might try using keywords with conversion-related words like "buy," "purchase," or "order."
Ad text can also help you reach customers in the right stage. Call-to-action phrases like "Buy Now!" and "Order Easily Online" encourage customers to take the action you value most once they reach your landing page. The call-to-action should reflect the action that you consider a conversion, whether that's a sign-up, a request for more information, or an actual sale. Conversion-related call-to-actions will set the right expectation for customers in various stages of the buying cycle. For example, if your ad offers a call-to-action phrase like "Buy today for 10% off," you'll likely avoid having to pay for clicks from customers who aren't interested in buying your product.
Here are some of the tool's key benefits:
To use Conversion Optimizer, you must have set up conversion tracking and have received at least 15 conversions in the last 30 days.
- Experiment with bids and budgets to see what works
Test different bid amounts and budgets and measure how effective the change is, test bids for profitability and ROI, and test budgets for ad exposure.
We suggest adjusting amounts in small increments to allow your keywords to accrue conversion statistics and performance data with the new settings. Allow at least a few days between changes so you'll have enough performance data to make an informed decision. In addition, your daily costs, profits, and sales might rise and fall with regular fluctuations in search volume. Therefore, you'll want to re-evaluate these amounts regularly to make sure your campaigns are continually effective.
Learn about setting bid adjustments to gain more control over when and where your ad is shown.
Through testing and measuring, you should be able find the ideal range where you're most effectively reaching your advertising goals.
- Allocate your budget according to performance
An important aspect of budgeting is making sure you have appropriate budgets for each campaign. For keywords that are profitable, you probably want to show them all the time. To do this, the campaign's budget needs to be sufficiently high so the campaign isn't limited by budget.
If you'd like certain keywords to receive maximum traffic, make sure they're in campaigns whose daily spend isn't reaching or exceeding its daily budget consistently. If your campaign often meets its budget, there's a chance that only your high-traffic keywords will trigger your ads, overshadowing other keywords that might turn out to be more profitable.
Try to prioritize your products or services and then match budgets to each campaign based on priority. If your overall advertising budget is limited, find budget from campaigns that have unused budget or that don't convert well, then reallocate that budget to high performing campaigns that are limited by budget. If a campaign is not limited by budget (it isn't consistently meeting its budget), then allocating more budget to it will have little or no effect on that campaign.
- Adjust your keyword bids
With conversion data, you'll better understand how profitable your keywords are with their current bids and can identify which keywords could be more successful with adjusted bids.
For keywords that show a profit (such as having high conversion rate and low costs), you might try increasing their maximum cost-per-click (CPC) bids. While costs may increase, your ad position could rise and provide more ad exposure, potentially increasing your conversion rate and ROI. In other cases, it may make sense to lower the bid for a keyword even if the keyword is profitable. By lowering the bid, you'll lower the average amount paid, which may increase the profit margin for that keyword.
For keywords that aren't profitable (such as having a low conversion rate and high costs), you might try decreasing their bids to lower your costs. A lower bid is likely to decrease the keyword's average position, the number of impressions and clicks it receives, and as a result, the cost it incurs. Not only can this strategy improve your ROI on low-performing keywords, but in some cases, it can also free up part of your budget so you can invest in more valuable keywords.
- Use Conversion Optimizer to get more conversions at a lower cost
Tool: Use the Conversion Optimizer to help get more conversions at a lower cost. This tool uses conversion tracking data to get you more conversions (like sales, leads, and signups) at a lower cost. You set the maximum cost-per-acquisition (CPA) you want to pay for a sale or lead, and the tool adjusts your CPC bids to get you as many profitable clicks as possible.
- Increases ROI: Conversion Optimizer predicts, in real-time, which clicks are likely to lead to a conversion and aims to spend only on clicks that are profitable. You minimize unprofitable spend and maximize your investment on keywords that produce results.
- Saves time: Conversion Optimizer automatically adjusts CPC bids in each ad auction, on both Search and Content Networks, when necessary to help optimize your ROI. This frees up your time to focus on more strategic efforts, such as optimizing campaigns or analyzing your website's effectiveness.
- It's free: Other bid management tools can be expensive, with monthly fees. Conversion Optimizer is free to use with AdWords and easy to set up. Just navigate to the bidding options page of your campaign, choose your maximum CPA, and enable the feature.
- Use ad scheduling to automatically change your bids throughout the day
Tool: Ad scheduling includes an advanced setting which lets you adjust the pricing for your ads during certain time periods. Use the bid adjustment feature of ad scheduling to automatically take these actions:
- Increase your CPC bids by a certain percentage on days or times of day that are most profitable for you. For example, if you find that your ads get the best results before noon, you can set your bids higher during that timeframe to try and get more impressions and clicks.
- Decrease your CPC bids on days or times of day when appearing in a high position doesn't result in profitable clicks.
You can choose to raise your CPC by 50 percent (therefore selecting 150 percent in the bid box) between 9 a.m. and 5 p.m. if you know this is the peak period when customers you target search for your product and tend to convert. Then decrease by 30 percent (selecting 70 percent in the bid box) between 5 p.m. and 9 a.m. if you notice that traffic or ROI dips during this period.