Search Marketing

5 Common AdWords Myths Absolutely Destroyed

#1 Myth: AdWords Is Media Placement

This is a misconception of ad agencies and clients who have done more media placement than pay per click. In media placement, you place your ad somewhere for a set fee, and that’s it. We can make analogies between that and pay per click, but it’s not the same.

If anything, AdWords is super-duper-granular media placement, because you place ads for keywords or on sites. However, the nature of the broad and phrase match types means your ad could show for a similar, not exact keyword. Expanded broad match means you could show up for a somewhat distantly related search. All of this has to be considered when creating the account structure and keywords. It’s not as neat and tidy as a single media placement.

Content network placements are dynamic as well. Your ad will show on relevant sites, and though you can exclude sites, you aren’t picking exactly which sites to show it on. Site-targeting allows you to place on specific sites, but see the next difference:

With AdWords, a variety of dynamic factors determine your ultimate spend. You can set a budget but you may not reach it, especially at first. You might find the click volume does not exist in your niche to hit your target budget. Or you may hit your budget easily and need to consider spending more after you’ve optimized for better ROI on that initial spend.

Ongoing optimization affects click volume and thus spend. The rich data you get back informs you how best to proceed next. This is better than just putting up an ad and hoping it works.

Along those lines, AdWords is better because it enables granular conversion tracking. Sure, you can track a media placement with a vanity URL and your web analytics package or with call tracking, but you can’t subdivide the readers or optimize the placement. In other words, the ROI you get from a media placement can’t be changed- but AdWords’ granular tracking allows you to shape, hone, optimize for better ROI.

If a media placement’s ROI is bad, you’re out of luck. With AdWords, you may be able to optimize it to an acceptable, if not awesome, level.

#2 Myth: AdWords Is An Auction

For some reason, even six years after AdWords changed the PPC auction model, some people still think winning at AdWords is all about bidding the highest cost per click (CPC). Since 2002, AdWords has been more sophisticated than the old Overture auction model. So keep in mind, if you talk like AdWords is an auction, you sound extremely out of touch.

The fact is, AdWords ads are positioned based on a variety of factors. Your bid is only one of those factors and not the most important one. I’ll explain what happens when you try to get a #1 position and don’t deserve it in the next myth. But your position is determined more by the relevance of your ad to the keyword search and by the click through rate (CTR) that ad receives than by your bid. Certainly, your bid has to be high enough, but that’s all. In reality, independent studies have shown that the CPC paid in different ad positions is not remarkably different, especially on the side of the search results page- in the end, it’s mainly your CTR that determines your position.

#3 Myth: That #1 Position Is Best

Some advertisers can’t get the misconception out of their head that #1 is best. Without debating whether the people who click on #1 ads are more qualified or just window shoppers (variety of results suggests to me it depends), let’s talk about results.

You should be looking at your key performance indicator (KPI), which is usually cost per lead (CPL) or return on ad spend (ROAS). If getting the number one position increases your CPC too much, then your CPL skyrockets and your ROAS plummets. And that’s bad.

Here’s what happened with one of our advertisers: They insisted we test getting them the #1 spot for two big “head” keyword in their niche. Their average CPC was about $2.34 and their average position was about 3.0. To get them to the #1 spot for these two keywords, we created two new campaigns- they wanted to spend $3,000 to test each. I did the only thing I could to boost position that artificially- I bid $100 per click. AdWords assured me the actual CPC would be the minimum needed to get those keywords (in that account with those ads) to the #1 position.

The results we got differed- one keyword was highly focused on the offering, the other was about the destination city. The focused keywords ended up costing more than $9.89 per click. So they received 330 visitors for that $3,000. The good news was that the conversion rate was high, so overall, their cost per lead was only about 5% higher than normal. However, for the more general keyword (that probably didn’t deserve to rank highly because of its lower relevance), their cost per lead was 150% higher, too high in fact to even finish the $3,000 experiment.

Lesson? Sometimes the #1 spot is worth it, but only for highly relevant keywords.

#4 Myth: Google is out to get me (or conspiring against me)

Stop watching Oliver Stone movies.

Yes, Google is naturally incentivized to make money from AdWords. It’s their number one money maker. Do they tip the scales their way? Sure, in some ways. But not so much that you can’t get incredibly good ROI from AdWords for the right offering, if you know what you’re doing.

Some warnings about what Google does in their favor:

  • The Campaign Optimizer is best at increasing click volume, not at giving you relevant keywords. Make sure you’re careful and use negative keywords along with the Search Query report to show your ad to more relevant searchers only.
  • The Conversion Optimizer has increased my CPL both times I’ve used it, and other AdWords managers have told me the same thing on newsgroup discussions. Because I don’t know how Google has shaped that algorithm, I can’t imagine what they’re doing wrong. I just know that manual, human conversion optimization outperforms theirs. And they make more money with it.
  • AdWords looks awesome and easy to the newcomer. Google does a great job selling people on trying it, but AdWords isn’t easy to profit at. It’s unfortunate that many people don’t realize they need a consultant, manager, or coach until they’ve already wasted hundreds or thousands of dollars doing AdWords wrong.
  • Even if you work with Google AdWords reps or their JumpStart program, you will have to focus on conversions metrics and conversion tracking yourself. You have to push them on that to get answers or tips.

#5 Myth: AdWords is too expensive

This is no more true for AdWords than for any advertising. If you sell pens, putting on a promotional pen parade probably won’t yield positive ROI. Placing an ad in a major national magazine probably doesn’t make sense if you have a low-margin local-only business. Some products in highly competitive niches have small margins and positive ROI is nearly impossible.

For example, if you start an online t-shirt store and your margin is $4 per sale, if it costs you $1 per click, you’d have to convert 25% of your PPC visitors just to break even. That’s a ridiculously high conversion rate you’re unlikely to achieve. AdWords ROI is just a matter of doing the math.

You can guess if PPC will make sense for you if you know your:

  • Margin per sale
  • The average CPC in your niche
  • Your site’s conversion rate

To check whether CPC is too high in your niche:

  • Break-even CPC = Margin * CR

To calculate the conversion rate you’d need to break even:

  • Break-even CR = Niche Avg CPC / Margin Per Sale

I know you want to profit, not just break even, but if it looks like you might be able to break even, factor in that you’ll be optimizing and ad testing to improve those results, and you have a shot at profiting on your PPC investment.

Brian Carter is the Director of PPC, SEO, and Social Media for Fuel Interactive and The Brandon Agency. He co-founded TweetROI which is an AdWords-like Twitter advertising service.

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Brian is author of The Like Economy: How Businesses Make Money With Facebook and Facebook Marketing: Leveraging Facebook's Features For Your Marketing Campaigns, How to Get More Fans on Facebook, and LinkedIn For Business: How Advertisers, Marketers and Salespeople get Leads, Sales and Profits from LinkedIn Brian has 12 years experience as a freelance consultant and digital marketing agency director. His hands-on business experience, cutting edge insights, background in improv and stand up comedy culminate in a keynote speaker, and social media trainer who leaves every audience not only entertained, but armed with powerful strategies and tactics.
c8aefda53a5c9e3de10e0468f9d99821 64 5 Common AdWords Myths Absolutely Destroyed

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18 thoughts on “5 Common AdWords Myths Absolutely Destroyed

  1. re: #4 I DO think Google, by default, stacks the deck against new, uninformed advertisers. Have you heard of anybody getting a good return using the default campaign setup? In the last year I even noticed even using broad match phrases started to be a problem.

    As just one example, we were bidding on – discount trumpet for sale – for a client who only sells lower end musical instruments. Google started, out of the blue, matching that ad for – trumpet – which ended up costing a lot and converting very little before we caught it. I had to switch most of our terms over to phrase matching in order to keep a decent ROI.

    It would be so much easier to approach new clients with the idea of making Adwords work better and make even more money than having to fight past the negative bias of costly mistakes made previously by others. But then the big G would have to wait longer to make more $$.

    Great post.

  2. Not surprising really.

    Despite it being in Googles best interest to ensure that advertisers get what they pay for (otherwise advertisers would not use Google again which would be a loss for Google) there is only so much Googles algorithms can do.

    You can see this clearly when using Google search.

    if you search for: discount trumptes
    or for: “discount trumpets”

    Which of those two do you think is most relevant to your search?

    So many forget that being specific (by using quotes to indicate phrases) return better matches.

    Google search also have AND OR abilities, and i believe exclusion as well. (so you could exclude “lessons” so you do not get anything related to trumpet lessons for example.

    I’ve never used AdWords but I’m sure it has similar abilities.

    If your company has a guy that is good at regular expressions (regular expressions is a popular but complex way for programmers to match/exclude and filter words), or if thee is none available, maybe see if there is someone good at database queries.

    Depending on your company you may find these guys in the programming department, or the webdesign/maintenance department.

    Grab them for a few hours to help the marketing dep with the word/phrase matching and exclusion. Ideally the marketing dep should have one guy/gal that knows this stuff in their own department though, but in a pinch the guys in programming or webdesign might get the job done.

  3. As an example you could either do:

    “discount trumpet”
    “discount trumpets”
    “discounts trumpet”
    “discounts trumpets”
    “trumpet discount”
    “trumpet discounts”
    “trumpets discount”
    “trumpets discounts”

    In Google search you could use the following search entry: “discount trumpet” OR “discount trumpets” OR “trumpet discount” OR “trumpets discounts” -”trumpet -lessons” -”trumpet -lesson”

    I’m assuming you can do something similar in AdWords too?

    i found this help on negative keywords, so it seems you can:
    http://adwords.google.com/support/bin/answer.py?answer=63235

    Also check out:
    https://adwords.google.com/select/KeywordToolExternal

    Make sure to click the “filter my results” so you can specify negative keywords.

    The keyword analysis you get afterward is brilliant.

    You also have the new http://www.google.com/sktool/
    Which is a search based keyword tool.

    And always remember, the magic trick is to ensure that your ads reach those who are actually interested in what you are advertising,
    otherwise you are just wasting your time and money as well as the the customers time.

    I just wish the email spammers had the same mentality as those who use AdWords, but alas I have to keep deleting emails about medicine written in russian (which I don’t understand at all), at least if it was written in norwegian and about vitamins I might be inclined to read it at least once. *laughs*

    Imagine if email spammers began doing things similar to how AdWords work, but using geolocation and isp information, or even OPT In lists with more details, spam would diminish dramatically and ROI for the “spammers” would increase to mind boggling highs.

    But to get back on topic, those two google tools above, use them, learn them, read the help/tips, it should ensure the money spent on AdWords ends up whee it counts, in ads infront of consumers that want what you advertise.

    As an advertiser your problem is getting your product to the consumers that want it (with minimal ad costs),
    and as a consumer the problem is finding the product you want (and that the right cost).

    It might also help to try and think like a consumer.
    “If I wanted a discount trumpet, how would I find this? Would I search Google? Would I know how to use google search phrases? Would I go to a site I know? Would I search Google for a music or trumpet site, or a music store site or a trumpet store site?”

    Where would “you” go? If you didn’t know where to find discount trumpets!

  4. @roger I think you might be missing the point of my comment. If I bid on discount trumpet as a broad match term Adwords will match my ad when somebody searches for just – trumpet.

    Since I included a qualifier in the term I am bidding on, it seems odd to match to the generic term.

  5. I just got off a chat about negative broad match…
    I had a click on “19 birthday idea” query, triggered by event ideas, broad match.

    That’s understandable, except that I had a negative broad match: 19th birthday ideas

    Chat suggested I add that as a negative as well as the negative broad did not “catch” it.

    What a double standard! Jeez.

  6. Very good list. Regarding myths #2, #3, and #4, don’t forget that the average position reported is of questionable value – and a lot of ‘positioning’ and ‘bidding’ decisions are being made based on it. (more here: http://www.clickequations.com/blog/2009/01/keyword-average-position/) While Google may not be out to get you, the important lesson is that they’re not trying to help you any more than they have to, and they’re not above sharing misleading or questionable data.

  7. One of the last points was the one that really stood out for me: “AdWords is just maths”. I find it amazing that business leaders – people who are ostensibly used to dealing with the bottom line – don’t seem to get that point. I took over a campaign last year where they were spending £3k a month and not even getting that back in sales, let alone profiting… this had gone on for months…

    The same company water down their washing up liquid!!

  8. Rob -

    I agree that Google’s algorithms are tipped in Google’s favor, but in the case of discount trumpets, initially, Google feels that someone searching for trumpets would also be interested in discount trumpets. To counter act that, Search Marketers use phrase matches, exact matches, and negative matches to refine what terms they are actually willing to pay for.

    Ideally, search marketers can use broad matches to get potential consumers in the conversion funnel, or reach consumers during the information search portion of the funnel, using phrase matches and exact matches to convert on consumers who are deeper in the funnel.

    But, yeah, sometimes the broad matches can get advertisers in trouble if we are focusing on strict KPI’s. But broad matches play a role in driving conversions, and should be incorporated into advertisers search portfolios.

  9. @richard I guess it’s the part about Google doing what it “feels” instead of what I want that bugs me.

    If I wanted to bid on plain ‘ole “trumpet” I would. By including a qualifier I am indicating that I want to attract a sub-section of the general market.

    I wouldn’t have a problem with G matching for “cheap trumpet” or “bargain trumpet” but matching for the term without a qualifier seems illogical to me. Plus there is no way to negative around it.

    IMHO broad match is only useful now for figuring out what phrase match terms to bid on. My strategy is to broad match initially, gather data, switch to phrase match and then periodically turn on broad match to make sure we aren’t missing any good terms.

    This has resulted in lower campaign cost and I am sure we have lost a few sales as a result of it but it is the only way I can get decent ROAS for a lot of my clients.

  10. Rob -

    I agree with using broad matches to gather data, if anything you are getting good learnings from the use of the broad match.

    I would recommend using phrase matches and exact matches (which I am sure you are doing through your learnings) for terms like cheap trumpet and bargain trumpet, but you are right. There is no way to really negative match trumpet.

    Good to hear that SEM has helped you provide your clients with decent ROAS.

  11. I go against google’s best practices by putting in broad phrase and exact match keywords into the camapaigns. This allows me to get more specific responses from the search query report.

    I would add another big misconception that smaller business owners have, and that is that they often have a small budget, but “must be on the first page” for high volume keywords. Instead, the best practice for them is to bid much lower and they will get 2 – 5 times the volume. I’ve done that for a number of clients…

    I recently posted a question on twitter about how to convince business owners of the problem, and got some great responses:
    http://www.linkedin.com/answers/marketing-sales/advertising-promotion/internet-marketing/MAR_ADP_INM/385962-10668879?browseIdx=1&sik=1231390521614&goback=.amq

    summarized at:
    http://www.liveinternetmarketing.com/articles/show/25

    Excuse the self promotion – I think it’s valuable to the community :)

  12. Adwords is really great for promoting your website and also affiliate links. i have just passed the Google Adwords Professional exam today and i am very happy.