How Not to Run a PPC Campaign, Inspired by eBay’s AdWords #Fail

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Earlier this week, the Harvard Business Review blog asked, “Did eBay Just Prove that Paid Search Ads Don’t Work?” Apparently the company turned off their AdWords ads in a third of their markets and found no appreciable loss in sales. Much in the same way that Ask Jeeves did back in 2005.  So the true questions; does that mean paid search doesn’t work?

In a word, no. I had to laugh at this news because eBay has always been a shining example of how not to run a PPC campaign. For years, SEM managers have snickered at their hopelessly inept use of dynamic keyword insertion, resulting in nonsensical ads suggesting you can buy babies, perpetual motion machines, and loneliness on eBay – cheap!

So, if you want to waste millions of dollars of marketing budget over a decade or so, here are four ways you too can tank your AdWords campaign and embarrass your brand!

Bid on 170 Million Keywords

I’m all for keyword expansion, but it’s possible that having 170 million keywords, as they disclose in the study, might not be the best strategy.

The whole point of keyword research is to determine a finite set of terms that:

a)     are relevant to your prospects and

b)     show some level of meaningful intent

Finding those targeted, relevant keywords is crucial to PPC success. Historically, eBay’s approach has been to bid on pretty much every keyword possible, with no targeting whatsoever:

ebay ppc

This can only lead to low click-through rates, low Quality Scores, high costs per click and very low conversion rates.

Use the Same Ad Text for Every Keyword

To make matters worse, eBay for years used generic text for every ad: variations on “Buy It Cheap On eBay,” “Shop on eBay and Save,” etc. This goes against every best practice of PPC ad writing. To maximize clicks and conversions, you need to:

  • Split keywords into very granular ad groups
  • Write specific, tailored ads for each ad group

Using generic ad creative that would work for any imaginable keyword is a sure way to tank your results.

Use DKI Indiscriminately

Dynamic keyword insertion is an ad technique that, used properly, can improve your ad CTR by dynamically inserting the user’s exact search query into your ad. Used improperly, it just results in total nonsense:

real ebay ppc

It looks like whoever was managing eBay’s AdWords account paid no attention to the search query report and the way ads were actually rendering on the SERPs.

Don’t Use Negative Keywords

Negative keywords are Google’s way of letting you filter out traffic that wouldn’t be useful to your business. When you set a negative keyword, you’re telling Google not to display your ad for those search terms. That way, if you sell kitty litter, you won’t get a bunch of clicks from schoolgirls looking for Hello Kitty merchandise.

Based on some of the terms that eBay was showing ads for, it’s clear that they didn’t have a handle on the power of negative keywords. I estimate that advertisers who don’t use negative keywords lose up to a third of their ad spend on worthless clicks that don’t drive business. No wonder eBay has decided that AdWords doesn’t work! But the problem isn’t AdWords, it’s the way they were (mis)using it.

If I had eBay’s huge budget to work with, I promise I could make paid search work for them. How about it, John Donahoe?

Larry Kim

Larry Kim

CTO and Founder at WordStream
Larry Kim founded WordStream in 2007. Today he serves as company CTO and is a contributor to both the product team and marketing teams. Larry... Read Full Bio
Larry Kim
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  • Vishal

    Hilarious way of burning your marketing budget, especially when you have all tracking tools available, and that also in an organization like eBay.
    Wondering what account manager was doing while managing the ad campaigns. Running ads for key phrases like Love, which has no relevance to business..

  • John Hughes

    To be fair to eBay, I just did a search on eBay UK for “loneliness” and there are 1,555 items :-p

    That said, I think all the points you make are fair.

    It is probably also not a good example for most businesses to compare a business that is in all practical senses a monopoly on auction-based buying and selling. How much PPC budget must eBay ‘waste’ on returning customers clicking brand-based ads? I say waste in the sense that the customer would have returned to eBay anyway, not that the PPC click has not contributed to revenue itself.

    eBay has an pretty good customer retention model, and this must skew PPC spend upwards compared to what would be spent simply prospecting new business. I don’t think that retention falls away much in eBay’s case when you remove paid search.

    For almost all other businesses, the marketplace is more competitive, and less brand loyal, and the PPC stage of retention is likely to be much more important than it should be for eBay.

    In other words, I think there are some good lessons to take from the study if you are eBay (including the ones made in this article) but I don’t agree they all apply to all or any other businesses as the circumstances are so different.

  • Although I agree with John that eBay is not a broad example to use, I think you have highlighted some very important points that can be applied to any PPC campaign. Thanks for sharing!

  • sam

    I just lol’d at the title. Can’t wait to read!

  • Jared

    The study suggests brand keywords are a waste of money for LARGE well-known brands with brand-loyal customers. The study also suggests that brand keywords are more effective for current customers that have 1-2 purchases within the past year (not brand-loyal but an occasional eBayer). The study didn’t imply that small businesses shouldn’t bid on brand keywords.

    I think many marketers think of brand keywords as “Brand Support / Brand Defense”. In verticals where it’s common to shop around and get multiple quotes from multiple local providers, it makes sense to bid on brand and competitors. There is no ‘brand loyalty’ in some industries – you buy the service once (could be very high ticket item) and you may never use that service again.

    Regarding negative keywords, eBay’s problem is that they sell everything. Someone might search for a microphone, land on eBay and buy a toaster. I agree 100% that negative keywords are a must for most advertisers. However, as long as relevant ads are being triggered by the right set of keywords, that’s what matters.

    The keywords the choose to bid on and the ad templates they chose to deploy are another question though.

  • Ebay definitely knows their stuff. This is a great posting about this and the inner workings.

    Thanks for sharing! Great information

    Divina :)>

  • Hi Larry,
    I agree with John and Erika that eBay is not a broad example to use, and choosing a keywords for the ads you have to be positive, using negative keywords that will pause your ad and you will not get the traffic as you wanted to be. As Jared mentioned about negative keywords, eBay search everything related or not….
    Thanks for sharing ! I really enjoyed 🙂