Determine Customer Value
While I agree that this is essential, the way that Google suggests you determine the value of a customer gained through AdWords seems a bit… inflated. For example, here is their breakdown of a fictional company’s determination of the value of a customer.
Basically, we’re making a LOT of assumptions here. If you’ve got data that backs up that word of mouth and repeat purchases do commonly result from customers gained through AdWords, this is all well and good. But if you’ve got a fairly new account, I’d tend towards not assuming a large amount of profit resulting from customers to prevent overbidding. Additionally, you should be revising the value of customers on a regular basis, even if it’s just yearly, to ensure that you’re bidding appropriately.
Putting Your Ads To The Test
Another area that I agree with in general but may differ from Google’s suggested approach in general is testing ads. Their advice is to run huge account wide tests and data mine for trends and results. While this may be a good idea for someone with a large account and a number of keywords, since they won’t have time to deal with the minutiae of a million tests, I don’t know that large scale testing fits all account sizes.
Specific to testing, Google urges you to:
- Give tests time to produce results
- Ensure that when you’re looking at results you take possible noise into consideration (e.g. holidays and sales)
- Look at overall profits, not just individual keyword performance
Related to keeping an eye on profits, Google points out that you may want to keep keywords in that lead to sales later on, even if they don’t seem directly related to your company. Essentially, if someone is at the top of a sales funnel, they may still end up eventually purchasing something from you, even if they didn’t land on your site as a result of a directly converting ad.
Google also points out the value of using automated bids to do the grunt work for you. In addition to saving you time, automated bids can, well, automatically determine when to bid up based on certain circumstances. For example, a customer in California may be more likely to make a larger purchase than one from Illinois, so you’d want to bid accordingly.
Using Flexible Bid Strategies allows you to adjust according to time of day, geographic location or with a focus on conversions. However, as ever, I am always cautious about just letting Google run wild with my money, so I’d keep a close eye on the results of automatic bidding to ensure you’re getting the results you want, not necessarily the ones Google wants.