Not Keyword Selection

Pardon?

What I’m saying is that you should not select keywords solely on their ability to convert. You should get rid of keywords that have got a 0% conversion rate after a reasonable number of clicks, but if your campaign has an overall conversion rate of 5%, then getting rid of a keyword with a 3% conversion rate may not be in your best interests.

Remember, the objective is to maximise profits, and improving your conversion rate is merely a way to do that.

There are two situations to consider here – either you are spending your full daily budget or you aren’t.

If you aren’t then clearly, any keyword that is making you money should be kept, and any that isn’t should be optimised (and removed if it can’t be made profitable).

If you are, then you should always look at the keywords that generate the lowest ROI, and either remove them, or make them more profitable (see later). These are not necessarily the ones with the lowest conversion rate.

Suppose that you’ve got two keywords, [leather chair] and [reclining chair].

Their performance figures are as follows:

Leather Chair

Impressions: 2,500
Clicks: 100
Sales: 10
Cost Per Click: £2
Profit Per Sale: £30.00

Total Cost = 100 * £2 = £200
Total Income = 10 * £30 = £300
Total Profit = £100
ROI = 100/200 = 50%

Reclining Chair

Impressions: 4000
Clicks: 200
Sales: 10
Cost Per Click: £1.00
Profit Per Sale: £30.00
Total Cost = 200 * £1 = £200
Total Income = 10 * £30 = £300
Total Profit = £100
ROI = 100/200 = 50%

The first keyword has a conversion rate of 10%, the second 5%. And yet both make the same profit from the same level of spend. So, where possible, you’ve got to do the calculation, and base your decisions on which keywords make the most money per pound of spend, if your budget is restrictive.

Of course, if a keyword is getting no conversions at all, then it can’t make money. Just make sure that you give it time. If a keyword has a profit per sale of £500, and a cost per click of £0.50 you only need a 0.1% conversion rate to be profitable, so don’t panic if you’ve got no conversions after 100 clicks…

Page last updated by Steve Baker on May 22, 2009 at 11:10 am.

4

Need more professional advice? Contact our agency experts now!

Back To Top ⇑

4 Responses to “Not Keyword Selection”

  1. Search Analyst

    As a search marketing professional, this is the most comprehensive and accurate guide I’ve read on Adwords. The only suggestion I can think of is that you might do a section (or five!) on Adwords Editor. The platform is so much easier to work in then Adwords itself.

  2. Steve Baker

    Thanks Search Analyst.

    Very good point about the Adwords Editor tool.

    Expect to see one in the next couple of months.

  3. Gary Gallo

    This is a great set of articles and the best new users guide to adwords that I have found. Only one thing that seems wrong. In the leather chair keyword example in the “not keyword” section It says that the cost per click is .30, but then says the total cost is 100 X 2 = 200. Shouldn’t the cost be 100 X .30 or 30?Making total profit 300 – 30 = 270? So ROI would be 270/30 = 900%. I’m new at this, so please tell me if I am missing something.
    Thanks, Gary

  4. Steve Baker

    Hi Gary,

    Thanks for spotting the ‘deliberate’ mistake. I’ve corrected the typo now…

Back To Top ⇑

Comment on 'Not Keyword Selection'

Comments, questions and feedback are all welcome. Each submission is read and replied to by one of our Adwords professionals.





Looking for professional Adwords consultation or advice? Contact us today to speak to one of our experts.