Whether you’re in financial services, SaaS or hospitality, chances are you want to increase revenue. And, this will happen by getting more people to exchange money with you for goods or services.
But, what happens before that exchange of money? A customer makes a deposit into an investment account or a prospect requests a demo or makes a reservation. Okay, good. But, what happens before that?
Asking these questions is how you begin to map the buyer’s journey.
What’s that got to do with PPC management you may be asking. Once you know the path a prospect takes to become a customer, you can model your AdWords campaign optimization to progress along this same journey. Let me explain.
Step 1: Map the buyer’s journey
In the simplest of terms, the buyer’s journey maps the path from point A to point B and all the milestones in-between. Point A will depend on who you are targeting and their level of awareness of your brand or product.
If you’re launching in a new market, your target audience will have little awareness of your brand (that’s point A). You’re ultimate goal is to get them to buy your service (that’s point B). But, before they buy your service, they’ll first need to be aware of it (that’s a milestone or what I’ll refer to as a micro conversion). There will be several micro conversions between point A and B.
To illustrate, let’s say you own a software company that’s launching a new service. To figure out your buyer’s journey, we will work backwards from your ultimate destination (i.e. point B) to where your target audience begins:
So, on our example buyer’s journey, the first micro conversion is to have the user visit your website. There could be several other touch points that lead to that first visit. Most likely, awareness-building tactics, such as streaming audio or video, social media, or PR would generate those visits.
For paid search marketing, we’ll focus on the following micro conversions:
- Website visit
- Requests information
- Requests a demo
- Free trial sign-up
- Buys software
Before you begin, calculate the value of each conversion
A big part of optimization—and one that is often overlooked—is knowing how much each conversion is worth. This is especially true for paid media campaigns. If you’re going to be spending advertising dollars, you’ll want to be able to know the return on your advertising spend (ROAS).
Just like with our buyer’s journey, we’ll start at the end—the sale. How much is your average sale? You start with the amount and work back using conversion rates. So, you’ll need to gather a little conversion data.
For example, let’s say your average software subscription is $1,200 per year, and one out of every 5 people that sign-up for a free trial end up buying the software. That’s a conversion rate of 20%. So, a free trial sign-up is worth $240. ($1,200 x 20% = $240).
One out of every 10 people that request a demo buy the software. That’s a conversion rate of 10%, which means demo requests are worth $120. You follow these same steps for each micro conversion to establish an average conversion value.
Say in our software example, we end up with these conversion values:
These values may change slightly after you’ve gathered more data and optimized your campaigns.
Step 2: DADA loop: Data, analysis, decision, action
AdWords campaign optimization is essentially a series of DADA loops. DADA stands for data, analysis, decision, action. This is a decision model used by military and intelligence officers. The process is pretty self-explanatory: you gather data, analyze it to gain insights, decide the best course of action based on the analysis and then take action.
With PPC optimization, you proceed from one micro conversion to the next, optimizing along with way by using a series of DADA loops.
Initially, you optimize for website visits. Here we focus on eliminating irrelevant traffic and gaining insights about which keywords and ad copy convert.
Optimizing for your first micro conversion will take several DADA loops and may take 1-2 months (depending on the amount of data you’ve been able to gather and analyze). Then, you’ll move on to your next micro conversion: Request information. This micro conversion could take many forms: a content download, a contact form submission or a newsletter signup.
You will already have some data related to this micro conversion. Now, you just need to put it through a series of DADA loops like you did with the data related to generating website visits. For this micro conversion, you will begin to narrow your focus to those website visits that generate this action. You’ll use this information to optimize by your budget allocations, further refine your campaigns and begin to evaluate your landing pages with conversion in mind.
Why are you talking to me about my landing page design?
You’ve optimized for conversions and fine-tuned your PPC campaigns. Your CPA (cost per acquisition) has stabilized, and you’re wondering what to do next. That’s when your media buyer starts talking about your website. What gives?
Your website and, specifically, your campaign landing pages play a key role in converting visitors. Ideally, you would have a web designer and creative team update your landing pages with an eye for conversion rate optimization before you launch your campaigns. But, that doesn’t or can’t always happen.
Landing page design will come up at some point. Paid search marketing serves to get relevant visitors to your website, after that the website has to guide the visitor to the final destination. A lot goes into designing a landing page for conversion—more than we can cover here.
Just know that AdWords can help you with testing your landing pages too (try using AdWords Campaign Experiments). Landing page tests offer more data to feed into your DADA loops. What does this new data tell us? How can landing page data feed into our campaign strategy?
Gather the data, analyze it and decide how to use it to further optimize your campaigns. Then, act. Optimizing paid search campaigns is an ongoing process that requires a flexible and data-driven approach.
Step 3: Go further by integrating sales data
By now, you might be asking, “When are we going to get to the final destination—the sale?” Good question. Ultimately, we are optimizing for sales (that exchange of money) and not conversions (exchange of data).
Now, is a good time to take another look at costs. As you move your optimization efforts to focus further down the buyer’s journey, you will most likely see a shift in your metrics.
Why is my average CPC going up?
As you begin to make changes to optimize for a conversion further down the buyer’s journey, you may notice your metrics shift. Maybe you had optimized for visits with an average CPC of $0.93. Now that you’re optimizing for information requests, you notice your average CPC increase to $1.01. Don’t fret.
Remember earlier when we calculated the average conversion value for each of our micro conversions? The value of a website visit was lower than that of an information request, right? It follows that as we optimize for visits that convert, our CPC will go up. But that’s okay, we’re still getting a great ROAS.
Let’s say your information request landing page converts at a rate of 4.3%, and we already know that 2.5% of information request leads eventually purchase a software subscription. That means that you’ll need approximately 930 visits to this landing page to generate 40 leads that will ultimately result in 1 customer.
930 visits x 4.3% visit-to-lead conversion rate x 2.5% lead-to-customer conversion rate
= 1 customer
With an average CPC of $1.01, those visits will cost you $939.
(930 visits x $1.01 avg. CPC = $939)
The resulting conversions are worth $1,200
(40 conversions x $30 conversion value = $1,200)
That gives you a return on your advertising spend of 127.80%.
($1,200 revenue from ads / $939 cost of ad spend = 127.80% ROAS)
Each time you shift your focus to optimizing for a further-down-the-funnel conversion, you should also adjust the conversion value that you’re working with. Bottom-of-the-funnel (BOF) conversions are of more value than top-of-the-funnel (TOF) conversions. So, expect to pay more for them.
Optimizing for the sale
So, now that we understand how the metrics and costs my shift with a change in optimization strategy, let’s talk about our objectives. In our software example, our ultimate objective is to get prospective customers to buy your service (that’s point B in the buyer’s journey).
To optimize for sales, we’re gonna need more data to feed our DADA loops.
Which keyword is performing better?
At some point in your PPC campaign management, you’ll start asking questions that cannot be answered by AdWords data alone. After all, the buyer’s journey doesn’t end with a click on a paid search ad.
Which keyword is performing better?
To understand the whole buyer’s journey and how PPC fits in, you’ll need to incorporate sales tracking data from your CRM. It’s not enough to know which Ad Groups or keywords generate the most conversions. You need to understand how well the leads generated by those keywords convert to sales, and eventually tie leads to profitability (but that’s for another blog post).