Analyzing Adwords Shopping Campaign Viability

I'm sure we would have more clients if we just said yes to everyone--but that's just not me! 

Instead part of any new client relationship for me means really spending some time to understand if Adwords even could be a viable traffic source--given some basic assumptions--including that you can't win every baseball game by always hitting home runs. Or said another way, if everything has to go perfectly--well...it likely won't. 

Part One: Product and Keyword Research

The first part of our process looks at the products being sold and makes assumptions about target keywords--keywords that ideally have some unique specificity. In this particular case: Microfiber Yoga Towel

The important part being microfiber. In our experience three-word key phrases always before better than two words--higher CTR's, better stats all the way through the funnel. But the trade off for targeting can be volume. In this case, our keyword research tools are indicating good search volume--but also high competition and a relatively high CPC estimate for shopping ads--just under $1.00.

Keyword research using Keywordtool.io

Keyword research using Keywordtool.io

Shaping a Shopping Campaign

Shopping campaigns are different than normal search campaigns in a really important way. With normal campaigns we feed Adwords keywords as the primary way to determine to whom ads show. 

Shopping campaigns are set up quite differently. They use product data that's configured in a feed and looped through another platform called Google Merchant Center to get into Adwords. The actual words used in the product description are treated as the 'keywords' for targeting.

The implication is that by controlling words we use in the product title and description we can indirectly influence where the ads show. But where they don't show is equally as important--especially with shopping campaigns. So we go back to our keyword research tools, and in this case look for high volume search variations we want exclude. For example "how to wash microfiber yoga towel"

All Shopping Ads are Not Created Equal

As with normal search ads, there can be many components that make us a shopping ad--and it's up to you as the advertiser to get these additional bells and whistles set up. They're called Ad Extensions, and simply put--they help your ads occupy more real estate in the search results, differentiate them from your competition, and often result in increased CTR.

Anotomy of a Google Shopping PLA (Product Listing Ad)

Anotomy of a Google Shopping PLA (Product Listing Ad)

We're Good at Bringing Down CPC

Part of our advantage is that we get excellent efficiency on CPC's--by leveraging precise campaign set ups and about a million other tricks. If my research is telling me that the average CPC is going to be $1.00, I'm going to assume I can cut 30% out of that--maybe more. So for the rest of the model I'll use $0.70 for the CPC input. 

The Funnel

From there it's that ole' conversion funnel math problem. I'll make some assumptions, but should also be able to get real data from the client to understand this more explicitly. I'll start with 1% conversion-to-sale.

Combining that with a low-ticket item for sale I can already tell something's gotta give...

  • $500 spend @ $0.70/click = 714 clicks
  • 714 clicks @ 1% conversion to sale = 7 sales
  • 7 sales x $14.95 = $104

...not good.

Using the Model to Target Max Possible CPC

For the purpose of taking a second pass at the model, let's assume a 1.5% conversion-to-sale rate, and CPC at $0.45

  • $500 spend @ $0.45/click = 1,111 clicks
  • 1,111  clicks @ 1.5% conversion to sale = 16 sales
  • 16 sales x $14.95 = $239

How about $0.25/click...

  • $500 spend @ $0.25/click = 2,000 clicks
  • 2,000 clicks @ 1.5% conversion to sale = 30 sales
  • 30 sales x $14.95 = $448

Getting better...

That's How We Work a Sales Funnel

Through an ongoing and iterative dance between keyword targeting and bidding--that fits into a framework that we already know works. I bet we could buy "non slip microfiber yoga towel" for $0.25/click.

Lower CPC's for longer phrases

Lower CPC's for longer phrases

 
Notice CPC difference for key phrase variations

Notice CPC difference for key phrase variations

What's Next

Low cost items are tough to advertise, no doubt. It makes for a tight sales funnel. But while huge ROI's are a common goal with Adwords and search marketing in general--sometimes there are other factors to keep in mind. This particular client is actually after something totally different. Their goal is actually not short term ROI. Their main sales channel is actually Amazon. And their goals for PPC are simply to jumpstart new products listing on Amazon by expediting the review collections process. 

More reviews = way better organic performance on Amazon. And once they cross that bridge they'll be no more need to invest in the break-even proposition of Adwords. It's sort of like using Adwords and PPC as the kindling for a fire. 

Or maybe we'll just squeeze that CPC so tight on our PLA set up that it will challenge the Amazon organic. Not impossible : )