I recently mentioned creating high-performance ad campaigns in Google Ads (the ad platform formerly known as AdWords) while talking about identifying under-performing keywords in Google Ads campaigns. In that article, I discussed how you can determine which keywords were underperforming. To create a high-performance campaign, we start with the same data.
- Download your keyword report from Google Ads making sure to collect the Conversions, Cost / Conv., and your conversion rate. I like a long(ish) date range for this. At least 90 days or enough to have most of your keywords have several hundred clicks.
- Copy this data set into a spreadsheet and format as a table.
(The details of how to do this are explained in the article linked above)
Identifying Your Goals
It’s hard to believe, but I still find Ad accounts almost every week with no goals defined and no target metrics. Without this information, there’s no way you can know if your campaigns are profitable.
While there are a lot of metrics we can choose from, conversion rates, number of clicks, number of conversions, cost per conversion, and several others, for your high-performance campaigns, we need to establish which one is the most important to this campaign. I prefer to use cost per conversion since this leads directly to profit, and the whole point of being in business is profit. Without that, you won’t be working for yourself for very long.
Determine Your Cost per Conversion Target
The easiest way to determine your cost per conversion target is to figure out your ‘real’ profit for what you are selling, whether it’s a digital download, a training class, the latest in floppy taco recipes, or a physical product, the process is generally the same.
The sale price of the product minus the cost of the product yields your gross profit. If your $75 carbon fibre spatula costs you $18 to acquire, your net profit is $57. This is where most people stop, and why they lose money. There are still other costs that are not considered here. The cost of the website, taxes, paying for marketing tools, and additional labor all need to be accounted for. I’ve found that in most cases, 30% is a safe number here. This turns our $57 gross profit into $39.90 net profit. ($57 x .7).
Define “High Performance”
The next step is to define just what “high-performance” means to you. Some people think that doubling your money is enough. We want to be able to give this campaign an unlimited budget, so I would consider any conversion that gives you a 4x on your ad spend, or more, a high-performance keyword. In our case study, this means that we can pay up to $10 per conversion on our product. ($39.90/4) In the end, this definition is something that you need to decide for yourself or your client and can be anything you want, as long as it’s high enough.
Selecting the Right Keywords and Phrases
We start with our keyword list and immediately remove all of the keywords with zero conversion.
The next step is to remove any keywords that do not make our target of 4x return on ad spend. In this particular case, the high-performance keyword target for this client is $50 per conversion. We then sort the spreadsheet again and eliminate any keywords with a cost/conv. over $50.
This leaves us with a short list. I automatically remove any keywords with just one conversion, there is not enough data to say if this one works or not. I also keep the keyword that is just outside of our target price because it is our highest converting term in this short list. This leaves us with a keyword list with just 6 terms in it.
Creating Your New Campaign
We now need to create a new campaign using only these keywords set to “Exact Match”. I also copy the highest performing ads from the campaigns that these keywords came from. If we’re very lucky, these keywords will lend themselves to creating a Dynamic Keyword Insertion ad. Next, we set the CPC at double, or more, of the average CPC and we set the daily campaign budget to an amount that can never run out. This is the part that can scare a client. Unlimited budgets can become very expensive if they don’t convert, but this campaign should convert at a rate so high they should be thrilled to spend money on it.
This means that we still need to keep a very close eye on things. At least for a while.
Warning: Google recently changed the meaning of “Exact Match” to include other phrases that they think are ‘exact enough’ to still be offered. You need to be very proactive at turning these into negative keywords as fast as you can. For the first few weeks, I may check the search terms every few days just to be sure.
Finally, be sure that you pause those keywords in the Ad Groups that you took them from. It is easy to forget where they came from and Google may suggest that you turn off the wrong ones.
Having high performing keywords in your ad groups can do wonders for making your groups look profitable. But, pulling those terms out and placing them in their own campaign allows you the freedom to really hammer those terms with little fear of burning up your budget on terms that may not convert very well. Take the time to study your metrics and use that information to refine your ads in a way that allows you the freedom to grow quickly and profitably.