Recharge Your PPC Profitability: 5 Ways to Diagnose & Treat a Paid Search Slump

profit-graphEvery so often, after having worked on an account for several months (or years) with successful results, there can be a plateauing or declining period. Core KPIs just fluctuate without a seeming trend, profits slump and it becomes an uphill battle simply to return to the base numbers of the past.

You’re frustrated. Management is worried. Nothing seems to be working and you’re possibly considering making sacrifices to the Google gods in hope of salvation.

You don’t need to be a master diagnostician like Dr. House to solve the issue; taking these five key steps will allow you to breathe new life into your account. Even if you aren't necessarily seeing a dip in profits, proactively performing these steps will help your account operate at peak performance.

Go Macro

Separating out the search network and display network, gain a clear understanding of the big picture by looking at the macro trends across each of them. This top-level overview of performance will provide the best roadmap for problem-solving.

First, look at the totals for each network as a whole, month over month, for the past 12 months. This will give you the best insights into how your core KPIs such as click-through rate (CTR), conversion rate (CR) and cost per conversion (CPA) have been trending.

Chances are high that you will immediately spot an issue such as a slow, but clear, decline in any of them.

For example, a slow decline in conversion rates may be less obvious when you are working on the account month to month; but looking at the last 12 months, you can see how big the dip really has been. Alternatively, response rates may be consistent but you’ll notice a decline in the number of impressions you receive per month, which could mean increased competition or declining impression share reducing your order volume. You can now easily glean the problem areas that need improvement to help you pick up the pace again.

To do this, pull your data from AdWords and organize it in an Excel sheet with the following columns:

  • Month
  • # of Days in the Month
  • Campaign Name
  • Total Monthly Impressions
  • Total Monthly Clicks
  • Total Cost
  • Click-Through Rate (CTR)
  • Average Position
  • Average Cost Per Click (CPC)
  • Conversions
  • Cost per Conversion (CPA)
  • Conversion Rate (CR)
  • Profits

Then, to normalize the trends for months with differing numbers of days, and really compare apples to apples, add on:

  • Impressions per Day (Monthly impressions divided by # of Days in the Month)
  • Clicks per day
  • Orders per day
  • Profits per day

It could look like this:

organized-adwords-data

Next, drill a little further down by looking at a similar month–over–month analysis, but this time doing it for each of your campaigns in the search and display networks individually. This will allow you to quickly identify the problem children (i.e., the campaigns that have seen the biggest declines).

Now that you have identified which campaigns to work on and which metrics have been under–performing, you can quickly dig deeper into them to identify the solution.

Analyze Quality Score

As most PPC managers well know, quality score has a big impact on cost efficiencies as well as ad position. If you find CPCs and thus CPAs creeping up, chances are a large percentage of your impression volume is going to lower quality score keywords.

Regularly keeping track of your quality score is a good practice to consistently measure the health of your account.

You can either use a quality score monitoring tool such as Tenscores, or for a more detailed report with a greater degree of accuracy, use Excel and pivot tables to gain an understanding of weighted quality scores by campaign.

Using excel for this exercise is actually quite easy, and is explained perfectly by Brad Geddes, in this absolute must–watch video on how to identify AdWords quality score problems. A great watch for both beginners and intermediates, the video explains exactly how to download the data from AdWords and pivot it for your analysis. Geddes also shares some phenomenal insights into analyzing the data to determine the greatest opportunities for financial benefits and how to prioritize where to start.

Now that you know where the problems lie, you can take measures to improve quality score such as:

  • Separating out low-quality score keywords into their own ad groups.
  • Regrouping your ad groups into tighter themes with closely related ads.
  • Improving landing page load times.
  • Testing new ads that improve CTR (while keeping CR the same or higher as well for your bottom line).
  • Testing dynamic keyword insertion (DKI) to help improve CTRs.
  • Analyzing comparative indicators to find additional insights into optimizations you could make.

Back to the Basics

Every so often, especially when things aren’t running as well as they should, it’s good to go back to the start. Take a look at the basics and settings, since often in trying to work on more advanced tactics, the simpler items get missed, when in reality they could have a big impact.

  • Review your negative keywords list, to either add negative keywords to save costs or remove potentially damaging negative keywords that could be limiting you.
  • Review your placements report. Some managed placements could no longer be working as effectively as they once were, and there could be underperforming placements that should be excluded under the automatic placements.
  • Review your ad group set–up. Could your “all” search query report indicate that there is room for additional ad groups with more focused ads? Check to ensure all ads are running.
  • Check your campaign settings. The daily budget cap could be limiting you; perhaps the settings are targeting computers as well as mobile devices and tablets, which don’t convert as well with traditional landing pages and thus could be wasting money.
  • Check for any technical errors. Some landing pages might not be working, or perhaps the AdWords conversion pixel isn’t firing, which could be a huge problem if you use CPA bidding.

Analyze Your Bids

If you want to manage AdWords keeping the 80–20 rule in mind, then adjusting bids would fall well into the top 20 percent of things you could do to make an 80 percent impact. Run a report on the top 15 percent of your highest spend keywords — if the majority of them are unprofitable, then it’s time to review your bidding strategy.

Manual bidding, while providing a greater degree of control, can easily get cumbersome with large numbers of keywords. Switching to automated bidding is one of the quickest edits you can make, and the results can really pay off.

  • If your focus is on maximizing clicks, you can test automated bidding to maximize clicks, while letting Google know to stay within a CPC bid limit. Alternatively, you can try enhanced CPC bidding (as long as you have conversion tracking installed), which still works on manual bidding but will adjust your Max CPC bid on the chances of the ad converting.
  • If you have a clear understanding of your ideal CPA, or perhaps the maximum you’d like to pay for each conversion, then consider either target or max CPA bidding. CPA bidding works by using the historical data on a rolling past–30–day basis (with greater emphasis placed on most recent history), to enter you into auctions where and when you are most likely to gain a conversion. It adjusts factors such as your bids, times of day, as well as keywords and placements.
  • For the display network, consider testing the Display Campaign Optimizer (DCO). To use it, simply set a CPA and set up ads in the campaign. Google will do the rest of the work for you to choose different placements and either spend more on winning ones or cut losers and continuously look for additional placements to run. It’s a great way to expand your reach.

However, when using automated bidding be careful to:

  • Not change bids too frequently. Especially with CPA bidding the DCO, slower changes to bids work best. The system takes a couple of weeks to really settle in and figure out what works best, so if you must make bids, make them in smaller increments.
  • Keep an eye on response rates. If conversion rates decline, then you can see impression and order volume fall, as the system will bid lower in order to meet the goal CPAs set.

Analyze External Factors

If elements in the account are looking good but you’re still losing impression share or seeing costs rise, then external factors could be having an effect.

  • Competition: Has there been a new competitor? Are current competitors working heavily on their account and bidding up, thus causing you to lose clicks or perhaps your CPCs to rise? Are they offering a new promotion or deal? Keep a careful eye on your top AdWords competitors, and look for changes to their ads or positions. Use tools such as WhatRunsWhere.com to keep an eye on their display ads or SpyFu.com to track their keywords and text ads. Also check their landing pages frequently, to track any tests they may be running there.
  • Creative burnout: Even the most successful ad or landing page can lose its effectiveness over time. Simply, there comes the saturation point when the creative has just been there and done that, and is now past its peak. This is seen even more frequently with image ads on the display network. Carefully analyze the response rates over time and always be testing new creative that you can roll out to keep performance strong.
  • Other marketing channels: If the downturn is only in paid search then the problem can be fixed within AdWords. However, if several marketing channels are also experiencing downturns, then the company has a larger problem at hand. It could be symptomatic of a bigger issue such as an online reputation problem or an uncompetitive offer. Speak to other channel managers or the director of marketing to get to the root of the issue and jointly seek a solution.

Summary

Doing a thorough check and audit of the account is recommended on at least a quarterly basis to keep things running smoothly. When working on day–to–day tasks it’s easy to get lost in the trees, and looking at things from a big picture standpoint will help you more clearly see the proverbial forest and create an action plan to keep the profits flowing.

Have additional ideas? Please do share your thoughts in the comments below.

About the author

Purna Virji is the Director of Communications at Petplan, leading providers of pet insurance across North America, where she heads up SEO, content marketing, community building, branding, and PR.

With more than 8 years of inbound marketing multichannel experience, both in-house and agency, Purna specializes in SEO, PPC, social media, brand building, e-commerce, direct response advertising and web analytics.

Purna regularly travels across the country to speak at different marketing and search conferences, such as SMX, ETail, and Affiliate Summit and is also a member of the Vistage community.