Optimizing Google Adwords


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Adapting SEM with internationel e-commerce rollout

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Optimizing Google Adwords

  1. 1. Lessons learned during 3071 days of Google Adwords pan-European advertising, whilst selling ink online!Dublin, April 13, 2011<br />
  2. 2. Questions<br />1. At what point did you think about internationalization? Was it part of your initial strategy when you set up the business or did you make that decision later on? <br />2. What was your key motivation as a business to expand into markets other than domestic? Which markets did you then choose and why?<br />3. When you decided to expand into a new market, what were the first obstacles you had to overcome? E.g. business internal, legal, country, language, advertising, etc. <br />4. How did Google help you to expand into new markets? What products did you use?<br />5. If you had a wish list, what type or product or service, would you like to be available to you from Google to help you expand into new markets faster and more efficiently?<br />
  3. 3. inkClub.com<br />A leading reseller of inkjet cartridges, toners and photo paper<br />Focusing on supply segments of consumer markets<br />Added replacement batteries, dustbags, light bulbs and merged sites in March 2011<br />Operating 9 product specific e-commerce sites<br />Turnover SEK 497 M (2010)<br />Profitable since foundation<br />>100 000 orders/month<br />>15 M unique visitors annually<br />Shipping to 15 markets in Europe<br />Client base of +3 million customers (90% B2C)<br />OEM and private label products<br />
  4. 4. Internationalization: inkClub present in 14 countries by 2003<br /><ul><li>As a niche player we had to expand swiftly – domestic market too limited.
  5. 5. Low barriers of entry as competition was low and marketing inexpensive.
  6. 6. Adwords constitutes the most realiable campaign generator since start and creating solid customer lifetime values from B2C transactions.
  7. 7. From self-service in 2003, limited Adwords support, and daily CPO check to rule-based and automatic campaign management driven by value per basket – and highly professional support.</li></li></ul><li>Obstacles per market<br />Consumer pricing and hence expectation differs between European markets<br />Don’t underestimate low margins due to B2C competition in Germany and the UK.<br />Shipping time – beat the competition!<br />Competition welcomes orders until 10 p.m. in the Netherlands with next-day delivery.<br />3PL, local warehouses, or single shipping point?<br />Consumer expectation – adapt to local demands<br />Belgium: credit collection attempts of overdue consumer invoices are also snail mailed to your current employer! Watch out!<br />Netherlands: VAT on a shipping charge is illegal.<br />Finland: the seller of a product is required to pay for return delivery/postage.<br />Retention methods: e-mail, postal, telephone? Different response rates for different methods per market!<br />Payment methods – don’t rely on credit cards only!<br />Open invoice is the king (depending on which credit risk per market you find acceptable).<br />Bank transfer (e.g. Ideal in the Netherlands).<br />Local credit and debit cards (CartaSi/Italy, Laser/Ireland, Dankort/Denmark).<br />Cheque is still used for consumer payments in France!<br />C.O.D.<br />Assortment - may be different than it ”should be”<br />Impact of private label in Germany and France:<br />E.g. Aldi and Carrefour may sell their private label printer which is still using OEM supplies<br />Local style, fashion, cultural heritage, holiday traditions.<br />
  8. 8. The importance of Google Adwords since 2002<br />More than 700 000 purchases and ticking.<br />Conversion rate per campaign (9 product specific sites): 0,10%-24,81%<br />Best contribution margin: Swiss customers searching for Canon inkjet cartridges!<br />Worst contribution margin: UK customers searching for HP toner!<br />Conversions 10 times more expensive than 2003, yet profitable!<br />Best contribution margin and revenue per sale of all online marketing campaigns (cost of goods sold – marketing expense – credit loss).<br />Lower fraud and lower degree of returns compared to other marketing channels.<br />Which mistakes have been costly?<br />”Free for all” policy in affiliate networks resulting in increased competition for ourselves within Adwords and sometimes lowering user experience due to poorly designed landing pages by affiliates.<br />Trademark policy - affiliates can still slip through – be firm on enforcing policy in marketing contracts.<br />New keyword generation – although an excellent tool, be wary of using all suggestions for languages you don’t fully comprehend.<br />Treat broad, phrase and exact match with utmost respect (the keyword ”battery” may generate traffic where you won’t create a conversion due to consumer expectation).<br />Slacking with designing landing pages and design/copy to improve ROI – demand a good test leader and follow-up the statistics instead of debating endlessly if blue is a nice color!<br />
  9. 9. Advice to other advertisers<br />Keep your account structured:<br />Separate your brand from competitive keywords in your market segment.<br />Keep competitor brand names in a separate ad group due to quality score.<br />Experiment with max and target CPA as well as different bidding strategies (or tools), depending on complexity and campaign goals.<br />Focus on profitability per campaign and not competitors bidding (and try high-frequency bidding models if you have the competence!).<br />Evaluate available display network placements and start off with limited test budgets – if it doesn’t work at the first attempt it’s probably an irrelevant traffic source that won’t convert – ever!<br />Make use of automated rules – if you can’t do it with brains you can’t do it with hours!<br />Be sure to constantly evaluate keyword interdependency mixed with Google Instant search results (e.g. build exact matches with negatives as a countermeasure to interdepencency of keywords, i.e. ”cartouche d’encre pas cher” and ”cartouche d’encre gratuit”) to optimize what matters.<br />Include value tracking by using a dynamic (non-static) variable for your advanced conversion tracking.<br />Implement XML feeds to catch long tail search terms – most of your competitors won’t bother so get busy!<br />Don’t forget about alternative search engines! There’s still regional volume up for grabs in selected markets (e.g. Switzerland, Russia, France, China to mention a few).<br />
  10. 10. Don’t be average!<br />Maximum Bid = Allowable Marketing Cost * Conversion Rate<br />Allowable Marketing Cost = Conversion Value * Acquisition Percent<br />Average portfolio structure:<br /><ul><li> Overspend: 60% of the tactics have their bids set too high</li></ul>• Underspend: 30% of the tactics are set too low<br />• Optimized: 5% of the tactics are at the right level<br />• Wasted: 5% of the tactics should be completely disabled<br />
  11. 11. High frequency bidding for keyword buying<br />Legend:<br /><ul><li> Difference between optimal price/clicks and cost/clicks on the </li></ul>horizontal axis.<br /><ul><li> Number of clicks on the vertical axis.
  12. 12. Each circle represents 1 sample which is the aggregate of days </li></ul>statistics grouped by error.<br /><ul><li> Black circles are Low Frequency Bidding (max 1 per day).
  13. 13. Red circles are High Frequency Bidding (every Nth click).
  14. 14. The black sample is about 45 days of data and the red sample is </li></ul>about 8 days of data.<br />What I read into this:<br /><ul><li>The highest peaks (clicks) are dominantly red.
  15. 15. The red dots are closer to error = 0 (we buy the clicks at the </li></ul>defined optimal price more often).<br />Result:<br />19% increased profit/click och 4% increased sales volume from<br />no more work other than exploiting market inefficiency!<br />
  16. 16. Wishlist to Google as a pan-European advertiser<br />Market entry assistance – long shot!<br />Package advice regarding local e-commerce prerequisites may facilitate advertisers time to market and hence Adwords spending:<br />Payments<br />Shipping<br />Legal requirements<br />Communication style and ad copy improvement<br />Promote selected partners per market as potential service partners to increase quality among e-commerce vendors (revenue potential!)<br />Increased local conversion = content customers = $$$ = > ROI = happy Google shareholders!<br />
  17. 17. Wishlist to Google as a pan-European advertiser<br />Product development:<br />Gmail<br />Start selling exclusive placements to evaluate advertising revenue compared to content based ads.<br />Webbased mail is one of the top 3 online marketing channels when looking for profitable online marketing sources (besides search and incentive based marketing).<br />Improve ROI dashboards for executive use to understand returns of advertising<br />I have the blueprint...for a price<br />Create an index in Google Shopping that determines highest perceived value from customer reviews, which increases good governance in e-commerce and consumer confidence. What should matter?<br />Price per product (shipping charge often dependent on basket size so exclude that in head-to-head comparison).<br />Amount and value of customer reviews (Google Shopping reviews or consolidation of price comparison questionnaires).<br />Shipping time and options (e.g. express or low-impact shipping alternatives at different cost).<br />Support for products without EAN codes (e.g. compatible products that may replace OEM alternatives).<br />Enforce the use of fake content sites that are not improving shopping experience – shut ’em down!<br />Extraordinary amount of black and grey hat sites living on affiliate marketing revenue.<br />Suboptimization of advertiser spend.<br />Poor organic search results may impact negative user experiences.<br />Advertiser diminishing returns<br />Increasing amount of re-purchases from existing customers start via a sponsored link, which decreases advertiser ROI and will become an increasing industry-wide problem.<br />Improve the display network quality – become the ”new” affiliate marketing network<br />Profit sharing with e-commerce companies an alternative to CPC or CPM as payment model to filter out low quality traffic sources.<br />
  18. 18. Questions?<br />henrikn@inkclub.com<br />+46 76 629 67 31<br />http://se.linkedin.com/in/henriknilzen<br />If everyone is thinking alike, then somebody isn't thinking. George S. Patton<br />