In my presentation, I’ll share secrets about how AdWords works that even Google doesn’t want you to know. I’ll reveal new data-backed research on how AdWords really works, including how important metrics such as your CPC, ad position, and even your cost per conversion are calculated. I’ll show you how in AdWords, there are winners and losers – and how great it is to be a winner vs. how terrible it is to be a loser. I’ll show how companies going after identical keywords in the same market can pay +/- 400% for the exact same click, and winners convert those clicks at 3-5x higher than average, and reveal the weird tactics that they use. Finally, we’ll translate all of these insights into unconventional PPC strategies to drive conversions up and costs down.

1. CONFIDENTIAL – DO NOT DISTRIBUTE 1
The Weirdest Intro to PPC Ever!
10+ Years of PPC Experience in
Just 40 Minutes
Larry Kim,
Founder/CTO, WordStream
June 27, 2014

2. About Me
Larry Kim (@larrykim)
• Founder & CTO of WordStream
• Commander of the Google AdWords
Quality Score Rebellion
• Had a Kid 7 Weeks Ago (#ppckid)
Larry Kim (@larrykim) #wordstream

3. Today’s Agenda: Weirdest Intro to PPC Ever
1. How AdWords Really Works
2. Winning at AdWords the Weird Way
– Tips for Writing Killer Ads / Picking
Keywords
– Tips for Writing Amazing Offers
– User Context & Mobile Search
– Converting Customers with Remarketing
Larry Kim (@larrykim)

4. CONFIDENTIAL – DO NOT DISTRIBUTE 4
Pick the Red
or Blue Pill

5. The Rules of the
AdWords Game

6. Understanding the AdWords Auction
CONFIDENTIAL – DO NOT DISTRIBUTE 6

8. How Quality Score Impacts Ad Position
• AdWords is Like Real Estate: It’s all about
Location!
Larry Kim (@larrykim) #mnsearch

9. How is Quality
Score Actually
Calculated?

10. Google Expects WAY More of Your Ads!
Larry Kim (@larrykim) #mnsearch

11. QS is Based on Your CTR vs. Expected CTR!
Larry Kim (@larryim) #mnsearch

12. What’s an Average
Quality Score in
2014?

13. Avg. Quality Score Has Been Falling.
• Today, average score is 5/10. Previously was 7/10!
Larry Kim (@larrykim) #mnsearch

14. How Does Quality
Score Impact Cost
Per Click?

15. How Quality Score Impacts Actual CPC
Larry Kim (@larrykim) #mnsearch

16. CONFIDENTIAL – DO NOT DISTRIBUTE 16

17. How Does Quality
Score Impact
Impressions?

18. Impression Share vs. Quality Score
• AdWords is Like Real Estate: It’s all about
Location!
Larry Kim (@larrykim) #wordstream #mnsearch

19. How Does Ad
Position Impact
Conversion Rates?

20. Do Certain Ad Positions Convert Better??
Larry Kim (@larrykim)

21. Conv. Rate vs. Average Search Position
Larry Kim (@larrykim)

22. How Does Quality
Score Impact Cost
Per Action?

23. Cost Per Conversion Greatly Impacted by QS
Larry Kim (@larrykim) #mnsearch

24. The Impact of Quality Score on Cost Per Conversion
Larry Kim (@larrykim) #mnsearch

25. But High QS Not Possible In My Industry!
Larry Kim (@larrykim) #wordstream

26. B2B Industry Quality Scores
Larry Kim (@larrykim) #mnsearch

27. Finance Industry Quality Scores
Larry Kim (@larrykim) #mnsearch

28. Ecommerce Industry Quality Scores
Larry Kim (@larrykim) #wordstream

29. But Google Says Don’t Obsess Over QS!
Larry Kim (@larrykim) #wordstream

30. “Low CTR” =
Losing PPC
Strategy

31. Quick Recap
1. Below Avg. CTR =
Low QS
2. Low CTR ads:
 Have Lower Ad Positions (Fewer Clicks)
 Often don’t even get displayed
 Get penalized w/ up to 400% higher CPCs
 Have up to 64% higher cost per conversion
Larry Kim (@larrykim) #mnsearch

32. The High CTR Game for AdWords
1. Be Very Picky. Bid on Only the Best
Keywords and Get HIGH CTRs.
2. Delete Junk Keywords (Bottom Third of
your Account)
Larry Kim (@larrykim) #mnsearch

33. How To Write
Insanely
Great PPC Ads

35. What’s a Good CTR?
Larry Kim (@larrykim) #mnsearch

36. • Even the “Winner” is a Loser!
CONFIDENTIAL – DO NOT DISTRIBUTE 36

37. Your Best Ad Might Be Crap
Larry Kim (@larrykim) #mnsearch

38. How Great
Can My CTR Be??
(You’d be surprised)

39. Click Through Rate Varies A Lot!!
Larry Kim (@larrykim) #mnsearch

40. Some Ads Do 2x, 3x or 6x Above Avg!?
Larry Kim (@larrykim) #mnsearch

41. Under-Performing vs. Unicorns
Percentile Vs. Expected
CTR
Name
Bottom 50% Below Expected
CTR
Under-
Performing
Advertisers
Top 15% 2X Higher Awesome
Advertisers
Top 5% 3x Higher Super Awesome
Advertisers
Top 1% 6x Higher!! Unicorns
Larry Kim (@larrykim) #mnsearch

42. @larrykim
Ad Unicorns?!
(6x Avg. CTR!)

43. Ad Text Testing
• Same Story – 20% of Ads Generate 92% of Spend
• 20% of Ads Generated 65% of Impressions
• But CPA, CTR, and Conversion Rates vary
@larrykim, @perrymarshall

44. 1. Keywords With High Commercial Intent
Larry Kim (@larrykim) #mnsearch

45. Does Dynamic
Keyword Insertion
Matter?

46. What is Dynamic Keyword Insertion?
Larry Kim (@larrykim) #mnsearch

47. 2. Dynamic Keyword Insertion (DKI)
Larry Kim (@larrykim) #mnsearch

48. 2. DKI Doesn’t Produce As Many Unicorns
Larry Kim (@larrykim) #mnsearch

49. Do Ad Extensions
Matter?

50. What Are “Ad Extensions”?
50
Larry Kim (@larrykim) #mnsearch

51. 3. Ad Extensions Impact on Click Through Rate
Larry Kim (@larrykim) #mnsearch

52. 3. Ad Extensions Impact on Quality Scores
Larry Kim (@larrykim) #mnsearch

53. How To Write
“Unicorn” Ads

54. 4. Most Ads Suck. Create Emotional Ads.
54
Larry Kim (@larrykim) #mnsearch

55. Creating “Emotional” Ads
Larry Kim (@larrykim) #mnsearch

56. An Example:
Larry Kim (@larrykim) #mnsearch

57. Versus…
Larry Kim (@larrykim) #mnsearch

58. These Emotions Make Things Spread Online
Larry Kim (@larrykim) #mnsearch
Source: Buzzsumo

59. You Need To Test 100
Ads To Find 1
Unicorn.

60. Relative Abundance
Name Percentile Relative
Abundance
Vs. Expected
CTR
Awesome
Ads
Top 15% 1:6.7 2X Higher
Super
Awesome
Ads
Top 5% 1:20 3x Higher
Unicorns Top 1% 1:100 6x Higher!!
Larry Kim (@larrykim) #mnsearch

61. You’re Not Testing as Many Ads as You Think…
Larry Kim (@larrykim) #mnsearch

62. It’s Not as Hard As
You Think

63. Most Small Businesses Aren’t That Active
Larry Kim (@larrykim) #wordstream #mnsearch

64. 85% of Impressions are From 5% of Ads
Larry Kim (@larrykim) #mnsearch

65. Converting
Clicks Into
Leads

66. The Great Landing Page Optimization Fairy Tale
• We Changed the:
– Font Type
– Spacing
– Button Color
– Image
– Etc.
• We got a 5%
Increase in
Conversions!!*
Larry Kim (@larrykim) #mnsearch

67. Typical Conversion Rate Optimization Test
• PTD- Premature Testing Dilemma (aka
“Optimizatitis”)
– The Early Lead Disappears!
– We want to believe our hard work paid off but we are often
deluding ourselves…
Larry Kim (@larrykim) #mnsearch

68. Conventional Landing Page Optimization is Over-Rated
• Small Changes Result in Small Changes
• The x% Increase you think you got
probably isn’t significant!
Larry Kim (@larrykim) #mnsearch

69. Re-Arranging Deck Chairs On the Titanic
Larry Kim (@larrykim) #mnsearch

70. What’s a Good
Conversion Rate?

71. What’s a Good Conversion Rate?
Larry Kim (@larrykim) #mnsearch

72. Unremarkable vs. Unicorns
Distribution Point Conversion Rate Vs Average Comments
Average 2.35% Unremarkable
Top 25% 5.31% 2x Awesome
Top 10% 11.45% 3-5x Unicorns
Larry Kim (@larrykim) #wordstream

73. “top 10% of accounts have a CVR 3x average” rule
Larry Kim (@larrykim) #mnsearch
Distribution
Point
All accounts Ecommerce Legal B2B Finance
Median
Conversion
Rate
2.35% 1.84% 2.07% 2.23% 5.01%
Top 25%
Conversion
Rate
5.31% 3.71% 4.12% 4.31% 11.19%
Top 10%
Conversion
Rate
11.45% 6.25% 6.46% 11.70% 24.48%

74. Aim For 2-5x Increases Not 2-5%!
Larry Kim (@larrykim) #mnsearch

75. @larrykim
Landing Page Unicorns?!
(+3x Avg. Conversion Rate!)

76. What Do Landing Page
Unicorns
Look Like?

77. 1. Change The Offer
Larry Kim (@larrykim) #wordstream

78. The New Offer:
CONFIDENTIAL – DO NOT DISTRIBUTE 78

79. How to Know if your Offer Stinks
• Average or Below Average Conversion Rates
• Ask Your Customer!
CONFIDENTIAL – DO NOT DISTRIBUTE 79

80. 2. Change The Flow.
Larry Kim (@larrykim) #mnsearch

81. 2. New Flow: Registration At End
Larry Kim (@larrykim) #mnsearch

82. Changing the Flow: Let Them Choose
Larry Kim (@larrykim) #mnsearch

83. You Need To Try Out
10 Landing Pages To
Find 1 Unicorn

84. Relative Abundance
Name Percentile Relative
Abundance
Vs. Expected
Conversion
Rate
Awesome
Landing
Pages
Top 25% 1:4 2x Higher
Unicorns Top 10% 1:10 5x Higher!!
Larry Kim (@larrykim)

85. Larry Kim (@larrykim)

86. This is the same landing page with different
spacing…
Larry Kim (@larrykim) #mnsearch

87. Again,
It’s Not as Hard AsYou
Think

88. 80% of Traffic Goes to 10% of Landing Pages
Larry Kim (@larrykim) #mnsearch

89. The Bar for Landing Page Excellence is (Very) Low
Larry Kim (@larrykim) #mnsearch

90. You Don’t Need Dozens of Landing Pages…
Larry Kim (@larrykim) #mnsearch

91. But You Don’t Need Dozens of Landing Pages…
Larry Kim (@larrykim) #mnsearch

92. Understanding
Mobile PPC

93. Larry Kim (@larrykim)
Source: BIA/Kelsey

94. Larry Kim (@larrykim)
OMG a Call
Button!!

95. Larry Kim (@larrykim) #mnsearch
Call Extensions Radically Change The Flow!
Calls to Businesses worth on Average 3x More
Than Clicks to Websites!!
4. Captured
Lead
2. Calls
Business
2. Clicks On Ad
Desktop Search Conversion Funnel
3% Avg.
Conversion
Rate
Mobile Conversion Funnel
1. Sees Ad 1. Sees Ad
3. Visits Website
Landing Page
3. Lead
Captured!!

96. Larry Kim (@larrykim)
No, You Don’t Need A Mobile Website!

97. Larry Kim (@larrykim) #mnsearch
Avg. CTR Drops Off VERY Fast on Mobile

98. Larry Kim (@larrykim) #mnsearch
Mobile Impression Share VERY Competitive

99. Converting
Traffic with
Remarketing

100. Typical Conversion Rates Are in Single Digits
of people who visit a website
leave without completing
the actions marketers want
them to take
~97%
Your Ad
Your Site
X
-
of people abandon their
shopping cart without
completing a purchase
70%
Larry Kim (@larrykim) #mnsearch

101. How Remarketing Works
Larry Kim (@larrykim) #mnsearch

103. Typical Reach of Remarketing…
1. Reach 2. Frequency 3. DiversityOn various pagesReach more users Reach them frequently
Of the typical remarketing
audience, find
Reach them on between As they visit 20 or more pages
on a typical day across
84%
…within a month
10-18 days
… or more out of the month
5-10 sites
… of which all pages and
sites have ad space available
to Google Display Network buyers
Larry Kim (@larrykim) #mnsearch

104. Audience Definition Strategy
• Funnel and Product Based List Segmentation
Larry Kim (@larrykim) #mnsearch

105. WordStream’s Remarketing Ads
• Ads that both reinforce your brand while
driving to a conversion!
Larry Kim (@larrykim) #mnsearch

106. Impact on Repeat User Rate
• New Visitor Rate Fell From 79.8% to 66.63%
• (Meaning, Visitors are Now Returning)
Larry Kim (@larrykim) #mnsearch

107. Impact on User Engagement
• Time on Site Increased from 1:33 to 4:35
(TRIPLED!!)
Larry Kim (@larrykim) #mnsearch

108. Remarketing = Your Secret Weapon
Larry Kim (@larrykim) #mnsearch

109. 1. Delete Bottom Third of your Search Marketing
Campaigns (Worst Crap In Your Account)
2. Redeploy Budget to Remarketing!!
Larry’s Crazy PPC Strategy!!
Larry Kim (@larrykim) #mnsearch

110. Summary: Weirdest Intro to PPC Ever
1. Just Say No to Low CTR!
2. Write Insane Ads that Get 3x Avg. CTR
3. Crazy Offers that Get 3x Conversion Rates
4. Use Mobile Search to Triple ROI
5. Convert Customers with Remarketing
Larry Kim (@larrykim) #mnsearch

111. Thank You MNSearch & ThinkSEM!
Larry Kim (@larrykim) #mnsearch
Slides: bit.ly/mnsearch2014