Conversion per Impression is a great idea metric to focus on.

A slightly vague ad with a high CTR will likely be more expensive and less effective than a specific and relevant ad that has a lower CTR but higher conversion.

Thanks,

Good article, though there are occasions when I would disagree with the first point, regarding statistical significance.

Whilst you clearly shouldn’t make a snap decision based on a day or two of data, the most common significance level used seems to be 95%, which I believe can be too high here.

If you set this level much lower (say 80%) then you will get results much quicker. Whilst this will mean that you will select the weaker advert sometimes (one in five times), you will be able to run far more tests in the same time period, so the incremental effect is likely to be greater (4 steps forward and one step back is better than 1 step forward).

If an advert is a real dog, it will still come out behind at this significance level, so the only ‘wrong’ decisions that you make are likely to be the more similar adverts (in terms of performance).

This approach isn’t right for every account – if you’ve got enough traffic to get significant results every few days, then there’s not much cost to waiting. But if your campaign has low traffic volumes, then waiting for weeks or months for statistical significance isn’t always the best long-term strategy…

Regarding Bruce’s question regarding Profit Per Click, if you assume that conversion rates are the same in different positions, and that order values are also unaffected, then the less you pay per click, the higher your profit per click (since income per click is fixed). As a result, maximising your profit per click would result in reducing your bids until you got almost no clicks at all.

Steve

So I’ve been running a campaign for 3 weeks now and have as per adwords

83 Clicks

I am tracking my sales page / sales letter as a goal in my analytics and have imported those goals into adwords.

Adwords is reporting 5 conversions to my sales page from 83 clicks

how do these numbers ad up since the target page for my adwords ads IS my sales page, so theoretically i should have had 83 visits (not 5!!!) to that page corresponding to those 83 clicks…

In my analytics those 83 clicks show up as 7 visits …

So why am i paying for 83 clicks when realistically they have delivered between 5 and 7 visitors (depending on which report i trust ??) and where is the discrepency ?

Very confusing …. :(

For example, I might have an ad with a very low CTR (so lots of impressions, but not many clicks), a very high CPC (so those clicks I do get cost me a lot per click), but a fabulous conversion rate (those few people that do click are the ones that really want my product). That could produce a very high profit per click (even though the clicks are expensive, I’m converting very many of them), but very low profit per impression (because there are so many impressions going without any clicks).

Should I be dropping that ad in favour of one with higher CTR, lower CPC but lower conversion rate? Just because it has a higher profit per impression? Surely not? Surely profit per click is what counts?

I think the “a-hah!” is actually contained in the article, specifically “which ad put the most money in your pocket each time it was displayed.” Too many advertisers decide the ad with the highest CTR or conversion rate is the winning ad, and delete the “loser”…but what they don’t know (unless they run profit per impression calculations) is whether that “loser” is actually making more money than the “winner.”

Click-thru rates and conversion rates are just that – rates. But ultimately what you want to maximize is dollars – ie, profit. Profit per impression lets you decide split testing winners and losers on that basis.

Adwords guide

I agree that putting CTR above conversions can be a mistake, but “can” is the keyword. Maybe you are only writing to people who manage LARGE AdWords accounts tied to LARGE businesses or purely ecommerce websites?

In either of these scenarios, I “get it”.

However, for many local businesses the number of conversions can be low. Businesses that take customer inquiries via phone often receive 6-9 phone “conversions” for every one AdWords conversion.

I’ve seen business owners kill a particular keyword/ad with a high CTR and no (online) conversions — and lose a bunch of sales in the process because they weren’t taking into account the phone conversions.

Of course… if you are relying on CTR over conversions then you MUST use some analytics program to continually monitor the quality of those visits. You are absolutely right – clicks that result in 100% bounce – are a complete waste of money.

How do you reconcile conversions from returning visitors that might have come in the first visit via PPC, but return direct or organic using a branded search? I know that there is a way to track this, but are people using it??

Great blog BTW – love all of your stuff.