If want to use Google AdWords to attract more visitors to your business website, a good option is to outsource this to an agency. If you want to take this route, or if you just want to be able to see if your campaign manager is actually doing a good job, you should read this blog. You’ll learn to understand how you can determine if your campaigns are performing well, and you’ll learn how you can easily find out if someone is actually working on your campaigns.
Table of Contents
- How to check if an agency actually spends time on your AdWords-campaign
- How to check the quality of your AdWords-campaign
- Understanding the basics of Google AdWords
- KPI 1: Quality Score
- KPI 2: Average Ad Position
- KPI 3: Cost / conversion
How to check if an agency actually spends time on your AdWords-campaign
When you outsource your AdWords-campaign, it’s likely you’re paying an agency to work on these campaigns for just a few hours a month. But do you have any idea what they do during this period? Do they actually do anything? Especially with AdWords, it may seem like an agency puts a lot of effort in because you’re getting new leads, but that does not have to be true. Especially after setting up a campaign, it runs automatically. Of course there are plenty of ways to optimize the campaign, and for you, also if you don’t know anything about Google AdWords, there’s a very easy way to check what has been changed. The only thing you’ll need is access to your own AdWords-account. When you log in to your AdWords-campaign, you can see all changes that have been made within your campaigns (see Tools > Change History).
No changes in a long time? Then something’s wrong.
How to check the quality of your AdWords-campaign
Let’s dive a bit deeper into AdWords. There are a few Key Performance Indicators (KPI’s) that can help you understand if your campaigns are performing well. You can find all this data in Google AdWords yourself, or you can ask the agency / your campaign manager for a report. Before we look into these KPI’s, you need to understand the basics first.
Understanding the basics of Google AdWords
It’s important to understand that it’s not the highest bidder that gets the highest position in Google results. For Google, relevancy is extremely important. Imagine: you’re searching for a red couch, but you’ll see ads for black chairs. That’s totally irrelevant. Will you keep using Google, or will you start using other search engines like Bing and find what you were looking for? Google wants to maintain their current position as market leader, and therefore relevant search results (including ads) are very important.
So, how does Google determine which ad will get the top position? It’s quite easy, they use the following formula:
Ad position = Bid per click (CPC) * Quality Score
In short, this means that a high quality score helps to give you higher positions in Google, against a lower price per click.
If it’s not clear how this works yet, have a look at the example below:
|CPC Bid||Quality Score||Score|
|Advertiser 1||€ 1,00||9/10||9|
|Advertiser 2||€ 2,00||7/10||14|
|Advertiser 3||€ 3,00||4/10||12|
In this example, we’ll keep it easy. Let’s say there are just three advertisers. Advertiser 1 created the ad with the highest relevancy (quality score of 9/10), but offers the lowest bid per click. Advertiser 3 bids the most, but doesn’t have a very high quality score. Looking at the total scores, Advertiser 2 would get the highest position, even though Advertiser 3 bids 50% more. It’s all about the relevancy.
Understood? Then you can probably easily answer the following question:
How much should Advertiser 1 bid per click, to get the highest position if all other variables remain the same?
Answer: Advertiser 1 needs to ‘score’ over 14 points, so with a bid of € 1.56, they’ll get a higher score than the other advertisers, and therefore the highest position in Google.
KPI 1: Quality Score
Check if your keywords have a sufficient quality score (7/10 is fine). If you notice plenty of low scores, there’s work to do for the person you outsourced your campaign to. There are many tricks to optimize your quality score – and the agency should know them.
The Average Ad Position
Google AdWords shows an average ad position for every single keyword. 1.0 is the best possible number here, because that means your ad is always the one with the highest position. An average ad position of 2.8 means that, on average, your ad is somewhere between position 2 and 3, but more often on the third position. The ad position always varies, because there are multiple competitors who try to optimize their campaigns. For a better understanding of this principle, see the image below:
Why is the ad position so important?
During a presentation at Google’s office here in Amsterdam, one of Google’s specialists mentioned that 50% of all clicks goes to the top ad. In total, about 90% of the clicks probably goes to the ads in the top 3, and less of them go to the side bar. However, you should always ask yourself if it’s necessary to be in the top position. You can probably make a similar amount of sales if you’re in the top 3, because most people will compare their options anyway. You just need to make sure they’ll consider you in their comparison.
KPI 2: Average Ad Position
Have a look at your average ad positions per keyword. If these are substantially worse than 3.0, it means your ads are often shown in the sidebar instead of at the top of the page. This could mean two things:
A) The quality scores are too low and need to be optimized
B) You should consider spending more money on AdWords
For a better understanding regarding option A, have another look at the formula Google uses (as stated before). If the quality scores are fine, it might be worth it to spend more money on Google AdWords. Try it for a month, and see what it does for your ROI. Google said it, and it’s what I’ve experienced as well: it’s important to have an average ad position of at least 3.0.
Make sure you measure the success of your campaigns
Google AdWords will show you a lot of data, such as clicks to your website. If there’s a keyword that generated many clicks, it doesn’t mean that it generated many leads or sales for you. That’s why you should always add ‘conversions’ in Google AdWords. A conversion is a certain action that can be performed, for example:
- Purchasing a membership online
- Filling out a contact form on your website
- A phone call to your business
You can assign a value to each conversion. This should give you insight in your campaign success. And your agency should be able to give you insight in the (estimated) return on investment of your campaigns quite easily.
KPI 3: Cost / conversion
If you measure conversions in Google AdWords, you’ll get detailed information about the cost per conversion. Ideally, this number should always be lower than the revenue earned from these ads, so you’ll make money.
Let’s say you’re measuring filled out contact forms. On average, you’ll get 1 new customer out of 10 received forms. A new customer is worth €200 to you. In short, this means that a filled out form is worth €200 / 10 = €20 (on average) to you. If the cost per conversion is higher than €20, you will lose money. However, sometimes this might be worth it to invest in new clients. If they love your product, they’ll spread the word and bring in their friends. It’s up to you to determine how much you want to spend per conversion. Set aside a realistic amount of your total budget. If you’re just starting out with AdWords, it’s always good to start small – you can always scale up. Clicks to your website are good but don’t give you the insights you need. You should look into conversions to determine the success of a certain keyword. You’d rather invest in the keyword that gave you 5 new clients out of 10 clicks, than 1 new client out of 50 clicks.
If you want to know if one of your staff (or an agency you outsource the work to) is working on your AdWords campaign, check the Change History. If you want to check if they’re doing a good job, check out the quality score, ad positions, and conversion rates. On average, the quality score should be 7/10 or higher, while the ideal ad position is as close to 1.0 as possible. An average ad position of 3.0 is still acceptable, but worse positions can be bad for the success of your campaign. If the ad positions aren’t that great, and the quality scores are high, you should consider allocating more money to AdWords. You could give it a try for one month, and if it doesn’t work, just reverse the changes. Finally, keep an eye on the conversion rates to see if your ads have the desired effect. And always make sure you measure everything and pay attention to the cost per conversion. This number is more important than the clicks to your website.