Adwords for Online Store

PPC E-Commerce Case Study

Denver PPC Improved Advertiser’s

Cost Per Acquisition as % of Sales

by 55% over five months . . .

from 16% down to 7.2%!

About the Advertiser & AdWords Account

In November 2008, Durango Anglers*, a sporting goods ecommerce retailer focusing on fishing equipment, with a large brick and mortar store located in Durango*, Colorado, appointed us to manage AdWords for their online store. At that time, the ecommerce retailer was spending $8,000 per month on AdWords and earning new customers online at an average cost of $40 per conversion. The average shopping cart value was running at about $250 per order, implying an original (pre-mandate) average acquisition cost of 16%, which had been the rate experienced fairly consistently for the previous two years. The online store sells over 2,000 individual products and ships around the world. Advertiser had always managed the account themselves. Although Management knew a lot about their specific products, their knowledge of AdWords best practices was lacking, as illustrated below.

Extract from our Original PPC Proposal

Following is an extract from our original proposal to manage the Pay Per Click Adwords account for the Advertiser:

Review of Existing Adwords Account

Based on our review of your existing Adwords account, we found that it consists of 12 campaigns, 12 ad groups, 12 ads, 257 broad match keywords, and zero negative keywords. The ads are not sufficiently tailored to the keywords and over half of the keywords have quality scores of 5 or less, indicating that Advertiser may be spending more on a per click basis than would otherwise be necessary.

Our experience in managing Adwords for online stores is that an upfront investment in creating a finely-grained advertising buildout sets an advertiser up to excel in its ad space, and reap the rewards in terms of improved returns on ad spending. If we were to take over the management of the account, we would improve the structure considerably by creating about 150 ad groups, with a minimum of four unique ads per ad group (minimum of 600 unique ads), about 10 to 50 mostly phrase match keywords per ad group, and hundreds of negative keywords.

Initial Findings – Adwords Waste & Inefficiencies

In our initial study, we determined that much of the budget was being wasted on a handful of keywords which were way too general, on a lot of geo-targets which were not productive, and through an inefficient account structure. Advertiser was mixing content and search spending in their campaigns, and was spending more of the advertising budget on Category keywords than on individual products. After studying the account, we found that about 20 products were accounting for over 50% of total conversions. The account had a negative keyword deficiency as well as a negative site deficiency for the content network.

Initial Adwords Account Restructuring

Over the first 45 days, Denver PPC completed a top to bottom restructuring of the account which involved creating ad groups for almost 200 individual products. These ad groups were comprised of about 30 keywords each, mostly very specific product descriptions, brand names and model names. For each ad group, Denver PPC wrote four unique ads targeting individual product pages and developed custom lists of negative keywords designed to avoid displaying ads for related but tangential search phrases.

For the best performing products, at management’s request, Denver PPC rushed its restructuring to capture Christmas sales, bringing ads for those online within 7 days of being appointed. As part of the mandate, Advertiser asked us to decrease overall spending without losing sales.

In connection with the restructuring, Campaigns were broken out by Category, Platform (Search versus Content) and Geographic scope in order to better control spending and track results for major market areas, products and advertising platforms. Keywords and negative keywords were discovered by studying the website, and by including product descriptions for individual products, as opposed to the legacy category keywords, and estimating search values for each ad group. Ads were tailored for each ad group to include primary search phrases for each respective ad group, as a means of optimizing click through rates and quality scores.

Results of Initial Adwords Restructuring

The immediate results of the Adwords account restructuring were somewhat obscured by seasonal factors, with December generally representing Advertiser’s best month, and January representing Advertiser’s worst month. Nonetheless, both December and January were over 10% improved from the previous year’s results for the same months. By February, the results of the restructuring began to crystalize. Although February is not generally a remarkable month for this Sporting Goods Retailer, the cost per conversion had fallen from $40 to $27, representing a 32% improvement, while the acquisition cost had decreased from a historic rate of 16% to an improved acquisition rate of 10.5%.

Concentrate Ad Spending on Star Products

Some of the intial improvement resulted from concentrating ad spending on those elements of the account which had historically been winners. While the data from the original accounts was useful in this respect, we were hesitatant to draw hard and fast conclusions from the data, because it was generated from such a poorly setup and managed account. As additional data became available from the post-restructuring period, through thorough analysis, we began identifying new opportunities for further improving the account.

Continuous Optimization of Adwords Account

Throughout the ensuing periods, in its intense ongoing analysis of the Adwords and Google Analytics data, Denver PPC continued to slice and dice the account according to geo-targets by country, region and state, ad types, platform, day of week, language, landing page, placement, bounce rates, cost per conversion, quality scores and time of day. Our analysis is clearly demonstrated in the Sample PPC Report for an Online Store.

Continuously Improving PPC Ads

Throughout this period, Denver PPC also continuously analyzed the results of competing ads and began identifying which ad elements were performing relatively better and which were performign worse, and begain refining ads for each ad group accross the account. The results and scope of our ad split testing is clearly demonstrated in the Sample PPC Report for an Online Store.

Ongoing Optimization Improves CPA by 55%

By April, the cost per conversion had fallen from the original cost of $40 per conversion to $19 per conversion, as can be seen in the Sample PPC Report for an Online Store. Meanwhile, as a result of our focus on higher dollar items, the average shopping cart value had increased by 6%. These two improvements combined to result in the acquisition cost as a percent of sales improving from the original average of 16% down to a significanly improved CPA of 7.2%.

To learn more about this Case Study, read the Sample PPC Report for an Online Store.

To request a Quick Quote for your own Online Store Adwords account, call Hanna at 303 975 2810. Ask her about our PPC Performance Guarantee for Advertisers.