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20 Nov 2009

Ad Optimization….and A/B Testing Part 2.

November 20, 2009PPC Advertising

 This is a follow up to our initial article Ad Optimization….and A/B testing Part 1. In that article I said that if you are serious about testing ads, you should not use the default setting that has Google optimize your ads for you. 

 
In this article I would like to show you a real life example that will help illustrate that Google Ad optimization is not a necessarily a good idea.
 
The figure below shows the ad statistics for one of our clients. (Our thanks to The College of Golf for letting us use this information in our example.)

Figure 1.

golf ad CTR example  111609

 

Click Thru Rate.
If you look at the two ads that we are going to use for comparison, you will see that one has a CTR (click thru rate) of .65% and the other a CTR of .36%.    If those were the only two ads, the Google Optimization feature would automatically start sending all or substantially all of the traffic to the ad that has the .65% CTR.
 
That’s a good thing right? After all you would get more clicks! Well it’s good for Google, but not necessarily good for your campaign.
 

Figure 2.

golf ad copnversion example  111609

  

CTR or Conversions?
For a business owner, Figure 2 highlights the more important numbers. Notice the poorer performing ad in terms of CTR did much better in terms of conversions.   The ad with the .36% CTR had two conversions at a cost of $13.81/conversion, where as the better performing ad with the .65% CTR had only one conversion at a cost of $52.40.
 
Frankly, this is an extreme example….but these are the kind of numbers that make a PPC manager lose sleep. And these are real numbers, not something made up to make a point.
 
If these numbers continued to hold up it would make for a tough decision on whether to keep both ads or not, but I would most likely keep both.  Naturally, you will keep the ad with the higher conversion ratio, but retaining the ad with the relatively high CTR will improve your quality score. (If you need a refresher on why CTR is important for quality score, check out  this article.
 
Google Ad Optimization.
So, like I said, the Google Ad optimization algorithm would have picked the first ad and started sending nearly all the traffic to that ad…and it would have made that decision fairly quickly. Maybe in as few as 10 clicks each.
 
So if you are serious about testing ads, you will want to turn off the optimization option on AdWords and set the ads to rotate evenly.   This puts YOU in control and lets you decide when to retire your ads.

  

Figure 3.

Rotate ad

 

Need more proof? One last surprise!
The primary point that I hope to make in this article is that you need to test ads, but you need to do it with enough information.   Most PPC Managers feel that the Google Optimization Algorithm makes decisions much too quickly. And actually many folks that run campaigns will make decisions on ads with too little data. 
 
Here is an eye opener–
 
Take a look at figure 4 below.

Figure 4.


Golf Ad Example for Optimizer

  

Identical.

The ads that we have been comparing are identical!  Same ad group, same keywords.  I discovered this technique by accident (obviously!), but I use it now occasionally as a sort of statistical barometer.   Hopefully this underlines the need to collect enough data to make good decisions regarding your ads, keywords, etc. in your Pay Per Click Campaigns.  Clearly at this point there is not enough data to make a decision on these ads. Making decisions too early may hurt you in the long run in the quest for finding the best converting ads.  Be Careful! 

 

If you think you’re Adwords campaign might be wasting money, contact me for a free Adwords evaluation. I’ll be your second pair of eyes to double check your campaign for these kind of issues. Because when you optimize your Google Adwords campaign, you want someone optimizing it to make money for your business, not Google’s.