Depending on your disposition, this is either encouraging or disheartening news.

• Does it mean that 10-15% conversion rates are a goal you should work towards?
• Does it mean your 2.4% conversion rate is a terrible embarrassment?

I don’t think it means either. Let’s take a closer look at who made this list and how they did it.

• Three firms sell flowers. Who comparison shops flowers? What would you compare? If you just did something stupid, or tomorrow is ‘the day’ and you just remembered that, you buy the flowers.
• Tickets.com. Everyone must know by now that every ticket seller on the internet sells from one database (ebay, stubhub, and craigslist excepted.). There is no point in comparison shopping. You want tickets, you buy them.
• QVC. What’s their conversion rate for TV viewers? Their website is functionally a cart, so it could be argued that they’ve got 86.2% cart abandonment.
• Coldwater Creek and Lands’ End. Huge catalog mailers. Again, many many visitors coming just to place orders considered offline. If your site dropped 4M catalogs, your conversion rates would zoom too.
• OfficeDepot.com. Many no-point-in-comparing products and I assume lots of business orders from people who have accounts and replenish online frequently.
• eBay and Amazon. These are impressive – but they’re ebay and amazon. Comparing them to almost anyone isn’t fair or informative.

The message it seems is that if you need to deliver an overall conversion rate of 10% or greater, you need 30M registered users who buy from you 3-5 times per year, a 24-hour television channel, a pattern of inflicting back pain on innocent mailmen 3-4 times each year, or to sell products which are purchased as a result of some ages-old game of emotional blackmail.

Yet for many, those methods may not be practical.

That doesn’t mean you have to simply accept the shop.org and FireClick reported broad averages of 2-3% range.

There are many things most sites can do to dramatically improve conversion rates. There are also much smarter ways to measure and consider conversion rates than the overall site average. While that may be an interesting for conference-room conversation, it’s a lot more important to break down conversion rates by method-of-contact (email vs organic vs display vs PPC), based on the place in their buying cycle where visitors engage with you, or based on user intent as evidenced in their actions/expressions.

These are big topics in and of themselves, which I’ll dive into more deeply in a future post. Hat tip to Bryan Eisenberg, whose been on conversion rate watch for longer than any of us, for bringing all this up in his recent ClickZ column.

Take a look at this report snippet from onlynaturalpet.com. As part of our initial work on the account we’ve been cleaning up the organization of many ad-groups, so since early December there has been quite a lot of campaign and ad-group reorganization going on.

Weeks later reviewing a portion of the January results, we see clearly the impact of the way latent orders are handled – a bunch of ad-groups with zero spend, zero clicks, but orders and revenues.

Of course this only shows half the story. Each of those ad-groups has been recreated in a different location within the campaign, so there is a corresponding ad-group elsewhere in the report which shows both clicks and revenue for this same time frame, but as compared to peer ad-groups that weren’t part of the clean-up, the new ones suffer from much lower revenue (because all their trailing revenue is still being reported here in the old groups).

For beyond the fact that reporting both clicks and revenues when they happen as opposed to attributing revenue to the click that provoked it distorts reports by assuming that costs and revenues are constant when they’re not (see the earlier post for a better explanation), we have the problem that after making organizational changes your reports have severe limitations (they’re sort of worthless) until many weeks after the changes.

This post is part of a case-study series on the Commerce360 management of paid search campaigns for onlynaturalpets.com. It is being done with the kind permission of Only Natural Pet Store, and some data has been changed to keep PetSmart guessing. For your convenience, we’re keeping a list of all posts in the series.

OnlyNaturalPet.com is very interested in the number of new customers being driven via paid search. So I popped into D2 and quickly segmented units and sales for paid search by all visitors vs first time visitors.

Sure enough, we’re getting a pretty high count and percentage of new website visitors via our PPC programs. I can’t find first time buyers/customers yet, but I think that data may be here somewhere.

I was also reminded of the great drill-down benefit of D2 as I easily made my way through the layers of data.

As the screen shot above shows (click to enlarge) I can clearly display an entire path: Engine-Campaign-AdGroup-Keyword-Query (as covered in several recent blog posts) and see the actual products purchased for each query. That is amazing detail.

I should also point out that moving up-down-left-right within Discover is very fast. I hadn’t though about D2 last week when writing the post on how tough and slow navigation was for PPC. I’m not yet sure I can get to all the metrics I’d need for daily use here (more on that in a later post), but D2 sure allows fast and fluid omni-directional navigation.

Next, I’m going to rebuild my most favoritests calculated metrics in D2, and find/refind everything else this thing can do.

This post is part of a case-study series on the Commerce360 management of paid search campaigns for onlynaturalpets.com. It is being done with the kind permission of Only Natural Pet Store, and some data has been changed to keep PetSmart guessing. For your convenience, we’re keeping a list of all posts in the series.

Looking at search query reports on a campaign, ad-group, or keyword level certainly makes it clear that without the right negatives, you’re paying for a lot of clicks that just don’t have any chance of converting.

But reviewing query data makes it clear that there’s a use for negative keywords beyond keeping certain queries from displaying your ads altogether. It’s also necessary to use negatives to steer certain queries into the campaigns and ad-groups you’ve setup to target them.

The keyword ‘innova evo dog food’ for example, is matching queries for ‘only natural pet store’ despite the fact that ‘only natural pet store’ is an exact match keyword purchased in a different brand-targeted ad-group.

Innova dog food only represents a fraction of the OnlyNaturalPet inventory, and so it doesn’t make sense to show a brand-specific text ad (and landing page) to someone who might be looking for cat vitamins or even a dog collar. There’s a reason we didn’t put the ‘Innova’ brand keywords in our ‘Only Natural Pet’ brand-specific ad-group.

Yet throught the magic of broad match, it’s Innova dog food specific ads that are being served to these searchers, if we don’t prevent this with the proper use of negatives.

Also since we recently split up many categories and product lines into separate ‘dog’ ‘cat’ and ‘pet’ ad-groups, we’re seeing quite a bit of bleed there – both ‘dog’ and ‘cat’ show up in the ‘pet’ group, and ‘pet’ in each of the others. So now we’ve added the appropriate negatives so the queries respect our intentions; pet ad-groups have ‘dog’ ‘puppy’ ‘cat’ and related negatives, dog ad-groups have ‘pet’ negatives, and so on.

This is an interesting by-product of hyper-targeting the ad-groups, keywords, and text-ads. As our broad-match use is reduced over time the need to watch for this may be reduced, but right now with lots of broad-match still running it’s another thing to keep an eye on.

The amazing thing isn’t that it’s true. It’s that we know it.

We know exactly how much profit and where it comes from. Which engines. Which campaigns. Which ad-groups. Which keywords.

This is unusual because the search engines reporting systems, and most analytics packages, can’t report on profit or ROI. Isn’t it amazing that they ignore the goal?

Instead they focus on ROAS, which is a lousy measure, and just maybe tell you how you can manually calculate ROI if you’re willing to do the work – every time you want to know. (Some thoughts on what’s wrong with ROAS here, here, and here.)

But the software systems aren’t the only barrier to measuring profitability. Doing so also requires the advertiser know their cost-of-goods-sold (COGS) for each item and be willing and able to provide that information to the system on a regular basis. We’ve worked with many retailers where the marketing dept either doesn’t have access to the data, permission to share it, or can’t keep up with rapidly changing market prices.

The Omniture Solution for OnlyNaturalPet.com

Both of these obstacles have been overcome in our work for OnlyNaturalPet.com. We’ve augmented the standard Omniture SiteCatalyst and SearchCenter with an add-on Omniture Vista Rule that allows us to upload COGS data for each SKU which then becomes an available reporting metric.

From this COGS we create calculated metrics for a whole range of interesting measures like gross and net margin, profit and ROI.

Of course this works so well because onlynaturalpet.com provides us with complete cost/margin lists for their entire inventory. Given their expanding range of products, we plan to update these files monthly.

Reporting with Profit Visibility

Note that we’ve purposely chosen a small set of keywords, and not the most profitable at that, and changed a few numbers around, to provide this illustrative report.

When reports display profit and ROI right next to cost and revenue, it gets a lot easier to make what are typically hard decisions when running paid search campaigns.

For onlynaturalpet.com the loss from trying to sell dog collars over the last quarter has been clear, the keywords and creative while not perfect were not culpable, and so at least for now we’ve pulled the plug on much of the ad-group.

Elsewhere profitability makes it clear (even before our bidding tools and other software kick-in) where we can spend more, work to expand, test more creative, etc.

As compared to managing campaigns without clear profit visibility, it’s like someone switched the lights on.

This post is part of a case-study series on the Commerce360 management of paid search campaigns for onlynaturalpets.com. It is being done with the kind permission of Only Natural Pet Store, and some data has been changed to keep PetSmart guessing. For your convenience, we’re keeping a list of all posts in the series.

The keywords in your account are nearing an unmanageable size. We recommend that you reduce the number of keywords within your account. This will ensure that your account includes the most targeted and relevant keywords possible. Use our AdWords Editor to identify poor performing keywords within your account (such as keywords with few or zero impressions) and delete them. Note: Be careful when deleting keywords in campaigns that are only opted in to the content network. Impressions and other statistics aren’t attributed to individual keywords when ads show on content pages, but are attributed to the ad group as a whole. Therefore, keywords in content-only campaigns will always show zero impressions.

This isn’t a suprise.

The campaign we inherited had just above every keyword in every account included three times, as broad, phrase, and exact match. To make matters worse, many 3-4 word phrases are included in different word orders, which is obviously redundant at least to the broad match versions (and usually the phrase and exact match versions are nonsensical).

How bad is it? The Adwords Editor identifies 335309 out of 341203 keywords as being duplicates!

Thus far we’ve only cleaned these up in a few ad-groups while doing some other reorganization. The balance will be a project for the next week or two.

This post is part of a case-study series on the Commerce360 management of paid search campaigns for onlynaturalpets.com. It is being done with the kind permission of Only Natural Pet Store, and some data has been changed to keep PetSmart guessing. For your convenience, we’re keeping a list of all posts in the series.

As you probably know, many people execute several searches, often over the course of several days, clicking on different paid keywords along the way before finally making that purchase.

When this happens, which keyword(s) should get the credit for the sale?

• Is it the keyword they clicked on that last visit where they executed the transaction?
• Is it the keyword that first brought them to your site?
• Should the credit be distributed across the keywords in some fashion?

This might sound like a small matter. But what if 50% of your visitors didn’t buy during their first search or visit? What if nearly one-half of your revenue was being allocated at least partially to the ‘wrong’ keywords?

Would this impact the decisions you made about which ones to bid up and which ones to bid down or pause?

Importance of Proper Allocation

For onlynaturalpet.com nearly 35% of their paid search visitors do not buy on the first visit. (We learn this in Omniture Discover 2 – neither SiteCatalyst nor most other packages can separate this metric for paid search vs other visitors.)

We also know that around 50% of their purchases do not occur on the same day as the first visit. (Unfortunately that number can’t be broken out for paid vs other visitors, even in Discover.)

Both of these statistics, however, suggest that lots of paid search visitors are not buying based on the first keyword they click. Shifting 20-30-40% of our revenue to different keywords would have a huge impact on any analysis of success or future campaign recommendations.

Revenue Allocation in SiteCatalyst

We choose to use linear revenue allocation in SiteCatalyst, splitting the revenue evenly between all keywords that the user clicks on along the way. While imperfect, we think this is far better than having all of that revenue accrue to the last keyword, or putting all of it to the first one they searched.

It’s worth noting that most analytics packages including Google Analytics, and the search engine ‘conversion tracking’ systems do not allow you to control allocation. In reports from those systems, all revenue is assigned to the last keyword a users clicks. Yahoo Panama tracks the number of assists, but doesn’t shift the revenue. If like most sites you have a significant portion of your revenue coming from visitors not purchasing on the first visit, this limitation means you’re looking at numbers (when reviewing keywords and ad-groups) with a fairly serious distortion.

For onlynaturalpet we set this allocation method several months ago, so even our historical data in any reports is based on this linear allocation.

Summary

Soon we’ll be making important decisions based on the information available from the search engine reports and our analytics software. While it’s easy and tempting to just trust the numbers provided, very often it’s important to understand how these numbers are arrived at before making decisions based on them.

Revenue from paid search and its allocation to keywords is a great example of a tiny detail that has big implications for the success of your PPC campaigns.

This post is part of a case-study series on the Commerce360 management of paid search campaigns for onlynaturalpets.com. It is being done with the kind permission of Only Natural Pet Store, and some data has been changed to keep PetSmart guessing. For your convenience, we’re keeping a list of all posts in the series.

Organization matters because these structures determine how text-ads are matched to keywords, how budget is allocated, and the default breakdowns you’ll get in reports to analyze performance.

It can be difficult or impossible to recover from a bad campaign organization. Ad-groups full of dissimilar keywords mean that your text-ads don’t directly target your keywords which usually drives down both click-through and conversion rates.

More importantly, when ad-groups contain keywords with too wide a range of performance characteristics – such as a bunch of words which average click-through-rates in the 2-4% range and then a couple of outliers with high volume and CTRs over 20% – your ad-group summary reports are going to be full of misleading (and therefore useless) numbers.

Mind Your Brand Terms

As we looked into the campaigns for OnlyNaturalPet.com we quickly saw the most common of all organizational errors; brand terms scattered everywhere. ‘Brand terms’ in this case refers to keywords which include the company name or variants, such as ‘onlynaturalpets’, ‘only natural pet store’, ‘onlynaturalpet.com’ etc.

There was an existing dedicated ad-group for branded terms, but it was part of a campaign full of all kinds of other non-brand focused ad-groups. And many of the core brand terms were repeated in several other ad-groups both alone (duplicating keywords already existing in the branded ad-group) or within other phrases (‘only natural pets dog food’).

These branded phrases trounced all others in terms of both click-through rates and conversion rates – running between 2 and 50x higher. Imagine the impact these were having on the campaign and ad-group results as reported within both the engines (Adwords etc.) and Omniture SearchCenter.

We defined a new ‘branded terms only’ campaign, created ad-groups within that campaign for the core branded terms ‘only natural pet store’ etc. and others for groups of words which use the brand name along with category and product terms. All relevant keywords and phrases were removed from any other campaigns and ad-groups and placed into this new brand-focused structure.

The impact was seen immediately. Just yesterday one of the product focused ad-groups that previously contained a smattering of ONP brand terms, reported a conversion rate nearly 50% lower than it did for the same timeframe three weeks ago.

This gives us a far better picture of the value of this ad-group in its true ability to drive revenue. It improves our ability to compare ad-groups on their own merits because the brand influence has been removed.

Synonyms Are Different

We also found cases where keyword lists had been well expanded to include common synonyms and related terms, but some of those deserved their own ad-groups and didn’t have them. The word ‘organic’ for example, is an important (and probably distinct) adjunct to the word ‘natural’ when you’re talking about dog food.

And someone searching for organic dog food would have a higher chance of clicking on a text ad that used the word ‘organic’ than one using the word ‘natural’. Or so we believe, and so these words have been moved into their own ad-groups and tests are underway to compare their performance in the new configuration. More about our findings in a future post.

Overall Campaign Assessment

Beyond the branding issues and some cases where there seemed to be a logical case for breaking one ad-group into two or three, our findings in the Only Natural Pet Store campaigns were pretty good. They had already segregated their content network campaigns from those running on the main search engines, isolated terms with geographic keywords, and separated ad-groups into major campaign sections such covering different business/inventory areas such medical, food, dogs, cats, etc.

With comfort in the basic organization, we’ll next take a closer look at the keywords and match types that fill all these ad-groups.

This post is part of a case-study series on the Commerce360 management of paid search campaigns for onlynaturalpets.com. It is being done with the kind permission of Only Natural Pet Store, and some data has been changed to keep PetSmart guessing. For your convenience, we’re keeping a list of all posts in the series.

When we review an account, we want to take a look at the campaigns and ad groups, keywords, creative (text ads), bids, and the landing pages.

Here’s what we want to look for in each:

• Campaigns and Ad-Groups
  • Is there a logical structure that can organize the account into reasonable and meaningful groups and sub-groups?
  • Are the keywords in the ad-groups properly sorted according to this structure?
• Keywords
  • Are the keywords of appropriate quality, quantity, and diversity?
  • Are match-types set reasonably?
• Creative
  • Are the existing text ads diverse and well written?
  • How wide is the CTR range that the existing ads are achieving?
  • How do these ads compare to those being run by competitors for similar keywords?
  • Does the history suggest that there has been a lot of creative testing?
• Bids
  • What are the average positions of the keywords in the different ad-groups? Within any ad-group are the positions within a tight or widely distributed range?
  • What is the average cost per order, or ROAS within and between the ad-groups?
  • What is the ROI being achieved at the ad-group and keyword levels. What’s the range of ROI within any ad-group?
• Landing Pages
  • How diverse is the set of landing pages being used across the ad-groups and keywords?
  • How well do the landing pages match the conceptual organization of the ad-groups?

The goal is to understand (and later improve) the alignment of keywords, text-ads, and landing pages and then properly value each grouping. Messy organizations, incomplete keywords, poorly written ads, inappropriate landing pages, or illogical bids are all opportunities for improvement.

We often do quick reviews of accounts for prospects, to gain an understanding of the level of existing management and provide some insights as to the potential for improvement and some examples of how we’d approach the opportunity.

But sitting down to review an account after we’ve taken over management is quite different. Now we need more than just a sense of potential, we need to create an actual task list.

In the next post we’ll talk about the first step of our review for onlynaturalpet.com, as we examine the organizational structure of their accounts and make our first changes since taking over account management.

This post is part of a case-study series on the Commerce360 management of paid search campaigns for onlynaturalpets.com. For your convenience, we’re keeping a list of all posts in the series.

Commerce360 has just begun working with OnlyNaturalPet.com on the management of their paid search marketing, and OnlyNaturalPet CEO Marty Grosjean has kindly given us permission to use our work on his account as an ongoing case-study here on our weblog. Our plan is to showcase our methodology, the benefits and impact of our ClickEquations platform, and discuss issues and ideas about PPC campaigns based on situations and experiences from the onlynaturalpet.com account.

To kick-off the project, I spoke with Marty yesterday for the podcast listed below. We discussed:

• A business overview of www.onlynaturalpet.com
• The online marketing programs they’re current running
• Their history of managing paid search in house
• The goals they have for paid search marketing and why they decided to outsource to Commerce360

The podcast is about 7 minutes long. Listen to get a great introduction to the business and their experience in PPC. And watch for the inside story of our work improving the PPC results for onlynaturalpet.com in future posts on this blog.

This post is part of a case-study series on the Commerce360 management of paid search campaigns for onlynaturalpets.com. For your convenience, we’re keeping a list of all posts in the series.