Tag Archives: Google

Google Ads can charge you anything they like for a click on their partner network

I have been using Google Ads (previously Adwords) since 2005. A lot has changed in that in time. But it still remains basically an auction. You bid how much you are prepared to pay for a click when someone types a particular phrase into Google. Google then decides which ads to show based on bids and a variety of factors. It has always been a basic article of faith that (if you choose manual bidding) you are never charged more than the maximum cost per click you set. But this is no longer true. Check out this recent Google Ads report for my data transformation software, Easy Data Transform.

adwords-cpc

How can the average cost per click be 3x more than the maximum cost per click? I am using manual bidding, am not using ‘enhanced CPC’, have no positive bid adjustments and I haven’t recently changed these bids. I emailed Google technical support. This is the reply I got:

Post reviewing the search campaign : Easy Data Transform, I can see that  you have applied Bidding strategy as Manual CPC, also you have included Google search partners due to which system has charged extra amount. As in Google search partners maximum capping would not work.

For example the keywords: [keyword redacted] in this the maximum cpc is set as while as you have included Google search partners due to which system has avg cpc charged £0.45.

‘Google search partners’ are “hundreds of non-Google websites, as well as YouTube and other Google sites”. New Adwords campaigns are opted in to search partners by default.

So I emailed back:

So when did this policy change?

Is there a limit what you can change for Search partners clicks? If I bid a Max CPC of £0.10 CPC can Adwords charge me £100.00, if it feels like it?

And the reply was:

Andy, I would like to inform you that there is no recent changes made in this policy. However, I would not be able to provide the exact date of change made in this policy. If you have applied the  Max CPC of £0.10, system may charge you £100 if the search partner is enabled at your campaign level.

WHAT? They can ignore my maximum bid and charge me £100 per click (if I am using manual bidding, tracking conversions and opted in to search partners)! I don’t trust Google’s algorithms to bid for me based on prior experience. Presumably they can’t charge more than my daily budget, but they can use this whole budget in a single click, if they choose.

Running a report you can see that the average cost per click of the partner network (red) has shot up recently for my Easy Data Transform campaign:

adwords-network

Digging a bit more I found this.

smart-bidding

So it looks like they quietly introduced this new policy in October 2018. I don’t remember being told about this. It doesn’t mention this policy if you hover over max CPC:

adwords-tip

It is only if you click ‘Learn more’ and read to the bottom of that page that they tell you about the exception for network partners.

I checked with my goto Google Ads expert, Aaron of softwarepromotions.com. He knows Google Ads inside out, but he hadn’t heard of this policy either.

Google Ads have a long history of quietly introducing major changes and not telling their customers, let alone asking them to opt-in. For example with in-app ads.

This change is particularly galling given that clicks from the partner network are generally lower quality and convert significantly worse than clicks from Google itsself.

So far the costs to me of this change don’t appear to be significant. But they could be very significant to people with larger accounts. I did a quick surf and I found this on webmasterworld.com, dated March 2019:

Don’t have all the numbers yet but it looks like so far this month about 60% of our spend this month has been on these inflated clicks. And when I say inflated, on the extreme end we have a keyword set to $0.27 CPC and the average CPC has been $4.67, and almost all clicks for the keyword have been from the search partner network.

I have turned off the Google partner network on all my campaigns. You might want to do the same.

disable

Google CPA bidding goes wild

I have been using Google’s AdWords Cost Per Action (CPA) bidding for a number of years. I set the maximum I was prepared to pay for a conversion  (e.g. a successful install of my software). AdWords then set the bid price to try and get me conversions at that price or less. It worked pretty well for a number years and it saved me a lot of time tweaking bid prices. But Google recently phased out Maximum CPA bidding and forced me to switch to Target CPA bidding. From this point I could only specify the average price I was prepared to pay per conversion. This is where it all started to go wrong.

AdWords started to bid crazy prices. Check out the screenshot below. You can see that in each case the average Cost Per Click (CPC) is more than the CPA price. For example, in the first row I have set £0.50 as the price I am prepared to pay for conversions from the ‘seating charts’ ad group. Typically about 10% of people who click on one of my Adwords ads will install the software and trigger a conversion (which is fairly standard). So a £0.50 CPA means that AdWords should be bidding somewhere around £0.05 per click. Google knows this, because they have vast amounts of data from my AdWords account (11 years worth). But the average price for the last 3 clicks was £1.17 per click. WTF Google – that’s my money!

Given that the base version of my software costs £19.95 (one time fee) there is no way I can make a profit at £1.17 per click. Not all the bids are this crazy. But there are enough crazy bids to put my whole AdWords campaign into a tailspin. So I have been forced to switch back to manual CPC bidding. If you have also been forced to switch from Maximum CPA to Target CPA bidding, then I suggest you keep a careful eye on your cost per click.

Google bans hyperlinks

Summary: My AdWords account was suspended after ten years of continuous advertising. I was told that hyperlinking from my domain to any another domain was a breach of Adwords policy. This is clearly ridiculous and not what their policy says. But I had to appeal higher up and it took 11 days to get my suspension overturned.

I have been advertising my PerfectTablePlan seating plan software continuously on Google AdWords since the 7th March 2005. Just shy of 10 years. Google emailed me on the 20th Feb. But it wasn’t a thank you for 10 years of loyal custom. It was to tell me they had suspended my account.

Hello,

We wanted to alert you that one of your sites violates our advertising policies. Therefore, we won’t be able to run any of your ads that link to that site, and any new ads pointing to that site will also be disapproved.

Here’s what you can do to fix your site and hopefully get your ad running again:

1. Make the necessary changes to your site that currently violates our policies:

Display URL: perfecttableplan.com

Policy violation: Software principles
Details & instructions: https://support.google.com/adwordspolicy/answer/50423?hl=en

2. Resubmit your site to us, following the instructions in the link above. If your site complies with our policies, we can approve it to start running again.

There was no detail about what I had done wrong. As far as I was aware, I complied with their policies. I had a look through the linked page, but it was about “Malicious or unwanted software”, “Low value content” etc. I couldn’t see anything that obviously applied to my website or software. My software is bona fide. I’ve been selling it for 10 years. It was used to help plan the seating at one of the official events for the Queen of England’s Diamond Jubilee, don’t you know!

I went to the AdWords support page to try and work out who I could talk to. A chat pop-up appeared. So I did an online chat with a Google AdWords employee. He told me that I needed to:

  1. Add a link to the uninstall instructions on my download page. I told him that my uninstall was completely standard for the platforms I support (Windows and Mac). But he insisted.
  2. Remove some links that were ‘redirections’ from my reviews page.
  3. Explain the value of what my software did. I pointed out that this is what the entire website is for. He backed off on that one.

Google doesn’t put uninstall instructions on the download pages of its own software (exhibit A). I was annoyed by the hypocrisy. Also their policy says you mustn’t:

[make] it difficult for users to disable or uninstall the software

It doesn’t say you need to include uninstall instructions. However I wrote a page of uninstall instructions and linked to it from the download page.

I looked at my reviews page. There were 16 links pointing to genuine reviews of my software on various blogs, download websites, magazine websites and Amazon. However some of the links pointed to pages that no longer existed and a few were redirected at the other end. All the redirections seemed completely harmless (for example one was just a redirection to the the same page, but http instead https). But I removed all the links except this one:

amazon_reviews_resized

This link just pointed to http://www.amazon.com/gp/product/B0017YOSE2/. No redirection at the other end.

I then emailed AdWords support on the 21st Feb to say that I had complied with their requests. I heard nothing for several days. I tweeted them on the 24th and they asked me to fill out an online contact form with my details. I did that on the 25th.

The next day I was woken around 8am by a phone call from AdWords support. I think it was the person I did an online chat with. The line wasn’t great, English obviously wasn’t his first language and I hadn’t had my morning coffee. So it wasn’t a great conversation. But, as far as I understood it, he told me that he couldn’t remove the suspension because I was ‘redirecting’ people from my review page to amazon.com. I tried to point out that it was just a hyperlink and it went exactly where it said it would. But he seemed to be saying that I wasn’t allowed to hyperlink to any external domain from my perfecttableplan.com domain. That is obviously ludicrous and I just about managed to stay civil. Surely I had misunderstood. Soon after I received this email:

Hi Andy,

As per the conversation we had over the phone. I would suggest you to remove the link from your website wherein it redirects me to a different website.
If I click on the link it is taking me to Amazon.com, which is a redirection from your website.

The policy says it has to be on the same website but I guess it is deviating a bit from it.
You can provide information about your products and services in the website but ensure those are not clickable.

Please see the link for policy forum for bridge page here.

Once the changes are done, please write back to me so that we can consult and get this done for you at the earliest.

Have a lovely day ahead.

I emailed back:

I have now removed the link to Amazon.com from this page, as directed:
http://www.perfecttableplan.com/html/reviews.html

> Please see the link for policy forum for bridge page here.

It says:

“Landing pages that are solely designed to send users elsewhere

# /Examples/: Bridge, doorway, gateway, or other intermediate pages”

The review page isn’t a landing page. It isn’t linked directly from any of any of my Google ads. To get to it the user has to:
1. click on the ad
2. click on ‘customers’ in the navigation bar
3. select ‘review’
4. click on the Amazon.com hyperlink (there is no automatic redirect)

Also I am only linking to that page so they can read independent reviews of my product. I don’t [want] them to buy it from Amazon!

…
Please re-review my site at your earliest convenience.

The reply by email was:

Andy,

I understand your point, but from your website the link is taking to Amazon.com. When I click on the link I am taken to this page.

You can write in as for further information please visit this link xyz.com/reviews.. [1]

The link should not be clickable. It is taking from your website to a new webpage.

Request you to change it so that we can review and get it enabled.

Awaiting your response.

Have a great day ahead.

I replied:

I was phoned by someone from Google this morning and have now removed that link.

Can you clarify the situation regarding links to other sites. Does the AdWords policy mean that no site advertising on Adwords can ever hyperlink to another site (surely not)? Assuming that isn’t the case, what hyperlinks are allowed and what hyperlinks are not allowed?

He replied:

Hi Andy,

Thanks for writing in, hope you are doing great.

With regards to your email I would like to confirm that any links that are taking a user to a new website is not allowed.
You can provide links, which are not clickable.

The user must not get redirected to a new website.

Hope this answers your query.

I have bolded the offending line for emphasis. There it is in black and white. No hyperlinks.

I replied:

So I can’t have a clickable hyperlink to *any* non http://www.perfecttableplan.com page from *any* http://www.perfecttableplan.com page without breaching AdWords policy? Is that correct? Please clarify.

He replied:

Hi Andy,

Thanks for writing in again.

With regards to your email I would like to confirm that any links which are taking a customer to a different website are not allowed.
If the link is taking the advertiser to any specific page of your website then it is alright but it should not redirect any other website.

Hope this helps.

Feel free to drop in your questions or queries. I will be glad to assist you on them.

Have a great day ahead.

There it is again. A world wide web without hyperlinks between domains? This is clearly absurd.

I approached AdWords expert Aaron Weiner from Software Promotions. He agreed that this was a complete misinterpretation of their policy and kindly offered to talk to his Google contacts in the US to see if they could help resolve it. On the 28th Feb he forwarded me this email from Google:

I have taken a look at the site and the previous interactions that your client has had with our team. I apologize that the communication has not been very clear for your client – I am going to take ownership of it from here and make sure that we get this site back up ASAP.

From what I can see now, the site appears to be compliant with our policies. I have contacted our policy team to have them review it right away. I have also asked them to clarify the issue with linking to third party reviews. Obviously we would not want an ad to direct to a different domain, but I do not see any problem with linking to reviews once the user has landed on your site. I am going to get some clarification on this to see if we are missing something,

Thank you for your patience and please let me know if you have any questions. I will be in touch soon.

On the 3rd March I got an email from Google:

Great news! We’ve re-reviewed your site and determined that the following site complies with our Advertising Policies

Followed by this email forwarded by Aaron:

Thank you for your patience while our policy team reviewed your website. They confirmed that the site is compliant with our policies and you will see that it is now re-enabled. I checked the ads this morning and I can see that they are serving.

I also confirmed with them that there is no policy against linking to third-party reviews on your website. You can add those links back to the reviews on your site.

I read through the chat that you had with ******* and I think that there may have just been some misunderstanding as to the specific problem with the site. I sincerely apologize for the confusion caused by that. I have reached out to ******* to clarify the policy with him.

It’s pretty shocking that a Google employee (or contractor) should have a such a poor grasp of the  policy they are enforcing. It shakes my faith in Google. Previously I thought that, even if they were a little bit evil, they were at least competent with it.

Also the entire situation was handled badly. They could have sent me an email clearly stating the policy violation and giving me a few days grace to fix it. Surely I deserve that much after 10 years as a paying customer?

My account was suspended for a total of 11 days and I wasted quite a lot of time and mental energy. For what? I removed a few hyperlinks from my reviews page and added a link to some uninstall instructions. How is that going to help anyone?

I talked to a number of other software authors and found that quite a few of them had also had their AdWords suspended for policy violations, such not having uninstall instructions. Oliver Grahl of PDF Annotator, who has also been suspended previously, commented:

“Every day, live your life as if it was your last day (getting traffic from Google). One bit in their databases can ruin a whole business and all the lives behind it. Pretty scary.”

I understand that Google is engaged in a continual battle with people trying to game the system to their advantage. But they need to be careful that legitimate businesses don’t end up as collateral damage. Training their staff adequately would be a good start.

Are you wasting your AdWords budget on in-app ads?

2 out of the last 3 AdWords campaigns I have looked at for consulting customers were spending substantial amounts of money on worthless in-app ads, without even realising it. Feast your eyes on the following:

in-app placement ads$1,071.04 spent on clicks from a single game app, that resulted in 0 trials of the software product being advertised. Hardly surprising given that it was a B2B app that cost around $1000. On further investigation this company was spending a substantial percentage of its AdWords budget on completely useless clicks from in-app ads. Ouch.

And this is from a different AdWords account for another B2B software company:

in-app display ads

Many of the apps in the iOS and Android app stores are now funded by in-app advertising. The creator of the infamous Flappy Bird game claimed to be making tens of thousands of dollars per day like this.

Flappy Bird In-App ads

(Note that the ad shown in the screenshot is not related to either of the two companies I mentioned above).

At least the ad is well away from the ‘play’ button. Some, less scrupulous, app makers place the ad in such a way that it is easy to accidentally click on it.

Who would want to pay for in-app ads, knowing that most of the traffic will be accidental clicks from frustrated gamers (many of them children) just trying to get to the next screen? If you run ads on the Google display (content) network, it might be YOU. Google started showing display ads in apps some time ago and it seems that all existing display campaigns were automatically opted in. Worse still, the apps they are advertising in appear to have no relevance at all to your content campaign keywords.

App makers get some money, the public gets free apps and Google makes mega bucks. The advertiser is financing the whole thing and getting (in many cases) nothing in return. But don’t feel too smug. If you have a display campaign that you aren’t carefully monitoring, you might also be throwing away money. To find out:

  • Log in adwords.google.com.
  • Click on All online campaigns.
  • Choose a sensible time frame, e.g. the last 6 months.
  • Click on the Display network tab.
  • Click on Placements.
  • Click on the Cost column to order from highest to lowest cost.
  • Look down the Placement column for entries that start with Mobile App.

Adwords display placements report

While you are there, it is also worth checking the relevance to your product of the other sites you are running display ads on.

Hopefully no horror story awaits you. If it does, you can exclude the offending placements to stop your ads appearing there again.

exclude AdWords placement

But this is a bit like playing whack-a-mole, as you will be continually excluding new apps (I haven’t found a way to opt out of in-app ads wholesale). Alternatively, just pause your display campaigns. Personally I gave up on display ads some time ago. The conversion ratios were so miserable (much lower than search ads) that I could never make any money on them.

If you have been stung for hundreds or thousands of dollars, it may be worth complaining to Google, to see if you can get any money back on the grounds:

  • You never explicitly opted in to in-app ads.
  • The apps your ads appear in bear no relationship to the search terms in your content campaign.

I have no idea if that will be successful, but it might be worth a try.

Google are continually changing the rules of the AdWords game and you would be naive to assume they are doing so with your best interests at heart. If you are running an AdWords campaign you must monitor it continuously or bad things will happen.

Related articles:

Upgrade your Adwords accounts before the 22nd July – or else!

google adwordsGoogle will automatically switch all Adwords campaigns to ‘enhanced’ on 22-July-2013. If you don’t do it before then, Google will do it for you. And you can be confident they will be thinking of their interests, rather than yours. The changes are mostly bad news for those of us that sell software for desktop computers. In particular you can no longer choose not to bid for clicks on tablet devices. I would like to have more control over how I bid on different platforms, not less, so I am not happy about the changes. However your choices are either to upgrade your campaigns to ‘enhanced’ or close your Adwords account.

You can at least bid less for clicks on mobile devices. If you are selling downloadable software that doesn’t run on mobile devices, I recommend you set your bid adjustment much lower for mobile devices. My own analytics data tells me that mobile devices only have one tenth the (measurable) conversion rate of desktop/laptop computers. So I have set my mobile bid adjustment at -90% for mobile devices. Presumably you can set it to -100% if you don’t want to bid for mobile clicks at all. I don’t understand why advertisers aren’t being given the same option for tablet devices.

Note that you can’t set a mobile bid adjustment for CPA campaigns. However Google should notice the lack of downloads and sales on mobile devices and adjust the mobile bids down for you automatically.

Upgrading is pretty straight forward and should only take a few minutes. More details on the software promotions blog.

The imminent demise of Google Reader

Sadly, Google is killing Google Reader on 01-July-2013. If you are reading this blog using the RSS feed via Google Reader, I suggest you start looking for another RSS reader. I have been trying feedly. It is ok, but so far I prefer Google reader. What is your favourite Google Reader alternative?

Setting an optimal bid price for Google CPA bids

A couple of years ago I wrote up the results of an experiment comparing Cost Per Action vs Cost Per Click bidding in Google Adwords. At the end of the experiment I decided that I did trust Google CPA bidding, but the results from CPA bidding weren’t compelling enough for me to switch. So I stayed with my mature CPC campaign. Subsequently I spoke at length with Adwords guru David Rothwell and Adwords master practitioner Alwin Hoogerdijk. They convinced me that:

  • I hadn’t really given Google CPA enough learning time – the more data Google has the better it should be able to do. The mighty Google brain might even be able to spot and exploit patterns I would find very difficult to emulate (e.g. based on season, country, day or week or time of day).
  • I should switch from paying per sale to paying per download, as this would give Google an order of magnitude more data to work with.
  • CPA bidding would require a lot less of my precious time to manage.

So I switched back to CPA. This time measuring a conversion as a successful download and install (my table planner shows a help page in a browser on first run, this contains the Google conversion tracking script).

So now, instead of having to choose thousands of bid prices (one for each keyword and match type in each campaign), I had to choose a single bid price – what I am prepared to pay Google for a download. If I pay too little for a download: Google won’t show my ads much, I won’t make many sales and my profit will be low. If I pay too much for a download: Google will show my ads a lot, but the amount I pay for each conversion will be high and my profit will be low. In between their should be a ‘sweet spot’ that gives me optimal profit. But how to find that sweet spot?

Looking at analytics data I have a good idea at what rate Adwords traffic converts to sales. I chose a CPA bid based on this and then I randomly varied the bid up or down every 7 days (some days of the week perform consistently better than others for my product). The graphs below show the results. Each data point is 7 days of data. The black lines are linear trend lines. I deliberately haven’t put values on the axes, but the x and y axes are all linear, starting at 0.

The trends are pretty clear. Increasing CPA bid price:

  • increases the number of times your ads are shown
  • makes little difference to the click through rates
  • decreases the click to download and download to sale ratios

So higher bids means more sales, but also a higher cost per sale. But, of course, the really important metric is profit. So I worked out the average daily profit from Adwords traffic, which is the net sales income (gross sales minus sales costs, including payment processor fees and support costs) minus Adwords costs. Again each point is 7 days of data. The black line is a 2nd order polynomial trend line.

The data is quite noisy. But some data is a lot better than none and there does appear to be sweet spot about where the red arrow is. The curve is fairly flat meaning that I don’t have to be too precise in my bid price to get a near to optimal return. But if I bid twice the optimal price my profit will drop by about 35%.

In an ideal world I would have run all these different bid prices concurrently, instead of one after the other. But that just isn’t possible with Adwords at present (you can use Google Adwords experiments to split test bid prices, but only 2 at a time). Also I could have gathered a lot more data, used longer time intervals (7 days probably isn’t long enough for Google CPA to get into its stride) and bid a lot higher and lower, to make the trends clearer. But I wasn’t prepared to spend the extra time and money required.

If you are using CPA bidding you should be able to carry out a similar analysis on your own Adwords account to find your own CPA bidding sweet spot. If you are still using CPC, perhaps you should consider switching to CPA and let Google do some of the heavy lifting for you. You can switch any campaign that has 15 or more conversions per month to CPA bidding in the ‘Settings’ tab.

You can always switch back to CPC later. If you aren’t using Google conversion tracking, well you really should be.

A word of warning. Not all downloads are equal. You might think that download to sale rates would vary a lot less than impression to click and click to download rates (I did). But download to sale ratios can vary a lot between different campaigns, even for the same product. For example, my analytics data shows that downloads from Adwords display (=contents/adsense) traffic only convert to sales at around a quarter of the rate of Adwords search traffic. So display campaign downloads are worth a lot less to me than search campaign downloads and I set my CPA bids accordingly.

I showed a draft version of this post to Alwin Hoogerdijk of Collectorz.com collection database software, who first persuaded me to switch back to CPA and knows a lot more about CPA than I do. He had the following to add:

When using CPA bidding you should give Google more room to experiment. On search, this means using more broad match terms, or at least modified broad match. And less negative keywords (I removed a lot of my negatives lately). The idea is that Google will automatically find out what works and what doesn’t (again, this may take a lot of time).

On the Content Network it means being less trigger-happy with the site exclusions. Without CPA bidding, I would be more likely to exclude generic sites like Facebook, about.com, etc… But with CPA bidding, I tend to allow the optimizer to display on those sites and the find the right pages within those sites to show my ads on.

In my experience, the optimal CPA bid can vary (wildly) between products, campaigns, etc. . Content Network CPA’s in general tend to be much lower, for the same products. Strangely enough, content network visitor sign up (or downloads) are worth less than search traffic sign ups. Which wasn’t what I was expecting. Of course, content network traffic is less targeted in general so one would expect a lower sign up rate. But even if those visitors sign up, they convert less well to actual sales too. Tricky.

Is it worth advertising Mac software on Google Adwords?

I learnt a long time ago that people will happily click on totally irrelevant pay per click ads. For example, if you bid on “seating plan” I can assure you that a significant percentage of people searching for “boeing 747 seating plan” will happily click on your ad titled “wedding seating plan”. They won’t buy anything, as they aren’t interested in wedding seating plans, but you still have to pay for each click. You can stop your ad showing to these searchers by adding “boeing” and “747” as negative keywords. Problem solved.

But what do you do if you are selling software that only runs on Mac OS X? The vast majority of searchers are running Windows. Indiscriminate clicks by them could quickly turn your Adwords ROI negative. In your Adwords campaign settings you can choose to only show ads on desktop computers and laptops. But you can’t choose the operating system.

As discussed above, putting “Mac” in the title is unlikely to be enough. You can’t use negative keywords, because the vast majority of Windows users searching for, say, backup software will type “backup software” not “Windows backup software”. You can just bid on searches containing keywords “Mac”, “Apple” or “OS X”, but will this be enough? My general advice to Mac only software vendors was to avoid Adwords, unless the ticket price of their software was in the hundreds of dollars. But, as my software runs on both Windows and Mac, I didn’t have any data to back this up.

Recently I got some data on Adwords clickthrough rates for a Mac only app (www.puzzlemakermac.com) by Hokua Software. They have kindly allowed me to share the data.

Initially they bid on generic keywords, such as “crossword maker” and ran ads such as the following with “Mac” displayed prominently in the title:

The results from analytics: 60% of the people clicking on the ads were on Windows and 40% on Mac.

Then Google banned them from the word “Mac” in their ads (it is possible to get this reversed with the express permission of Apple, but I don’t know how likely they are to grant this). So they switched to “OS X” in the ad, which hasn’t been blocked (yet).

The results from analytics: 73% of the people clicking on the ads were on Windows and 27% on Mac.

Then they restricted their bids to Mac targeted keywords such as “mac crossword maker”.

The results from analytics: 23% of the people clicking on the ads were on Windows and 73% on Mac. But there was a big drop in the number of impressions.

I think it is going to be almost impossible for anyone to get a return from Adwords when the majority of their clicks have no chance of generating a sale. So only bidding on Mac specific keywords seems to be the way to go. But there will still be a significant number of wasted clicks from Windows users. Also any Mac users who don’t use the appropriate keywords won’t see your ad. Consequently the return on time and money invested is likely to be a lot lower than Windows, cross-platform and web developers can expect. If you have a Mac only product with: a high ticket price product, well-defined keywords and limited competition, it might be worth trying Adwords. But otherwise it is probably better to wait and see if Google release OS targeting.

Of course, you could always use one of the free Adwords vouchers that Google are handing out like confetti (I get one every month in my PC Pro magazine) and try for yourself. This is how Hokua software got the results above. If you do, I would be interested to know how your results compare.

5 great ways to waste money in Google Adwords

google adwordsI have looked at quite a few Google Adwords accounts as part of a  1-day consulting package I do for other microISVs and small software vendors. I have also talked to a lot of people at conferences and on forums about Adwords. It clear that a lot of people are wasting a lot of money on Google Adwords, sometimes with really basic mistakes.

For example:

  • paying $1.50 per click to advertise a $20 utility
  • paying $1 per click for an expensive, English language only development tool in some of the poorest, non-English speaking countries in the world.

Ouch.

Below I list 5 great ways to waste money in Adwords. I have seen them far too often. I have considerable admiration for what Google has achieved. But I think Larry and Sergey are probably rich enough already. I would like to see a lot less people throwing money at them and getting nothing useful in return.

1. Don’t use conversion tracking

conversion tracking adwords

With conversion tracking you decide a goal to track (typically a customer buys your software) and put a small script provided by Google on the appropriate page (e.g. the ‘thank you for buying’ page). Google will then use cookie tracking to calculate the cost per conversion for your ads and keywords. It is that simple and you can set it up in a few minutes. I can’t understand why anyone wouldn’t use conversion tracking. With conversion tracking you will soon notice that some ads and keywords convert consistently better than others, often much better. Armed with this information you can optimise Adwords by changing bid prices and deleting under performing ads. Without conversion tracking it is pure guess work.

Conversion tracking isn’t perfect:

  • Adwords cookies time out after 30 days. If someone buys 31 days after they click your ad it won’t be tracked. And the cookie may be pushed out of the cache before 30 days.
  • If someone clicks your ad on one computer and then buys it on another computer (or even using a different browser on the same computer) the conversion won’t be tracked.
  • Some customers may have cookies disabled.

But imperfect data has to be better than no data. Obviously the 30 day limit on cookies is problematic if you are selling software with a sales cycle that is typically 30 days or longer (e.g. software with a 30 day trial). In that case you are probably better off tracking downloads, rather than sales. The fact that someone takes time to download your software, rather than bouncing straight out of your site, at least shows some interest. If you have stats which show your typical download to sale ratio (and you should) you can use this to work out what a download is worth, and set your bid price accordingly.

2. Don’t use negative keywords

adwords negative keywords

My own experiences with Adwords quickly showed me that people will click an ad, even if it isn’t at all relevant to what they are searching for. For example people searching for “747 seating plan” will click on an ad with the title “wedding seating plan”. It is the nature of the web that people are surfing rather than reading, and clicking on an irrelevant ad doesn’t cost them anything. You can avoid a lot of wasted clicks with carefully set-up negative keywords. For example, you can be sure that I have “747” set up as a negative keyword.

Ways to find negative keywords include:

  • Generating ‘Search Query Performance’ reports from Google Adwords reporting
  • looking through your web logs/analytics for the sort of terms people are typing into search engines to find your site
  • using Google’s keyword suggestion tool
  • using Google suggest

There is also a useful list of negative keyword suggestions on Alwin Hoogerdijk’s blog.

3. Advertise in developing countries

adwords country selection
Over a billion people have access to the Internet. Many of them are in developing countries and aren’t realistically going to buy your software due to a combination of: cost (even $20 is a lot of money to people in many developing countries), payment issues (they may not have access to credit cards), language issues (your software isn’t localised for them) and cultural issues (there just isn’t much respect for intellectual property and copyright in many parts of the developing world). But that certainly won’t stop them clicking on your ads and you still have to pay for the clicks.

Start with wealthy countries where plenty of people speak a language your software has been localised into. If you really think you might be able to make a return in developing countries, then test it by creating a separate campaign that only runs in these countries and set your bids much lower (it is very easy to duplicate a campaign with Adwords Editor).

4. Bid too much

adwords bids

Lets use an example:

  • Your software sells for $30, of which you get $20 after subtracting ecommerce fees and average support costs.
  • Your typical visit to sale conversion ratio is about 1%.

That means you will only break even if you pay $0.20 per click through Adwords. Personally I find it hard to justify paying more than 50% of my profit to Google. So I wouldn’t bid more than $0.10 per click. If I couldn”t get any impressions at $0.10 per click I would try to either improve my quality score (e.g. improve my ads or delete keywords with low clickthrough rates) or find cheaper ‘long tail’ keywords to bid on. Paying $0.20 or more just to ‘get on the first page’ of Google is crazy (unless perhaps, it is a loss leader for market research purposes). You can’t make up on volume what you lose on each sale!

5. Don’t monitor your results

adwords reporting

Leaving your adwords campaign running for months on ‘auto pilot’ is ill-advised. Adwords is a constantly changing landscape. Google is continually changing the system and your competitors are coming and going and changing their Adwords campaigns and their products. So you need to continuously monitor how you are doing.  Google makes this very easy. For example, you can just set up Adwords reporting to email you a weekly summary of the number of conversions and the cost per conversion for each adgroup. A quick glance through this will let you know if things are going awry.

Conclusion

Adwords can be a very responsive, cost effective and well targeted form of advertising, if you take the time to learn the ropes and experiment. Below is a graph of my return on investment from Adwords for my table planning software over 5 years (almost certainly an underestimate due to the short-comings of conversion tracking, as discussed above). You can see that, after a few months finding my way, I was able to get a consistent ROI of around 4 or 5 to 1 and maintain this in the face of increasing competition.

adwords ROI graph

ROI = number of dollars in sales for each dollar spent on Adwords (1=break even).

Adwords is a complex system and the defaults are weighted in the house’s favour. In this article I have only touched on a few of the biggest mistakes I see. Google will give you plenty of rope to hang yourself and there are lots of other, less obvious ways to lose money. You really need to take the time to learn the system and experiment if you are going to have any chance of getting a decent return.

When I started with Adwords 5 years ago I read the Perry Marshall e-book on Adwords (beware – long copy!). I found it quite helpful. I assume they have kept it up to date. If nothing else, you will learn what it is like to be relentlessly marketed and upsold to. Google also has lots of free Adwords documentation and videos. If you go to conferences such as SIC or ESWC it well worth listening to Adwords specialists such as Dave Collins of softwarepromotions.com (formerly sharewarepromotions.com) talk about Adwords. There is also lots of useful information in the blogosphere. Start with a small daily budget and gradually increase it as you learn what works for you.

If you haven’t got the time or inclination to learn the system and experiment, pay someone who knows what they are doing to do it for you or stay well away from Adwords. Also bear in mind that Adwords works better for some products than others. If I was selling a $20 Mac-only product in a market with lots of more expensive competitors, I probably wouldn’t even bother trying Adwords.

** Update **

I used a deliberately provocative headline for this post, because I wanted to emphasize the fact that a lot of people are wasting a lot of money on Adwords. It seems to have worked in terms of traffic. But, judging by comments here and on Hacker News it has also confused some people. Sorry about that. To clarify, the sections heading are telling you how to waste money. To maximize your ROI you should do the opposite:

  • use conversion tracking
  • use negative keywords
  • only advertise in richer countries
  • not bid too much
  • monitor your results

A test of Cost Per Action (CPA) vs Cost Per Click (CPC) in Google Adwords

CPA vs CPCThe traditional approach to Google Adwords is to set a bid price for each keyword. This is known as Cost Per Click (CPC). Google then then uses the bid prices in conjunction with a secret formula (the quality score) to decide how high to rank your ad in the Adwords results. If you bid more, your ad will appear higher and typically get more clicks, but your cost per click will increase. So setting an optimal bid price is important. Bid too little and you won’t rank high enough to get a decent number of clickthroughs. Bid too much and you will potentially end paying more to Google than you recoup in sales.

An alternative approach is to tell Google Adwords how much you are prepared to pay for a particular action, e.g. a sign-up, download or sale. This is known as Cost Per Action (CPA) or Conversion Optimizer. Google will then automatically calculate your bid prices and attempt not to exceed the CPA you set (although this isn’t guaranteed).

CPA sounds great. I can stay in bed a bit longer while the mighty Google brain does the bid tweaking for me. Unfortunately I wasn’t able to use CPA. I  count sales as conversions (not downloads) and I have my adwords account split into a number of campaigns by geographic region and by type (e.g. search vs content). Having my campaigns structured like this, rather than one monolithic campaign, makes for more flexibility (e.g. different ads, phrases and bid prices for different geographical areas) and more useful reports (e.g. separate reports for search and content). But it also meant none of my Adwords campaigns made the minimum threshold for conversions per month.

When Google dropped the minimum threshold for CPA to 30 conversions per campaign per month, one of my Perfect Table Plan search campaigns became eligible. So I did an experiment. I ran a campaign for 4 weeks using CPC, then 9 weeks using CPA, then another 4 weeks using CPC. I set the CPA bid to roughly the average cost per conversion I got for CPC. I was curious to see if Google would find sweet spots that I had been missing or whether they would bid as high as they could to take as much money off me as possible. Summary: CPC outperformed CPA on all key metrics, including: 4.4% higher conversions, 9.4% lower cost per conversions and 8.0% higher profit.

The detailed results are as follows:

metric CPC  (vs CPA)
impressions/day +13.9%
clicks/day +1.3%
conversions/day +4.4%
CTR -11.1%
conv rate +3.1%
income/day +4.4%
cost/day -5.5%
CPC -6.6%
profit/day +8.0%
PKI -5.2%
ROI +10.4%
cost per conversion -9.4%

In graphical form (click to enlarge):

CPA vs CPC graph 50pc

Notes:

  • The values given are taken by computing (CPC metric – CPA metric)/(CPA metric). E.g. ROI of +10.4% means that CPC had a 10.4% higher ROI than CPA.
  • Only a single (geographically based) search campaign was measured. The total number of conversions during the time period of the test was in 3 figures.
  • I only measured sale conversions. This gives me less data than measuring downloads, but I think it is unsafe to assume the number of downloads correlates closely to the number of sales.
  • The PerfectTablePlan sale price is £19.95/$29.95. To calculate profit I only counted 75% of the price of a sale (the other 25% was assumed to cover the cost of support, ecommerce fees and other overheads associated with the sale).
  • Each of the time periods was a multiple of 7 days to avoid any issues with different results on different days of the week.
  • I ran CPC for an equal amount of time either side of the CPA test to try to balance out any seasonal factors.
  • Google conversion tracking uses Cookies and is therefore not 100% accurate.
  • PKI is Profit Per Thousand Impressions.
  • ROI is Return On Investment.

It wouldn’t be wise to draw any sweeping conclusions from one test with a limited amount of data. However I believe the results show:

  • A CPA campaign running for 9 weeks wasn’t able to outperform a mature CPC campaign. The CPC campaign had been running for over 4 years, but one would have thought CPA would have been able to use that pre-existing  data. CPA might have performed better if given longer. It would probably also have done better against a less mature CPC campaign.
  • Google didn’t rob me blind using CPA bidding. The CPA cost per day was only 5.5% higher.
  • The results weren’t hugely different. On the basis of the above results one might still conclude that CPA is superior to CPC as it requires less time to manage.