Tag Archives: ppc

Amazon PPC Ads

The ever-expanding Amazon empire is now offering their own Pay Per Click ads.

Amazon Product Ads is an advertising programme designed to provide Amazon.co.uk customers seamless access to products available on external Web sites. As a seller, you simply upload your catalogue of products you wish to advertise and set your cost-per-click bids and budget. Amazon will then display your ads to Amazon.co.uk customers when they shop for your product or related products. Customers who are interested in buying your product can click through to your Web site and purchase the product directly from you.

amazon-ad

As with Google Adwords, you bid for clicks. Minimum bid prices depend on the category of goods you want your ad to appear in. On amazon.co.uk the categories and minimum bid prices are currently:

amazon ad prices

There doesn’t seem to be any restrictions on advertising downloadable software. So it might be worth trying if you software fits into any of the above categories and has a relatively high ticket price (given that typical conversion rates are 1% there is no point paying £0.10 per click for software that you sell for £10). For example, if your software is related to music, you could advertise it alongside musical instruments. I would consider advertising my table planner software alongside books or DVDs related to wedding or event planning. Unfortunately that isn’t an option at present.

amazon ad categories not supported

I could try advertising my software in categories such as Kitchen&Home›wedding favours. But people looking for wedding favours aren’t explicitly searching for table planners, so the click to sale conversion ratio is likely to be well under 1%. Also the minimum bid price in this category is £0.15 and I am guessing that my ads wouldn’t even show if I bid the minimum. Paying >£0.15 per click with a <1% conversion rate for software priced at £19.95 doesn’t make sense. So I haven’t signed up.

It is inevitable that the bid price will inflate over time. So, if you want to try it, now is probably a good time. Amazon.co.uk are also offering £50 in free clicks if you sign up now. You can find out more on the Amazon Product Ads FAQ.

Have you tried Amazon PPC ads? If so, do you have to bid significantly above the minimum bid prices and how do the conversion rates compare with other PPC ads (such as Adwords)?

The declining profitability of Google Adwords

Google Adwords used to be a great way to get targeted traffic cheaply (if you knew what you were doing). I think those days are well and truly over.

I have been using Google Adwords to advertise my table plan software since 2005. The following graphs show some metrics from my Adwords campaigns over that 8 years. The graphs show 12-monthly cumulative figures (e.g. each point represents the value for that month plus the preceding 11 months). Using cumulative data hides some of the noise, including the seasonal variations that are inevitable in a business related to weddings (more people buy my software when it is summer in the northern hemisphere), and makes the overall trends clearer.

Average cost per click (CPC)

Average cost per click (CPC)

Clickthroughs

Clickthroughs

Conversions (sales)

Conversions (sales)

Profit per month

Profit per month

The trends are clear and it’s not a pretty picture. Less, more expensive clicks = less profit. I can either pay more and more per click to maintain the same number of sales. Or I can continue to pay the same per click and get less and less clicks. Either way, my profit goes down. It isn’t a trend I see changing direction any time soon.

I think these long-term trends are mostly due to increasing competition. As more and more companies bid on Adwords for a finite number of clicks, it inevitably drives up the cost of clicks (simple supply and demand). It also doesn’t help that a lot of Adwords users are not actively managing their campaigns or measuring their ROI, and are consequently bidding at unprofitably high levels. Google also does its best to drive up CPC values in various ways (suggesting ridiculously high default bids, goading you to bid more to get on page 1, not showing your ad at all if you bid too low – even if no other ads appear etc).

Of course, this is just my data for one product in one small market. But the law of shitty clickthrus predicts that all advertising mediums become less and less profitable over time. So I would be surprised if it isn’t a general trend. Are your Adwords campaigns becoming less profitable? Have you found another advertising medium that works better?

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.

A small experiment with LinkedIn ads

LinkedIn.com (the B2B equivalent of Facebook) supports Google style pay per click ads. So I decided to run some ads for my seating planner software as an experiment. Here is a brief summary of my (very brief) experiences.

The good news

LinkedIn ads can be laser targeted. You can specify who you want to see your ad based on their job function, company, gender, age group, country and (best of all) the LinkedIn groups they belong to. I targeted 10,102 LinkedIn members who live in wealthy English speaking countries, belong to various LinkedIn groups related to event planning and have appropriate job titles. The campaign was quite painless to set up. It probably took me less than 10 minutes in total and I started getting impressions within an hour or so.

The bad news

The minimum allowed CPC (cost per click) was $2. Ouch. I know from extensive experience with Google Adwords that there is no way I can get a return on that.

The minimum allow CPM (cost per thousand impressions) was $3. If the CTR (click through rate) is around 1% (about what you might expect from Google search ads) this is $0.30 per click. Possibly profitable. If the CTR is around 0.1% (about what you might expect from Facebook ads) this is $3 per click. No better than the CPC bidding. Given that LinkedIn is more similar to Facebook than Google search, I expected the latter. I decided to spend a few dollars to find out. The results are below (click to enlarge):

So, with an average 0.17% CTR, I ended up spending $1.76 per click. Given my average transaction value and a realistic conversion rate I know that I can’t make any return on this. Also the CTR is likely to drop the more often people see the ad. So I stopped the experiment after less than 24 hours, before I wasted any more time or money. As far as I can tell (based on my own cookie tracking – LinkedIn ads don’t have their own conversion tracking) I didn’t make any sales. But that is hardly surprising given the small number of clicks.

Summary

Obviously $19.38 is a tiny amount to spend, but I think it told me what I needed to know about LinkedIn ads. Unless they reduce their CPC or CPM bid prices by an order of magnitude there is no way I can make a return. Of course, if you are selling a product where the average lifetime value of a customer is hundreds or thousands of dollars, the numbers might work out quite differently for you.

Related posts:

Advertising your software on Facebook (=Fail)

Advertising your software on Facebook (=Fail)

Facebook previously didn’t allow the advertising of downloadable software. Someone told me that they had relaxed this policy, so I checked their guidelines. Sure enough they have removed the offending line in their guidelines that used to say:

No ad is permitted to contain or link, whether directly or indirectly, to a site that contains software downloads, freeware, or shareware.

It says in their guidelines that downloadable software that does naughty things such as “sneaks onto a user’s system and performs activities hidden to the user” is not allowed, which is fair enough (see section 14 of their ad guidelines for the details).

Woohoo! As part of my ongoing project to try every legitimate form of promotion known to man, I can try advertising my seating planner software to, for example:

I ran 5 different ads over a couple of weeks. For example:

advertising software on facebookTrying to fit an attention grabbing and informative ad into the very limited strapline and image size was challenging. But I didn’t spend too long agonizing over the ‘creative’ (image and text), as this was just a feasibility study. The biggest problem was the minimum bid prices. Facebook was recommending I bid at least £0.40 per click. Given that the majority of my customers buy a single licence for £19.95 and typical conversion rates for clicks are around 1%, I would be likely to lose money if I bid £0.20 or more (especially when you consider ecommerce fees and support). I bid £0.10, but got no impressions at all. I bid £0.20 as an experiment and got a reasonable number of impressions. As soon as I dropped the bid to £0.15 the impressions slowed to a trickle.

Here are the stats from my experiments, as reported by Facebook:

Impressions: 357,366
Clicks: 310
Click through rate: 0.087%
Total cost: £46.60
Average cost per click: £0.15
Average cost per 1000 impressions: £0.13

Any of you who are used to Google Adwords might be surprised how low the CTR is. But apparently this is quite a reasonable CTR for Facebook. This isn’t too surprising when you consider that people are on Facebook to socialise, rather than to search for stuff.

Of course, the most important metric is the profit. So how many licences did I sell? According to my own cookie tracking: zero. Zilch, nada, nothing, not one. Cookie tracking isn’t 100% reliable, but it seems that a 1% conversion rate might be highly optimistic for a facebook ad. Advertising a £19.95 product on Facebook to people who might be planning to get married obviously wasn’t going to be profitable given my price point, the minimum bid prices and low conversion rate. So I created a new ad to try to target a more focussed demographic, who might convert better and perhaps buy one of the more expensive versions of my product. Ad number 6 was disallowed one minute after it had been approved.

Eh? This ad was very similar to the previous 5 approved ads and for the same product. Their email said:

The content advertised by this ad is restricted per section 5 of Facebook’s Advertising Guidelines. Restricted content includes, but is not limited to: 1. Downloadable products that may affect the user’s computer or browser performance in unexpected or undesirable ways; 2. Get rich quick and other money making opportunities that offer compensation for little or no investment, including “work from home” opportunities positioned as alternatives to part-time or full-time employment or promises of monetary gain with no strings attached. 3. “Free” offers that require users to complete several hidden steps or make additional purchases in order to receive the promised product. We reserve the right to determine what advertising we accept, and will not allow the creation of any further Facebook Ads of this type. Ads for this product, service or site should not be resubmitted.

I didn’t feel my ad/product violated any of those criteria. It was clear in the ad that only the trial was free (not the product) and it doesn’t do anything nasty or sneaky. I emailed them for clarification. Here is the response:

Hi Andy,

Thanks for your email. Please note that we don’t accept ads for downloadable products through our self-service advertising channel. We reserve the right to determine what advertising we accept, and will not allow the creation of any further Facebook Ads for this product.

In order to maintain legitimacy of the products and services promoted on Facebook, ads for downloadable or installable products are only permitted through a direct sales partnership with Facebook. At this time, we’re only able to provide this service to a small set of qualified advertisers.

We’re committed to providing high-quality support for all of our advertisers, and we’ll keep you and your business in mind for the future growth of our ads product. In the meantime, please continue to email us here with any questions you may have and we’ll be happy to answer them for you.

If you have any further questions about why your ad was disapproved for Restricted Content, please refer to our Help Center about downloads at:

http://www.facebook.com/help/?faq=18665

Thanks,

Gloria

Online Sales Operations

Facebook

So apparently, they still don’t accept advertising for downloadable software, unless you are an approved partner, because it ‘may affect the user’s computer’ (even if it doesn’t ). This wasn’t at all clear in their guidelines and they let me run 5 ads before they enforced it (these ads are still running BTW). Thanks Facebook, I like you less with every passing day (and I didn’t like you much to start with). At least I got enough data to show that I was unlikely to ever get a return on advertising a £20/$30 product. I also console myself with the fact that PerfectTablePlan is doing better financially than Facebook (after 7 years and with 500 million users Facebook are finally cash flow positive, but nowhere near recouping the estimated one billion dollars in venture capital) and my product will hopefully still be selling profitably after Facebook has  been buried by the ‘next great thing’ that comes along so regularly in the world of social media.

Yahoo can modify your PPC campaign without your permission

I tried Yahoo pay-per-click a few years ago, but gave up due to low traffic, high minimum bid prices and a horrible user interface. I am glad I did. Apparently Yahoo Search Marketing have given themselves permission to:

  • create ads
  • add and/or remove keywords
  • optimize your account(s)

for US advertisers, without asking their permission first. One can only wonder what ‘optimize’ means – double your bid price? You can revert their changes, but you are still liable for any costs their changes incur. Isn’t this a bit like the phone company deciding you aren’t making enough calls and phoning people on your behalf? There doesn’t even appear to be an opt-out. Yahoo must be getting pretty desperate. Let’s hope they are better at picking new keywords than Microsoft Advertising.

More details here:

If you have a Yahoo PPC campaign you might want to think about cancelling it. Or at least keep a very close eye on it. If you have actually experienced Yahoo making changes to your campaigns please post details in the comments.

(via Adriana Iordan of Avanagate)