One of the great things about the web is that you can measure just about anything. 

Tools like Google AdWords and Google Analytics have made the process of advertising, measuring and optimising a whole lot easier.

Unfortunately, a lot of people don’t use these tools effectively. They focus on the wrong numbers and forget to look at the whole picture.

Biggest trap: the ad’s clickthrough rate

Our clients often proudly announce click through rates of 15, 20 even 25% on some of their AdWords.

Our follow-up question “And how many of those people effectively did what you wanted them to on your website?” is usually met with an embarassed silence.

It’s strange how many people focus only on the ‘CTR’ (= clickthrough rate) column in Google AdWords. That seems to be most marketing people’s only goal: to get as many people on the website as possible.

Google Adwords cleverly exploits that focus on clickthrough rate by giving users the option to display the ads with a higher CTR more often: “Optimise: Display better performing ads more often.”

Focusing solely on CTR makes sense for Google. Each click earns Google money. Focusing solely on CTR doesn’t make sense for you. Each click costs you money.

Example: CTR of 20%

What good is an ad with a CTR of 20% if only 2% of all those clickthroughs results in a sale? Imagine the cost per click is 1 euro and the profit per sold article is 50 euros. Let’s do the math:

• 1.000 people see the ad.
• 200 people click on it and visit your website. Cost: 200 euros.
• Of those 200 people, 4 people buy something. Profit: 200 euros.
• End result: 4 purchases on 1.000 views. Net profit: 0 euro.

Example: CTR of 5%

Can an ad with a CTR of 5% be more successful than an ad with a CTR of 20%? Absolutely. Imagine the cost per click is still 1 euro but instead of 2% of people buying something on your site there’s 10% of people buying. Let’s do the math:

• 1.000 people see the ad.
• 50 people click on it and visit your website. Cost: 50 euros.
• Of those 50 people, 5 people buy something. Profit: 250 euros.
• End result: 5 purchases on 1.000 views. Net profit: 200 euros.

The message: look at the whole picture

Of course an ad’s CTR is important. But you have to look at the whole picture.

• Number of times the ad is shown
• CTR of ad
• Number of people who accomplish the ad’s goal on your website

I took a commercial website as an example because the numbers are very clear there. But even if you’re not selling things on your site, you should do this conversion exercise. After all, those ads are there to achieve something, right? What is that exactly? Put your website’s goals on paper and figure out how to match them to your ads.

Realistic?

Oh yeah. The example I gave above is very realistic. 

As a matter of fact, it’s based on the sales of the Dutch ‘Writing for the web’ tips we used to sell on our website.

The ads that included the words ’40 writing tips for the web’ had very high click through ratios (up to 25%). But we hardly sold anything to those people who clicked through (less than 2%).

The ad in which we mentioned the price of the tips was less popular (less than 3% CTR). But on closer inspection we saw that we sold the tips to nearly 1 out of 3 people (31%) of the people who clicked on that ad.

As soon as we saw that, we deleted all the ads that didn’t mention the price.

Conclusion

Be specific in your ad. Don’t hide things. Don’t gloss things over.

The clickthrough rate may be a bit lower but your net profit will be higher.

How to start?

• Activate the option ‘Conversion tracking’ in Google AdWords (under ‘Tools’).
• Connect AdWords to the software you use to analyse visitor behaviour on your site (Google Analytics, …).
• Analyze the data yourself or get an expert to do it for you.