Welcome to the final Online Advertising Answers of 2019! Here are my answers to some of the most interesting questions I’ve been asked on Quora.
This month’s questions:
- How do I increase the CTR and reduce the CPC on Google Ads?
- Do you breakeven with Google Adsense?
- What else to do to make my banner campaign work?
Let’s get started...
A: “Hi Debojit,
This is the inherent problem built into Google Ads – there are two things you need to optimise towards at once. Most accounts want their CTR to go up AND their CPC to go down, but working towards both goals at once is impractical.
There is however a simple way to increase your CTR and reduce your CPC on Google Ads at the same time – you combine the two metrics. Google Ads allows you to create your own metrics, and so by creating one which combines CTR and CPC you can optimise to both at once without prioritising either.
[Before I explain how to do this though, it’s worth noting that you should always optimise towards conversions where possible. Conversions are much more valuable to you than clicks, and so if you can set up conversions and run a CPA campaign you should do that instead.]
Value For Money – A better metric for Google Ads
I call this metric Value for Money (or VfM for short) because it tells you what each dollar (or pound, yen, etc) you spend on CPC actually gets you in terms of CTR.
VfM = CTR ÷ CPC
The great thing about this equation is that if you increase your CTR, your VfM goes up, and if you decrease your CPC then your VfM will go up. Basically the higher the VfM the better you are doing! It just makes life easier.
The VfM calculation also enables you to compare ads or campaigns which are performing vastly differently.
An Example Using VfM To Improve Results
Imagine you had one campaign with a $10 CPC which is getting 85% CTR, and another with a $0.50 CPC which is getting a 6% CTR. Which one is better?
The answer, in this case, is the low CPC campaign.
The high CPC campaign has a VfM of 8.5 (so each dollar of CPC is buying you 8.5% CTR). However, the low CPC campaign has a VfM of 12 (so each dollar of CPC is buying you 12% CTR). The low CPC campaign gives you more bang for your buck!
However, increasing the budget of a campaign can often reduce performance (as the best clicks get used up first). So if the low CPC campaign dropped to a CTR of 4% after the budget increase – then it would also drop to a VfM of 8 (ie $1 CPC = 8% CTR) meaning that the high CPC campaign would now be more worthwhile.
This example demonstrates that as CTRs can change dramatically over time, monitoring your VfM is the only way you could really hope to keep your ROI high.
I know it feels complicated when written down like this, but as I said above – basically the higher the VfM the better you are doing!
[Note: The exceptionally high CTR of the high CPC campaign in this example would indicate a much more engaged audience, and therefore a much high quality of click. The point of VfM, in this case, is to test whether the increase in quality of click matches the increased costs]
How To Add VfM to your Google Ads Account
Google Ads is pretty great when it comes to reporting. You can customise which metrics you want to see, including adding in metrics of your own. This means you can add VfM pretty easily.
To do this:
1. Go to a campaigns, ad groups or ads view, and click the Columns button on the right-hand side above the table.
2. From the drop-down choose modify column:
3. From the menu that comes up, choose the bottom option “Customised Columns” and then click +New Column
4. Now set up the VfM metric in the window that comes up. Make sure to:
a) Give it a name (VfM is convenient because it’s short and won’t mess up your view in Google Ads)
b) Give it a description so you can always remember why you made it
c) Write the equation in properly. Google will assist you with this – if you type CTR then a small dropdown will appear and you can click the CTR choice. You can also type / and it will insert a ÷. In the end, it should look like how it does in the below image.
d) Make the column format into Percent (%) – this will make it easier to remember that it is effecting CTR.
e) Click save to finish.
5. Once you’ve done this you can add VfM as a column to any view. To do this:
a) Tick the box next to the new VfM metric. This will put it at the bottom of the “Your Columns” list on the right-hand side.
b) Scroll down in the “Your Columns” section and then drag the VfM option to where you want it to appear. I personally like to have it next to CTR and CPC.
c) OPTIONAL – I highly recommend saving your column set (with a name including your initials), so you can easily find it again.
Optimise Towards VfM
Now that you have added VfM, whenever you want to optimise campaigns, ad groups, ads, or keywords you should look at VfM instead of CTR or CPC.
By removing items with the lowest VfMs, and adding more variants of items with the highest VfMs, you’ll end up with the lowest CPC and highest CTR combo you can get. You’ll also save yourself a lot of time.
If you want to know more about optimising your Google Ads, this Quora answer should help.
I hope this helps,
A: “Hi Johnanth,
It’s very easy to breakeven with Google AdSense for a small website. Considering all you really need to pay for (to start with) for a website is hosting, then the bar to breakeven is set very low.
Bluehost, for example, charges just £3.11 per month for hosting to start with. This means you would need to earn about $3.90 (at today’s exchange rate) from AdSense per month.
As AdSense makes you about $10 RPM on average, this comes to about $0.01 per page view, so you would need to have about 390 page views per month to breakeven for just hosting. Most websites should be doing this pretty immediately.
For medium and large websites, more costs associated with running the site will build up over time, and AdSense won’t be the best option. However, for small and new sites, AdSense is a great low-level money-earner.
I hope this helps,
A: “To improve the performance of a banner campaign, you need to start optimising performance. In general, this means
- Finding the best performing parts of your campaign and doing more of it (and doing more testing based on what you find)
- Finding the worst-performing parts of your campaign and doing less of it (eg moving budget away).
What should you judge your campaign on?
Ideally, all ad campaigns should be working towards a conversion goal of one type or another. This can be making a sale, getting someone to sign or download something. Basically any tangible goal that can be tracked.
You should have set up a goal to judge your banner campaign again before you started, and then use your conversion rate to see how well you are doing.
What is a conversion rate?
The Conversion Rate is how likely someone is to convert (do one of the actions listed above). It is a better measure than just conversions, as it helps you compare things which have received different amounts of ad impressions.
Conversion Rate can be calculated using this formula:
Basically multiple the number of conversions by 100, then divide by the number of clicks. Alternately, you can use this useful free conversion rate calculator.
What if I can’t track conversions?
For many campaigns tracking conversions back to ads is not available for one reason or another. Although conversion tracking should always be implemented when possible, if you cannot set it up, then you should use CTR to measure the success of your campaign.
CTR means how likely someone is to click on your ad.
CTR can be calculated using this formula:
When can I judge my campaign?
Unless you are spending lots of money (£1000+ per day), it is unlikely you can make any real judgement on the performance of your campaigns right away.
With Banner advertising specifically, you cannot judge anything before it is has delivered at least 1,000 ad impression. This is because before this time you simply do not have enough data for it to be considered reliable.
What should I judge my campaign against?
You should always judge your campaign against itself (or past campaigns) and not other people. If you get a CTR of 0.5% for your campaign this week, then try to beat that next week. Don’t get bogged down in finding benchmarks – just work on perpetual improvement and you’ll build a much better campaign then if you keep going back to the drawing board hoping to strike gold.
Note: For Banner campaigns, the global average CTR is 0.1% (1 click per 1,000 ad impressions), and ad agencies often say the absolute minimum they would expect is 0.2% (2 clicks per thousand ad impressions). If you are getting under 0.1% therefore, you are doing pretty badly.
What should I optimise?
When I say “find the best performing parts of your campaign” that could be anything. The best examples are:
- Ads – you should be running multiple ads in any campaign so you can test which one performs the best. When they have gone over 1,000 ad impressions (individually) you can judge them, and any which have a CTR worse than your average should be switched off. Any which are doing better than average should be learned from (make a variation of the best ones – use different ad sizes, colours, images, or CTA).
- Websites/Networks/Placements – Wherever you are advertising, once you’ve sent them at least 1,000 ad impressions then judge them against the average of your overall campaign. Use more budget on the best performing places, and less on the worst (or cut them off altogether if they are too far off the pace). If you switch off old places to advertise, slowly add in new ones to test (and if possible, ask for a test budget to start with).
- Locations – Sometimes some places just perform better or worse than others. Perhaps the thing you are advertising just works better in cities, or maybe only Spanish speaking countries really like your product. Whatever it is, ff you can find any clear trends, then focus your budget on the physical locations where it performs best.
- Devices, Gender, Age, Demographic, etc – There is often lots of other information available to you from whatever ad platform you are using. Outside of the main three targeting options listed above, a bit of caution is needed, as you could potentially cut out a large audience for little reason. If any of these things appear to be doing MUCH better or worse than average, then optimise towards or away from them. However, you need to keep in mind that it is very likely that different ads work better with different types of people, and that different websites work differently on different devices, so it may be the other advertising options you have selected which are causing the performance issues.
How often should I optimise?
The key here is not too often. For every change you make, you need to give it time to set in, so you can see the results of them before you judge your campaign again. If you are spending over £1000+ per day then every other day is ok. If you are spending less than this, then probably leave a week in between optimising different items.
Note: In most advertising platforms, your ads will be grouped in different ways (Ad Groups, Ad Sets, Campaigns etc). You can optimise each of these separately, just make sure you don’t optimise the same thing too often. Eg on Mondays you optimise your Ad Group for Newsletter sign-ups, on Tuesdays you optimise your Sales Ad Group, on Wednesday you optimise your About Us Ad Group etc.
How do I know if my optimisations worked?
Make sure to keep track of your changes. Make a spreadsheet, which tracks CTR or Conversion Rate (or both) over the past 30 days and update it weekly.
Every time you make a change to anything, make a note of it and record what that change effects (eg Ad Groups or Campaign). Then you can make sure you don’t optimise any part too often, but also can check to see if the things you have done have made a positive or negative impact.
- Not everything you do will have a positive impact. It’s ok to reverse a change you made! Just be sure to have given it enough time to work first.
- Don’t mess with success! If you have a campaign which is improving every week, leave it alone.
- Never stop testing. Slow and steady wins the race with advertising, especially if you’re doing it all yourself. Just keep optimising, measuring, and revising your campaigns (but not too much!) and you should end up with something that works really well.
What should I do if I’m out of ideas?
There are a million guides out there to read about advertising in general, so you can just Google it to get more ideas. I’ve written some other things that might be useful too if you want to read them:
I hope all this helps!“
I hope this all helps,