AdwordsMany people out there consider a high CTR part of a successful Adwords campaign.

It does make sense at first. When click-through rates go up, you get more traffic and thus more sales should follow.

However, this isn’t always the case. There are actually plenty of situations where pushing for the highest possible CTR could be very detrimental to your profit levels.

Why?

Because Adwords, like other similar advertising platforms, is based on pay-per-click pricing, and some clicks are far more valuable than others.

Here’s the problem

When you do everything in your power to chase the highest click-trough rate, you will attract more clicks from prospects who are likely to buy what you’re selling. But depending on the techniques you use, you could also be attracting more clicks from people who are much less likely to make a purchase. Every time they do click, it still costs you money.

This is a problem with pay-per-click advertising, as one of the key metrics you have to keep on top of is the cost-per-conversion. After all, if a sale brings in less profit than it cost to obtain, then you’ve lost money.

I’ve heard this issue time and time again. You may have even experienced it yourself. Adwords marketing does bring in revenue, sometimes a decent amount, but it ends up costing far more in advertising than you make. For many advertisers, the issue is not growing the number of customers. It’s about getting the cost-per-conversion low enough so you’re actually left with some profit.

So what’s the solution?

The key is not to have a generally high CTR. It’s to have a high CTR with the audience which is more likely to buy what you’re selling. You need to attract as many visitors as possible to fit this category, whilst filtering out those who don’t.

Essentially, you need to put certain people off from clicking your advert, which is known as a form of pre-qualifying. There are a few ways you can do this:

Showcase your price

If you only want to attract clicks from people who are prepared to pay your prices, then tell them what the prices are. If your price is on display in your ad copy, and they click the advert, it’s more likely that they’re willing to spend that sort of money because they know how much it costs before they’ve clicked.

Likewise, if your price is out of budget for certain users, they’re less likely to click your advert because they can’t afford it anyway. They’ll no doubt go elsewhere, but at least you haven’t paid to attract prospects who are highly unlikely to buy.

This is a particularly useful strategy if your product or service is focused on quality with a high price. If it costs £1,000, then you want to completely put off any searchers who only want to spend a fraction of that (or even worse, want it for free – see below).

Geo-target

If your business model suits, it can be useful to geo-target areas with the most relevant demographic. For example, this may involve only displaying your advert to users in certain towns, cities, post codes or zip codes. You can also exclude specific areas if you find that they’re a source of poor converting traffic.

To see these, click dimensions, go to “User locations” in the drop-down menu, enable the cost/conv column and then sort by highest cost-per-conversion to see which areas are the least profitable for you. These areas can then be excluded in the campaign settings tab.

geographic pre-qualifying adwords

Stipulate requirements

Do you have a requirement as part of your sales funnel? Perhaps prospects need to sign up to something, book an appointment or pay a set up fee? If so, mention this in your ad copy, so people will only click your advert if they’re prepared to do what you request.

State minimums

If you have something like a minimum order value, it’s very important to mention this in your advert, otherwise you’ll attract a lot of clicks from people who are blissfully unaware and then only realise once they’re on your site (and by then, they’ve already cost you that Adwords spend).

Ask them if they fit the bill

Just ask. For example, if you’re an energy broker, and you only want to target businesses which spend over £500 per month, start your advert with “Do you spend over £500 per month on energy?”. You’re more likely to attract clicks from prospects who spend this much and fit your target audience.

This also has a two-way benefit, as you’ll repel those who aren’t in your target audience, AND attract more people who are, as they’ll feel that your site is more relevant to them personally.

Use negative keywords

Head into the search terms to find out exactly what people are searching for, and unless you’re using exact match keywords, you may find clicks for search terms which are bringing in the wrong traffic.

Negative keywords

Some common words which pop up include:

  • Free
  • Cheap
  • Offer
  • Discount
  • Deal
  • Trial

If you provide any of these, by all means continue to target them, but if you don’t, it can be worth adding them as negative keywords so your PPC ads don’t appear in front of people looking for freebies or bargains. More often than not, they’re just less likely to spend money.

You might also find many other keywords worth excluding which relate to your specific audience, product, service or industry.

Side-note: Don’t go overboard with these strategies

You need to attract the right clicks, but you don’t want to make people so curious that they click your advert anyway.

For example, if you’re selling a product and explicitly state that it’s for wealthy people, many will click it just out of curiosity. Remember that no one cares about how much this advertising costs you. 99% of Google users don’t even think that clicking an advert could cost the seller money. They’ll happily click the ad with no intention to buy, scan the page for a few seconds, click back to the search page and then cost you click spend for the privilege.

Side-side-note: Always test!

These strategies will work for some better than others. It’s vital that you test these out first to ensure that they work for you.

But can’t you just make your keywords more specific instead?

Sometimes. However, most audiences just aren’t that specific with what they search for.

One good example I had experience with was a local cleaning company advertising via Adwords. Their business model was focused on high-calibre clients in more affluent homes and businesses where they charged premium rates for their services.

The average Joe prospects searched for terms like:

  • “Cleaning in #####”
  • “Cleaning services in #####”
  • “Domestic cleaning in #####”
  • “Office cleaning in #####”

Now what do you think the affluent prospects searched for?

  • “Cleaning in ##### for my giant house”?
  • “Cleaning companies in ##### for rich people”?
  • “##### cleaners for millionaires”?

I wish. They searched for the exact same things everyone else did.

Whilst there were some niche keywords to target this audience, they were few and far between when it came to impressions. The fact is, there were a mixture of different audiences using similar search terms, but it was virtually impossible to distinguish them based on keywords alone.

Now there were solutions to this problem outside of keyword focusing Eventually it came down to geo-location targeting to focus on the most affluent neighborhoods whilst excluding all the rest. However, this still had to be combined with substantial pre-qualifying to filter out the clicks the client wanted. This involved emphasising quality over price in the ad text, and also displaying the rates they charged directly on the adverts to discourage price-conscious prospects from clicking them.

Yes, the CTR declined, but the conversion rate skyrocketed whilst bringing down the cost per conversion. Lower CTR, higher conversion rate, more profit.

But what about Quality Score and cost-per-click?

This is one of the most contentious issues when it comes to lower CTRs. Google factor the click-through rate into their Quality Score (QS) algorithms quite heavily. In short, if you have a high CTR relevant to your Adwords competitors, your QS will go up and bring your cost-per-click down. However, if you have a low CTR, this can bring our QS down which pushes the cost of your clicks up – sometimes significantly.

A nightmare, right? Well, it depends on the maths.

Let’s say that an advertiser is selling a £200 product. They have a campaign running which brings in 100,000 impressions per month with a CTR of 5%. That gives them 5,000 clicks, with each click costing £2, and a sales conversion rate of 6%.

Total everything up, and that’s £10,000 per month of Adwords spend, and 300 sales giving them £60,000 of revenue every month. Average cost-per-conversion = £33.

Now let’s say that they want to target a specific sub-section of their audience. They may do this with pre-qualifying, such as displaying the price of the product on their advert. By doing this, they can scare away the lower spenders and increase the proportion of visitors who are prepared to spend £200.

With this strategy, their CTR drops to 3% (a 40% decrease), and their cost-per-click increases to £2.50 due to a lower Quality Score (a 25% increase), but because their Adwords traffic is now far more suitable for their product, the sales conversion rate increases to 11%.

The result? This reduces Adwords spend to £7,500 per month, but increases sales to 330, providing £66,000 of revenue and decreasing the cost-per-conversion to £22.

£6000 more revenue every month, AND £10 extra profit with every sale – all despite CTR, CPC and Quality Score taking a hit.

This is a hypothetical example, but it’s that balance between click-through rate and sales conversion rate which you need to test for yourself. In the world of pay-per-click, you need to do what you can to ensure that the visitors you spend money on have the highest chance of buying what you sell.

When it comes to organic traffic, the more the merrier, but when you have to pay for every click, it can pay off if you’re selective with who you entice to click your adverts.

Are there situations where this doesn’t apply?

Certainly. If you have tightly focused keywords (i.e. exact match), and you’re confident that the vast majority of your traffic consists of likely buyers, then you can go all-in when it comes to boosting up that CTR. However, for most advertisers, I would say there are always some ways to filter out wasted spend. Just don’t worry if your CTR takes a small hit as a result. It’s the conversion rate, and profit, which matter most.

More MarketingPinch goodess: