The filter function in AdWords is pretty powerful. Definitely should be one of the first steps in discovering opportunities and diagnosing problems. Here are a few of my favorites:

This one helps identify low hanging fruit. These keywords have great quality score, low CPA but just need a little increase in bid to get to a higher position so they can make more of an impact.

CPA is high, conversion rate is low and average position is also high. The bid unnecessarily high for these keywords. They’re not doing much for you so you might as well pay less for them.

These keywords are the bottom feeders. Really expensive and nothing to show for it.

Lots of clicks, high CTR and low conversion rate generally means that the ad does a good job of being relevant with the keyword but there is a disconnect when it comes to the landing page. Test different landing pages with these ones.

Lots of impressions and no clicks means these keywords are going to kill your quality score over time. Try different adtext.

Lots of clicks with a low quality score means these keywords are really expensive. Is it worth it?

There are endless ways to organize the structure of your AdWords account. I put together this flowchart to help get the process started. Its easy to see how complex an account can be if you sell multiple products, in multiple locations, for products that all have different uses and seasons.

Click For Larger Version

I’ve been playing with the new AdWords automated rules ever since it’s been released, here are some ideas I’ve come up with on ways to use it:

If you have an account with a lot of keywords you probably did a lot of work and research to get all those keywords in your account. But chances are there are a lot of them that aren’t getting a chance because their bid is below first page CPC, and you may not even know which keywords those are. Set up a rule to get those keywords onto the first page to see what they can do. On all campaigns set up a “Raise bids to first page CPC when…” rule.

For a big performing campaign, maybe a brand terms campaign where you always want to be on top, set a rule to increase bids every time your ads go below position 3 by choosing “Change max CPC bids when…”.

Then to optimize keywords based on conversions set up another “Change max CPC bids when…” rule so that if a keyword has a CPA that’s too high it gets bid down, (I also made it a rule that it has to have at least 2 conversions before I start bidding down, everyone deserves a second chance right?)

and if it has a low CPA it gets bid up.

Also for those keywords that just keep spending and never convert, set up a “Pause keywords when…” rule that says once a keyword has spent a certain amount and still hasn’t converted, it gets paused.

Your AdWords budget is a little different then a traditional marketing budget because it changes based on your average order value and your cost per conversion.
Think about it: if you got $50 for every $40 you spent, how big of a budget would you want to have? You would want to have the largest budget you could possibly have because the more money you spend, the more money you make right?!
Traditional advertising budgets spent on billboards, TV or magazines have no way of knowing how much money is being made back on your investment – hence the reason for having a budget.
Below is my AdWords Budget Calculator built in excel for calculating the sweet spot for your budget. Feel free to download it at the bottom of this post.

So the first thing you need to decide is how much a sale is worth to you – weather it’s the worth of one lead, the margin you make on a sale, or the value of a visit – I call it the average order value. Next, you determine your cost per conversion. This is derived by cost divided by conversions. If you’re just starting out you won’t know what this metric is in your AdWords account since you need to accumulate some clicks and conversions. But you can still use the tool to make a goal for your cost per conversion.
Once you start playing around with the calculator you’ll see the relationship between these metrics and your revenue. The more you can decrease costs to get that average order value to go up, and the more you can optimize your AdWords campaigns to get that cost per conversion down – the more revenue you make. Obviously no matter how large of a budget you have, at some point there won’t be enough demand, in the form of searches triggering your ads, to allow you to continue to make more money. This is where expanding your keyword lists comes in and the process starts all over again.

Download AdWords Budget Calculator

I’ve been messing around with the new Search Funnel Reports in AdWords trying to figure out how to use the data that it provides. Here are a few conclusions that I’ve come to that I think are actionable.

Path Analysis
Under Top Paths in the left hand column, drill down to “keyword path (clicks)” under the dimension drop-down box. This will show you the keywords that people used to click on your ads and how many times that happened before a conversion. Different paths can mean different user behavior which can give you clues on things to change on your landing pages or site. For example:
1. Head Keyword to Tail keyword Paths: Are visitors able to easily find what they are looking for on the site? Maybe improve site browsing and site search would keep them from going back to Google to refine their search.
2. Tail Keyword to Head Keyword Paths: May mean merchandising problems. If you don’t have very much specific product for the keyword, include more general product on the landing page too.
3. Same Term Multiple Times Path: Maybe they are comparing you against other retailers with the same product. Urgency in the offers may help close the sale sooner.
4. Unrelated Terms Path: Is there enough cross selling on the site? – you like Nike shoes, you might also like Nike shirts.

So with these ideas in mind take the top 500 rows of Top Paths and export it into Excel. This is where the manual part starts. What I do is build out the spreadsheet so I have a column for each one of the example paths above, then I look at the path and put a number one in the column that matchs the kind of path (see the image below). Once you go through this and add up the amount of conversions each path has you can get an idea of where the PPC landing pages are strong or weak.

Assisted Conversions
If you want to go out on a limb and try some broader keywords, the search funnel report will help you see if those keywords are helping to get more people started in the conversion funnel. Keywords can be either introducers, influencers or closers. Instead of only giving credit to the last click closing keywords, you can give some credit to the broader introducer and influencer keywords that educated and lead the user to the sale, which is worth something. Using the Assisted Conversion report in AdWords can also help define which keywords fall into the three categories. Keywords that do a lot of assisting should be given credit by building an assisted conversion metric into the CPA calculation like below. The tricky part is deciding how much credit to give those assisting keywords. In my example I gave 30%.

The search query report in AdWords provides a great way to expand your keywords in a data-driven way. There are a lot of keyword tools out there to help you discover which keywords you should be bidding on so that your keyword list is perfect right out of the gate. I like the approach of trying out well thought out keywords first, and then using the data for making the decisions of how to refine your keyword list second.

This is what I mean…

When setting out to manage and optimize bids in paid search, looking at all the campaigns, adgroups and keywords at once can be overwhelming. I like using the impression share report as a starting point for focusing optimization strategies and managing bids.

In AdWords make the following report: 1. Report Type: Click Campaign Performance. 2. Settings: Set Weekly visits, set the date range for a few months and select all campaigns. 3. Advanced Settigns: Add the following Columns: Impression Share, Lost IS (Rank), Lost IS (Budget), Conversions, Conv. Rate, Cost/Conv.
That’s it – once the report is made export it into Excel. In Excel sort by Campaign so that you can see the increase or decrease in impression share week to week for each campaign. Now we can cover the what, why and how.

What:
Start off by looking for campaigns with low impression share and then look across at the Cost/Conv column. If Cost/Conv is within your accepted range for these low impression share campaigns, then you are leaving money on the table by not maximizing your impression share. Likewise, if impression share is high for certain campaigns and their Cost/Conv is high, you might consider decreasing impression share.

Why:
With these initial insights look at the Lost IS (rank) column and Lost IS (budget) column. These two columns will tell you why you have low impression share. If Lost IS (budget) is high, this means your ads are not showing as often as they could because your campaign budget is being tapped. If your Lost IS (rank) is high, this means your keyword bids are so low to the point that your ads aren’t appearing.

How:
The campaigns with low Cost/Conv and high Conv. Rate are you hero campaigns. These should have as much impression share as possible. Give them unlimited budget (why limit it? As long as the ROI is worth it you should push these campaigns as far as they’ll go) and give their keywords higher bids. Google has a bid simulator built in for giving you an idea of how much traffic will result in your bid, but don’t worry too much about it, set a bid that seems right and then test how it performs. You can adjust it once you see the results.
The campaigns that are in-between need a little more time and effort. This is where you’ll dive into individual adgroups and keywords to discover which ones are causing the bad Cost/Conv and low Conversion Rate. Decrease bids on the losers and increase bids on the winners. Click through your ads to see if the keywords you are bidding on match the landing pages you are giving your visitor. Try different keyword match types.

This PPC bid optimization strategy allows you to prioritize your efforts so that you increase the biggest winners and get rid of the biggest losers first. Once done, go back the next week and see your results. I like to make my changes all in one day and then leave it alone for a week instead of making little changes day to day which makes it harder to recognize causation.

Long Tail keywords individually might not make the biggest difference to your overall PPC account. But in aggregate these long tail keywords can sometimes mean huge amounts of traffic and lots of money. Setting up you PPC account with your most popular, or “head”, keywords set to broad match is not an effective strategy to capture all of your long tail traffic and have a positive PPC campaign. Here’s why:

1. You will hurt you click through rate due to less targeted ad copy. look at these two examples for the query “Gibson Acoustic Guitar”.

Where one is only bidding on the broad match of Gibson Guitar, the other is bidding on the longer phrase Gibson Acoustic Guitar. Not only is the former ad more targeted and therfore more likely to get my click, its quality score will be better due to keywords in the ad text which will save money and give it a higher ad position.

2. Conversion rate will improve. Take a look at the landing pages for both of the previous ads.

One is showing me exactly what I was looking for, Acoustic Guitars, and the other shows me both electric and acoustic which means it is not inline with my intent so I will most likely bounce.
3. Better bid management. Let’s say that you have your adwords accounts set up so that each one of these long tail products are organized by category and theme. This way if there is a seasonality element or if something goes on sale you can easily increase your bids for just that product segment and keep all the rest of your campaigns running at the same cost. This means you can be more nimble and cost effective with your inventory.

So that’s the why long tail keyword management is better than just using broad match head terms, here’s the how:

1. First start by running a Search Query Report in AdWords and find all the keywords that are trigging your ads that you arn’t currently bidding on that make sense. Orgainze these keywords into themes that you can build campaigns around. In this example’s case, one campain set up for general acoustic guitars, another around Gibson guitars and another around Gibson acoustic guitars.

2. Expand on that list with this long tail key word tool to figure out all the permutations of those keywords.

3. Also use modular ad text. Meaning don’t make the second line flow over into the third line on the adtext, make them seperate sentences. This will help you mix and match adtext on the fly so that if acoustic guitars go on sale you can easily swap out one of the lines and replace it with something like, “Now 20% Off, Buy Now!”

Monitoring these keywords takes more time and more effort to set up, but in the long run means a much more effective PPC marketing effort.