Daily Limit

The first thing to know is that it is absolutely vital to set a daily limit on both Google and Yahoo. This is a daily budget that controls how long your ads appear each day. For example, let's say that you want to spend $300 per month on Google. You set your daily limit to $10 per day. Your ads will appear and people will click on the ads, and each time they do, your account will be debited. Once it reaches the $10 limit, then your ads will be shut off for the day. Without setting this limit you can spend a fortune in just a few days. So definitely use the daily limit.

Low Clickthroughs = Change Your Ad

If you are getting low clickthroughs, i.e. not enough to even use up your daily limit each day, chances are that you need to change your text ad. This is the ad that gets displayed on Google or Yahoo when people enter the keywords you have selected. If you have market research surveys done for your business, review these and rewrite your ad to better reflect what the surveys show as what your public needs and wants. If you don't have any surveys, go to Google and Yahoo and enter the keywords for your campaign, and look at what other vendors are saying in their ads. This will give you ideas on what to say that might work better.

Once you make changes to your ad, make sure you record the change and the date you made the change, in a folder. Then review the statistics every couple of days and see how the new ad is doing in terms of clickthroughs. Compare it to how the previous ad was doing.

Low Conversions = Change Your Landing Page

Once people click on your ad on Google or Yahoo, they land on a page on your web site. This I cleverly call the "landing page." The percentage of people that land on this page that actually do something that you want, such as fill out the form to buy something or become a lead, is known as the conversion ratio.

By the way, this landing page should NEVER be your home page. The landing page should be specifically set up so that it:

a. Does NOT include your standard navigational links to the rest of your site.
b. Contains sales text and pictures of your product or service
c. Contains a form at the bottom for people to either fill out the form and become a lead (giving you their contact info) or buy something

Get the idea that your landing page should only give the person one choice, i.e. to fill out the form and become a lead or buy something. If you give them your whole navigational button structure on that page, they will wander all over your site and the percentage of those that will become a lead or sale will be MUCH lower.

Also, your landing page can offer some kind of free item, often an informational product such as a "free report," something you can make into a PDF and send to them for free. This usually increases conversion ratios.

Often people ask me what kind of conversion ratio is good or acceptable. I have gotten as high as 10% conversion, meaning 10 people out of every 100 that come to the landing page do the desired action such as filling out the form to become a lead. However, not every campaign has that kind of potential. A lot depends on your offer, and how well that connects with the public. Also the various markets using Google and Yahoo paid search have changed a lot in the last 2-3 years. I would say that a 2-5% conversion ratio is acceptable today. 10% is really stellar.

Google vs. Yahoo

In the course of managing several paid search accounts for clients, I have noticed within the last year that people going to Google tend to convert to leads or sales at much higher conversion ratios than those going to Yahoo. For this reason I actually recommend, especially to people with limited budgets, that they start on Google. A few years ago it was just the opposite. My theory on this is that the demographic of people that go to Google is different than those who go to Yahoo. Google just has that one line. Everyone going there is going to search for something. Yahoo has news, sports, celebrity gossip, etc. So the person going there is slightly different.

Bidding

On both Google AdWords and Yahoo Search Marketing, in their online account management interface, it will show you your ad's average position. In other words, it will have a number like 1 or 1.7 or 2.5 or 63.7. This represents the average position your ad appears in for that keyword. In other words, does it appear at the top (in 1st place), or in second, or third, or way down the list?

Both Google and Yahoo use a very arbitrary and secret system to determine your position, based on, first of all, your bid, and secondly, your ad's "quality." The bid part is pretty straight ahead. The higher you bid, the higher your ad will appear. That used to be the only criteria that determined your ad's position on Yahoo, but they recently changed their system to make it like Google, based on your bid and also on "quality."

Your first question will likely be "What do they mean by 'quality'?" And you're right - that is exactly the question. Unfortunately this is all very arbitrary and secret, which has the effect that one tends to bid higher and higher to try to raise one's position, which of course is great for Google and Yahoo as they make more money. The quality issue is supposedly based on the idea that your landing page is relevant for that keyword and contains good information, and of course again, that's all pretty subjective and arbitrary (i.e. based on one person's decision or judgment.

So my advice is not to worry much about the quality issue. As long as your ad and landing page are relevant to the keyword that's pretty much all you have to worry about.

As for bid levels, in general if you have a keyword that is getting lots of impressions (number of times someone searches for that keyword in a given time period) and your average position is low, i.e. below 3 let's say, then you may want to bid higher to move yourself up in the ranks. But you also have to use judgment here, based on the current bid amount and the price point of the thing you're selling. You obviously can't afford to spend $3.00 per click if the thing you're selling costs $10.00. Because not everybody who clicks is going to buy.

Another aspect of bidding which is helpful to know about, is the phenomenon of the expensive keywords using up your whole budget quickly. Take this scenario: You have 8 campaigns up on Google. Your bid amounts are mostly between $1.00 and $2.00. But one of your campaigns has a max bid amount of $4.00, because there is more competition for those keywords. And those keywords get lots of impressions. And your daily budget amount is $12.00, or $360 per month. So you can see that 3 clickthroughs from your expensive campaign can chew up your whole budget for the day.

Beware of this phenomenon, because your goal is to either get leads or sales. And not every person who clicks through to your site is going to become a lead or sale. So you've got to drive volume clickthroughs to the site. So if a certain keyword or group of keywords has a much higher bid level, you might want to skip them. Go with keywords or groups of keywords that are more affordable. I have often found that those expensive keywords are not necessarily the best ones for conversions anyway.

Good luck with your Google and Yahoo paid search campaigns.