CHALLENGE
Sterling Simpson, Coordinator, Search Marketing, Abe Books, inherited a Google AdWords program with an average of 500,000 active keywords at any time. The good news: Even with the huge number of keywords, they were finding ways to improve ROI. The bad news: Revenue was down, and higher-ups wanted answers.

“The first thing financial officers look at is revenue, then costs and then ROI, in that order,” Simpson says. “While the top few rankings in paid search get the most clicks and are costlier, you sometimes see ads at the bottom of the first page, or in third or fourth pages, get better conversion rates. Those clicks represent qualified shoppers who already know what they want.”

Simpson and his team knew they needed to balance their program to find the ideal point where they get quality traffic numbers and qualified clicks. Skeptical about putting too much importance on ROI, they welcomed the charge to *responsibly* bring in more revenue.

While they knew that “long-tail” clicks could occasionally produce big orders, they considered that kind of transaction to be an anomaly more so than something to pursue.


CAMPAIGN
Simpson and his team sought to put together an automated system to increase revenue and reduce cost and make it more intuitive. They were fine with slashing the number of active keywords, although at the same time, improving their AdWords strategy entailed adding keywords.

Here are the four steps they followed:

-> Step #1. Set ranking formula

They systematically ranked their keywords in the positions that created the most revenue without producing a wildly high number of clicks. They did this by programming their AdWords management software to calculate the number of clicks and revenue that each keyword phrase produced.

This formula systemized which keywords were worth more to bid on or divest from. For instance, if a keyword produced a ton of traffic but a low number of conversions, the automated system was triggered to scale back the bid or take the phrase out altogether if performance was poor.

While the keyword phrase stayed active, it was at least now located deeper into the query -- where only serious shoppers were more likely to click.

-> Step #2. Change rankings according to performance

Next, Simpson and his team made the system more efficient by continuously recording the performances of keywords at various spots in the rankings. The system reacted by putting them in the best spot day to day.

A keyword could be high up in the rankings at one point, but drop down the next day if the data changed enough. This tweak was designed to make the system as malleable as possible as consumer behavior swung back and forth.

-> Step #3. Establish bidding threshold

To improve revenue while cutting cost, the system implemented a threshold for the AdWords bids: They wouldn’t spend more than 50 cents per click for most keywords.

The exceptions were:
o Keywords with excellent conversion rates
o Keywords that generated high order value sales

“We believed that this would help reduce our costs,” Simpson says

-> Step #4. Target college students

To do a better job of reaching college students who bought textbooks in January and August, they bid on keyword phrases involving international book standard numbers. All in all, Simpson and his team targeted 35,000 textbooks by title, which accounted for more than 100,000 new keywords.

They also worked on the ad copy and used stronger action words, switching “Find Now” to “Buy Now.”


RESULTS
No question, the new system worked like gangbusters. Some key metrics:
- Search engine marketing revenue increased 28%.
- Costs dropped 30%.
- ROI improved 83%.

In contrast, during the same period the year before, they saw a 4% decrease in revenue.

The focus on college students was another success, contributing to the turnaround. Plus, the SEM program has put big smiles on the faces of Simpson’s financial officers. “We have been saving a lot on commissions. We could see that from the start. When I talk to our company executives, they are very impressed with what this system has done.”

Additionally, the new bidding system cut that enormous number of 500,000 keywords in half. Even better: profit margins on keyword buys increased 2.7 times.

“While it’s been great to see sales so strong, it’s been even more satisfying to see our costs go down significantly. The automation that the system gives us has been incredible. We’ve made our campaigns leaner, weeding out keywords that weren’t performing very well.”


Useful links related to this article

Google AdWords Help Center:
http://adwords.google.com/support/bin/answer.py?hl=en&a
swer=6084

Media Boost - SEM services provider that worked on the fixes:
http://www.mediaboost.com/

Abe Books:
http://www.abebooks.com/