February 14, 2012
On average, companies pay out 92 times as much attracting website traffic as they do trying to convert it, according to Econsultancy. And having spent more than five years helping companies manage and optimize their paid search programs, I can assure that you’re not alone in wondering why your conversion rate remains stuck in the basement, and what (if anything) you can do to improve it.
A typical retailer might spend 20% to 30% of its acquisition budget on paid search, making it a small (but by no means insignificant) driver of the above statistic.
It’s likely that much of this budget performs below your expectations, generally for two reasons:
1. Diffuse Ownership of Conversion Rate Optimization (CRO): In most organizations, the pay-per-click (PPC) manager focuses narrowly on acquisition. In this pigeonholed role, the manager has little-to-no responsibility for the post-click experience. Rather, the responsibility for conversion rate optimization falls on the user experience (UX) team. In this respect, the organization is like an Olympic relay team. When the team performs like the well-oiled machine it was meant to be, it can get around the track faster than a single sprinter could do individually. But if that same team lacks continuous feedback loops and an understanding of how each member contributes to winning the race, results suffer—often greatly.
The problem? Diffuse ownership of CRO contributes to each team’s misunderstanding of the other’s strategies, challenges, and opportunities. You’ve heard the saying, “Our job is just to deliver traffic to your site. It’s the UX’s team to convert it.” But whether these words came from your mouth or your agency’s, the statement isn’t a reflection of the truth, but rather the collective frustration that CRO causes large organizations.
2. Google Believes Its Own Propaganda (and So Do You): Google is only happy to perpetuate the myth that CRO is difficult and costly, and that as a result, the path to higher conversions involves widening the top of the funnel through greater AdWords spend. Consider the following: In a well-optimized account, your spend has a certain tangent, after which each additional dollar spent becomes significantly less effective at generating conversions.
This is the very definition of diminishing returns. But Google teases you with concepts like Impression Share and Keyword Suggestion, with the goal of extracting a greater percentage of your marketing budget. The problem? The quality of these keywords (and the impressions that comprise them) isn't uniform across the entire population. As a result, with the exception of your brand campaigns, throwing additional spend at new keywords and higher Impression Share usually just decreases your budget’s efficiency.
Stay tuned for the second installment of this three-part series, which we’ll post tomorrow morning. In it, we’ll review several tactics for improving the effectiveness and efficiency of your paid search campaigns, consisting of both off- and on-site tactics. If you employ these tactics correctly, you’ll enjoy higher conversions for increasingly lower paid search spend.
In the meantime, re-read our November post about the benefits of a holistic website/search optimization strategy.