Paid Search Strategies for High Cost, Slow Conversion Products

[Editor: We received this e-mail from David Gibson of Australia, which I referred to our Paid Search specialist Andrew Goodman.]

"I am currently reviewing my Google AdWords campaign to reduce the number of click-throughs. We are a small B2B company with a very technical product. Lead times on sales can be years. For us the common measures of campaign success like conversions just don't work.

"I have estimated that to date gross profit from small (under $1,000) online sales is paying only half the cost of our AdWords. It is the repeat, large-order customers that we are after and they are, sadly, few and far between so far.

"The only metric I can think of to use as a measure of the quality of a visitor is 'entrance bounce rate.' In other words how many visitors to my 'store' stay for a while? I have been tagging all my AdWords, so I can get an indication of where my visitors came from. One of the ads was yielding a 95% entrance bounce rate, so I stopped it. I have also stopped some ads that on reflection were probably attracting people for the wrong reasons.

"For the balance of visitors I've set up a variation on A/B testing. I have two or three wordings for each ad group (each ad group is targeted by a separate set of related keywords). For each wording I uniquely tag the target URL so I can track the inbound clicks by wording. When I have enough data, which will take a few weeks, I will analyze for bounce rate and 'net retained visitors.' Meanwhile I shall study analytics more and see if there is a better measure of visitor retention that entry bounce rate alone. Part of the problem is getting enough data to develop statistically meaningful results." -- David Gibson

Here's Andrew's response:

You're describing a topic that is not new in my office, but is often shunted to the side in the usual talk about high-volume retail. Even there, in B2C retail, there are many retailers selling higher-ticket, less-frequently-purchased, long-sales-cycle, high-consideration products. And even in relatively low cost software, paying for anything in software requires a long thought process and a gradual upgrade, especially if the price is anywhere north of $39.

So a good chunk of advertisers need to strategize around this. You are on the right track. Using analytics to assess user behavior is actually a pretty sophisticated way of understanding whether paid click visitors are at least moderately interested in what they're seeing on your site. I'm glad you're looking at bounce rates as an indicator of interest or relevancy -- many would dismiss a 95% bounce rate as click fraud. It could be click fraud or it could be lack of interest or something else entirely -- it bears further investigation.

I'd encourage you to come up with some other type of conversion event or events that can help you not only improve the overall conversion rate to sales by refining your "sales funnel" (your sales process), but also help give you more of the data you need to refine bids and so forth in your paid search accounts.

You may need to "force" this type of transaction on prospects, and thus transform your process into a lead generation type model. Such models abound. A high end drapery retailer, for example, might send out a swatch -- for free or $1.00 (clever tactic). A B2B enterprise offers a free white paper. A software company offers a demo or trial version. This type of low-risk conversion happens much more frequently and thus can help you gather enough data to refine your paid search campaign.

Andrew Goodman is Principal, Page Zero Media, and author, Winning Results with Google AdWords (McGraw-Hill, second edition due out Oct. 2007).