In the past 2 years, I have talked to a plenty of e-commerce companies and I have heard a common theme about AdWords – Our bids in AdWords are high due to competition, there is significant cash burn on AdWords and we are making a loss by advertising on AdWords. AdWords is going to be cash burner if your company manages AdWords manually. There are couple strategies with which you can make AdWords a profitable channel.
Most e-commerce companies focus on AdWords campaigns with head keywords. For example, a “red dress” or a “blue shirt” are considered head keywords. The competition for head keywords is high and often leads to high bids. Due to the high bids and correspondingly high cost per click, the return on marketing spend is low and leads to cash burn. E-commerce companies tend to think that AdWords is not working for them but they are just focussing on head keywords and haven’t thought out of the box about long tail keywords.
Long tail keywords have the ability to generate website traffic at a low cost per click and high return on marketing spend. For example, “red cotton dress” or “plain red polyester shirt” are considered as long tail keywords. Companies are losing on significant AdWords traffic without long tail keywords. Each long tail keyword might generate small amount of traffic but collectively millions of long tail keywords generate huge amount of traffic.
However, deploying and managing long tail keywords manually is not feasible. Automation of SEM is required to generate millions of long tail keywords, classify them into the right campaign and adgroup and then deploy the keywords along with the campaign, adgroup and ads on AdWords. Once the keywords are deployed, the keyword bids should be adjusted via automation depending on performance of the keywords to ensure high return on marketing spend.
I have seen that most small and mid size e-commerce companies set-up their AdWords campaigns with initial set of keywords and corresponding bids at adgroup level. The bids are typically increased in the first few days to get more traffic. Once the campaigns start receiving traffic, most marketing managers let it run on auto-pilot and make changes to the keywords and bids once a month on average. This approach causes ROI to drop and marketing managers tend to lose confidence in AdWords. In order to get maximum out of AdWords, long tail keywords have to constantly added and bids of all keywords need to adjusted based on their performance. Monitoring the bids of thousands of keywords manually on a daily basis is a challenging task. Automation can help with adjusting the bids on a daily basis. Based on search queries received on the site, new long tail keywords can be added to your campaigns on a daily basis with a lower bid. These couple strategies improves ROI of your company’s AdWords campaigns.
My experience shows that long tail keywords can generate upto 50% of overall AdWords revenue and gets the AdWords campaigns into profitable zone. About a million keywords would be normal for a mid-sized e-commerce company. I would recommend e-commerce companies especially mid-sized companies to explore the option of automating AdWords for profitability.