These days, people appear to be internet savvy but really they’re not. They are more intelligent and more informed; they know how to find answers; they know how to use the web but they don’t understand it. The relationship with your car is very similar; you can drive it but you can’t get a hot lap on a track day without a lot of practice and understanding of vehicle dynamics.

Most people now don’t realise that the top three ads are ads, in fact they don’t know any difference between Paid Search and Organic – it’s just search results. They realise the right hand column of results are ads but that’s as far as it goes. SEO results these days usually start at position 4 (sorry guys, but it’s true) or lower if you factor in Wikipedia and Google Products.

Many SEO and internet types have a dream of creating a site and the orders will flow in. They believe in the affiliate marketing dream, but unless you’re the best of the best, it will remain merely a dream.

Skylining at the top of the page generates the lion’s share of the orders, but you are going to have to have the budget to win. The only way to finance the budget is create a larger profit per visitor than your competitors. You need to make double, triple or more profit than your competitors if you’re going to use Skylining to dominate your market.

But hold on, you’re thinking, you can hold a lower position and still make money. I’ll let you in on a little secret; I’ve been working with a customer in a highly competitive market against large blue chips. We (or rather he) was paying £34 per conversion and obtained 33 conversions in a 10-day period. We modified the ad group to run my Skylining strategy and tripled the Max CPC – yes, we tripled the MAX CPC. Results were unbelievable: conversions increased to 97 and the conversion cost fell to £21 in the next 10 days. Skylining really does work. But don’t just go and increase your Max CPC by 300%; it’s a little bit more complex. I’ll be glad to talk you through it.

But back to the original idea. Skylining is fine but what you need is unlimited Skylining. You need to dominate your market and that is going to require the largest profit per visitor in the industry.

You need to engineer the economics of your business so you can PAY MORE for a lead than everyone else in the market. I know this is odd idea, when we usually try to reduce cost and squeeze the last penny from our campaigns, but think about it; if you can pay more, you’ll dominate the market.

The solution is simple. Currently, revenue is based on the following:

Traffic x Revenue per visitor = Gross Profit

However, most people forget about repeat customers. Yes, REPEAT CUSTOMERS – it’s that important. The internet revolution has thrown away the concept of customer service and relationships. I believe the internet has moved from the early days of just getting new customers and forgetting about the existing customers to a more mature model. AdWords is the ultimate tool for extracting the gross profit from your sales. It used to be cheap and easy sales, but these days, Google is pushing the envelope so they take not only the profit from this sale, but the next repeat sale as well. The days of long tail keywords are gone. Try and enter a few long tail terms today in AdWords today; you’ll get low search volume warnings.

If you don’t, you’re using the wrong match type and you’re a candidate for us to save you 60% on your spend. I know you don’t believe me, but every day I walk past our team delivering demos and I hear shocked and horrified AdWords advertisers find for the first time how bad the truth of AdWords is in their case. At least this year they’ll save the money and can go to the Maldives on holiday. Don’t go in June; the weather isn’t good.

Back to Skylining. You must now view AdWords as a tool to acquire repeat business. You need to sell to your customer time after time after time. You may need to introduce new products, but you must also obtain repeat sales.

Traffic x Revenue per visitor x Repeat = Increased Gross Profit

In fact, to achieve real unlimited Skylining you need to improve the value of the sales. Imagine the above formula with high value ticket items included in the repeat sales. That’s truly an advanced AdWords strategy.

Traffic x Conversion x High Ticket Items x Repeat = FORTUNE

Given a basic proficiency with traffic and conversions, you get a lot more leverage by focusing on the second half of the equation! (High Ticket x Repeat).
Next time we’ll discuss the importance of your title mega tags to your future ads. This is so new that when we contacted Google Ireland, even they didn’t know about it and had to call Google HQ in Mountain View to confirm our findings!

Best wishes,
John Langley

Following a raft of new features (Top V Side, AdWords Editor 9.5) and the removal of a few useful tools (Wonder Wheel and Sets), this latest addition to AdWords metrics is equally a blessing and a curse. I say this because the Top V Side segment showed us how poorly adverts performed when they appeared outside the top 3 positions, so what this new metric essentially does is further force bids up. Quality Score has never been so important, as if your Ad Rank suffers, you’ll see a significant slide in your positioning as more and more advertisers cotton on to this data feed.

There’s an issue of accuracy with these estimated bids, as the Estimated First Page Bid can sometimes be way off the mark, but that doesn’t mean these new figures should be disregarded. As mentioned above, the Top V Side view will be taken into account along with the Est. Top Page Bid and you may well see the cost rising in your market.

We’re prepared for this at PPC Rescue and we hope you are too!

Thanks to Search Engine Watch for the data.

We set up our Google+ this week and subscribed to the Google Sparks feed, and came across a Bravada press release for the success of their AdWords trial.

“LOS ANGELES, Aug 08, 2011 (BUSINESS WIRE) — BRAVADA International Ltd. ( www.OnlyLeggings.com ) announced today that its ecommerce leggings superstore, OnlyLeggings.com, completed a trial campaign on Google AdWords on Sunday, August 7 with results that it calls tremendous (sic). The Metrics of the campaign were as follows:

Total AdWords Expenditure:                 $758.00

Total Online Sales:                                      $1,822.00

Less Average Online Sunday Sales:    $548.00

Net Google AdWords Sales:                  $1,274.00

Net Gross Return:                                     $516.00

Total Sunday Visits:                                   1,645

Unique Visits:                                               1,475

Average Time On Site:                                 4:57

Bounce Rate:                                                26.69%

Pages Per Visit:                                             7.70

Note, figures have been rounded off

The campaign resulted in a higher amount of sales compared to the amount of input capital. BRAVADA will be continuing its Google AdWords trial campaign for an additional week with a $500 – $1000 daily budget. BRAVADA shall continue increasing its Google AdWords daily budget as long as results are consistent with growing OnlyLeggings.com revenue and customer base. Another important future metric are return visits and purchases from new OnlyLeggings.com customers. BRAVADA believes a factorial of 0.3 – 0.6 of total sales generated to be a good measure of additional sales generated by future purchases.

The most effective keywords were: leggings, plus size leggings, lace leggings, women’s leggings and liquid leggings. BRAVADA believes the positive results are a direct result of OnlyLeggings.com having a high conversion rate due to a large legging selection, low prices, legging presentation, a clean robust customer experience and product mix and pricing structure given a weak economy and recession.”

Now I had to double check the figures as this immediately appears to be a poor performing account. They sold $1822 less normal Sunday sales of $548 leaving sales of $1274. At no point do they discuss gross profit, but sales. I’ve checked the site: let’s assume that the average sale is $25, and I would estimate the gross profit at 50% (and that’s generous, as most internet retailers have 30% margin), so the gross profit from sales of $1274 may be $637.

Here’s the issue: they spent $758 on AdWords to generate a return of $637, creating a net loss of $121.

This is a classic example of focusing on turnover and not gross profit. With AdWords and ROI, forget sales; please focus on the gross profit generated by sales.

Looking at these from another angle, alarm bells should have been ringing. Assuming a $25 order value, 51 additional sales were generated but the cost per conversion was $14 on a $25 sale!

Unfortunately the pain doesn’t stop with the financial performance. The PR team have even gone to the extent of revealing the keywords used.  So I have the AdWords spend, number of orders, conversion cost and the keywords. To top this, they have revealed their budget as well.

If you’re new to AdWords like Bravada, don’t get carried away with sales; focus on gross profit. As a rule of thumb, your AdWords spend should be less than 30% of your gross profit but it is very market dependent.

Oh Bravada, if you’re reading this: the AdWords spend should have been $191, not $758. You’ve just experienced how Google generates $30 billion a year and why you wasted $567 in one day or will waste $206,955 this year!