Adwords: The Bottom Line - Profitability

Keep in mind that analytics do not track all sales and a very large percentage of sales will not be attributed to the correct source. Installing much better methods of tracking the correct source of conversions is critical to successfully using analytics on e-commerce sites.

Here are some key points to consider:

1)Phone sales - most companies do not track their phone sales through analytics but they can be a significant source of revenue. Because those who are less comfortable using computers and searching online are more likely to call to order, these sales are often driven by general keywords that may never show conversions. Deleting your high volume, general keywords can make your phone stop ringing and seriously reduce your phone orders.

2)Conversion source - most buyers will view multiple sites and compare your prices to your competitors’ by using popular price comparison sites such as Shopping.com, Shopzilla, PriceGrabber, MySimon, and some of the lesser known sites that compare price. Google Analytics and many other analytics programs indicate that the last site a visitor used before buying is what generated the sale. Hopefully anyone reading this is wise enough to realize that is simply not true - especially for small businesses.

Would you like to prove the above two points for yourself? If there are enough searches for any of your high volume keywords you can prove the first one by pausing and resuming those ads or raising and lowering the bids to move them up and down the results page, and noting the effect those actions have on your phones ringing and total phone sales during the test period. [This will only work if there are sufficient searches for what you’re advertising for you to notice or measure the difference.]

To prove the second point, create a new ad campaign for a product that has not been selling. The product could be something new or one that has poor organic listings. Ideally you can use something that you have offered for sale for a long time and have zero sales. Do select profitable products to advertise online so you can make money while you’re testing. If you suddenly sell numerous items that have never sold before just after starting a new campaign to advertise them, to what source will you credit the sales?

KEY POINTS TO UNDERSTAND:

There is always a trade-off between maximum number of sales / maximum revenue and increasing ROI.
Increasing ad spends by raising bids or using higher traffic / higher cost keywords will increase sales and revenue at the expense of ROI.
Tightening up ad spends by lowering bids or deleting keywords will increase ROI at the expense of overall sales and revenue.