E-Commerce PPC Campaign Metrics

Posted by adam on November 12, 2007 at 02:37 PM

The cornerstone of every highly successful e-commerce PPC campaign is maintaining synchronization between the PPC campaign components. The areas that need to be regularly updated are keywords, ad creative, and landing pages. Failing to keep these campaign pieces up to date will kill your metrics.

I will provide a real-world example of how mistakes can affect your performance. The following analysis is based on monthly PPC spend of $20,000.

Baseline Example:

• Spend = $20,000


• Clicks = 40,000


• Revenue = $200,000


• Ave. Sale = $100


• Purchase # = 2,000


• CPA = $10


• CPC = $0.50


• Conversion % = 5.00%

Campaign with keyword flaws: Say your website has sale products that are being heavily promoted through PPC. When those products sell out, you remove them from the site but forget to remove the corresponding keywords from your PPC campaign for 1 week in each of the three major engines. The following explains the negative impact on your month ending CPA.

Product: The North Face Metropolis Parka

Example Keywords & Traffic:

• metropolis coat = 90 clicks
• metropolis parka = 150 clicks
• north face metropolis = 80 clicks
• full length north face coat = 50 clicks

Potential CPA Impact: Assuming that none of the above keywords will convert during this week, because the product is no longer on the site, the following is the negative impact of one week on CPA.

Keyword Spend:
(370 Wasted Clicks per Day x 7 Days x 3 Engines) x $0.50 CPC = $3,885

Change in Purchase #:
(7,770 Wasted Clicks x Conversion Rate 5%) - 2,000 = -398 Purchases

Change in CPA:
$20,000 / 1,611 = $12.41 an increase of $2.41.

If a $2.41 increase in CPA doesn’t look that bad, consider the negative effects on some other metrics.

Total Revenue:

• Baseline = $200,000


• W/ Errors = 1,611 (Purchases) x $100 (Ave. Sale) = $161,100

Conversion Rate:

• Baseline = 5.00%


• W/ Errors = 4.03%

ROI:

• Baseline = 1000.00%


• W/ Errors = 805.50%

Spend to Sales Ratio:

• Baseline = 10.00%


• W/ Errors = 12.41%

To create and successfully grow campaigns, it takes a manager a high degree of attention to detail and great communication between the manager and the team who keeps the website up to date.

Category
Pay-Per-Click

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