Using the new Adwords Experiments Feature

Adwords has released a new feature called “Adwords Experiments”. Most people should have access in the coming weeks. I have been part of the Beta testing. I will offer some advice after some of my successful (and not so successful!) experiments.

What is Adwords Experiments?
Due to Adwords’ concepts of “account history”, you are rewarded for past performance. Thus, you must think twice about every change you make to the account as your changes have a permanent effect!
Have you ever had a “brilliant idea” that you couldn’t get your boss to sign off on? Adwords Experiments is great for cases like these. Make a change to a campaign, check it in a month, and then celebrate your great results. If your idea was horrible, “undo” the results without harming your account history!

Adwords Experiments allows you to make changes to your account that you can undo if you don’t like the results. Usually, we make changes to our accounts and then look in the account history (or our memory) to keep track of progress. This is adequate 95% of the time. For the other times, we can use Adwords Experiments.

How Does Adwords Experiments Work?
Adwords will test the control group vs your new experimental group and tell you the winner. If you want to keep the changes at the end of the experiment you just click a button and your changes are implemented. If not, your changes go back to the way they were before the experiment.

If you make a dumb decision, it will still have a negative effect on the company. It might negatively effect sales or CTR or whatever during the experiment. Using Adwords Experiments you won’t be permanently punished for trying to improve your account.
This is all that a marketer wants.

When Should I Use Adwords Experiments?
If you are making a risky change to the account, make an experiment. Testing new copy is not risky. Raising the price of a high performing keyword is not risky. Adding a bunch of new negative keywords to a campaign makes me nervous, so I would set up an experiment. Splitting up a high-performing adgroup into two makes me nervous, so I would set up an experiment.

The Positives of Adwords Experiments:
1) You can make risky changes to the account without fear of permanently damaging your account history.
2) One great feature of Adwords Experiments is that it automatically calculates statistical significance. I wonder why this has to be limited to experiments? It is such a useful feature! It would be great in many of Google’s products.
3) Certain variables can only be properly tested by using the Adwords Experiment feature. (One feature that comes to mind is determining ROI-based-on-keyword-position. Previously our testing has had to simulate this effect, or make inductions based upon time-shifting results. That is fine, and we are able to produce actionable-data, but this new way is a little better).

The Negatives- Unfortunately there are a lot of negatives. Perhaps some of them will be ironed out.
1) You can only run one experiment at a time at the campaign level. E-commerce sites tend to have tons of campaigns, so this will not be an issue for you if you are E-commerce. Lead-generation sites tend to have fewer campaigns. You may have set up your account so that you have a ton of adgroups and few campaigns. If this is the case you will be limited to one experiment at a time. (I would not recommend changing your account structure simply to get around this).
2) The interface is complex: make sure your first experiment is simple. Until you get the hang of the interface, don’t make complex experiments. Try messing around with numbers rather than keywords the first time out.
3) Remember that any changes make will have ramifications campaign-wide. A small change to one adgroup may effect another adgroup. Make sure you look for those. Some of the effects to other adgroups are non-intuitive, but that may just be an indication that I designed a poor experiment.
4) You can’t save your experiment history. If you want to save your results you will have to export them and keep a log.

To Summarize:
-Make BOLD changes to your account so that your results will be statistically significant. Bid much higher or much lower.
-Make your first experiment simple.
-Most of your testing can still be done without using this feature. You can still experiment in Adwords without using “Adwords Experiments”.

Adwords Tips: How Much Should I Spend Per Month On Pay Per Click?

“How much should I be spending?” is one of the first and most frequent questions we get from potential clients. In that question are two separate questions that the client wants to know, though they are rarely able verbalize it:

1) What should I be spending per month
2) What will my setup costs be if I don’t already have an account.

What Should I Spend Per Month?
There are several ways to answer this question. You may want to consider these answers before you hire a pay per click management team. Some popular answers to this question are “what you can afford to lose”, “it depends on the industry”, and “about whatever you think you can afford to spend”. Those are all reasonable answers for some clients.

For advanced businessmen and women I think the following answer is better: “If you could buy one dollar bills for $.99, how many would you buy?” Obviously you would want to buy as many as possible, or spend infinite amounts. Even though margins are low (in this example), the more you spend, the more you make.

Would you still be interested in this deal if you had to pay someone else to arrange this service for you? Again, the answer would be yes. While this eats into your margins (again), you are still in a position to make a ton of money if you put up the money.

Lets bring this back to pay per click. Due to advances in tracking technology, we are able to calculate the amount of money you are spending and the amount of money you are making directly from pay per click ads. If this is a positive number, it is no different than the above example, where you are buying dollar bills for $.99.

This advice has is limitations, but not in the ways you might expect. The obvious limitation is that there is not an infinite supply of customers. This manifests itself in the following way: the more you spend, the higher the cost of acquisition, which will eat into your margins. However, if you do not yet have a solid account, you probably do not need to be concerned about this.

Setup Costs
The other limitation to this advice is that it will cost you money to get your account to a profitable state. Accounts are rarely profitable on day one. You will have to invest some money upfront in your advertising, just like all other forms of advertising. This cost varies from company to company. A pharmaceutical company that advertises to every country will pay a lot more than a mom-and-pop button-making shop that serves only San Diego.

Thus, there are two variables to keep in mind that will affect your startup costs (not to be confused with “setup costs”, which is the cost your ppc company charges you to setup the account): How competitive your industry is and how large the geographic region you want to advertise to is.