“David Rothwell knows AdWords inside and out” – Bryan Todd | Ultimate Guide to Google AdWords
"David Rothwell keeps me on my toes.
He knows AdWords inside and out, he knows what his clients need and want, and he's always on top of the latest news.
He asks the tough questions, and he's always got solid answers when I ask the tough questions of him.
I am always pleased to refer clients to him because he is a professional who serves his customers outstandingly well."
Bryan Todd, Co-Author "The Ultimate Guide to Google AdWords" (with Perry Marshall)
Coupon Marketing: Does Offering Coupons Decrease Your Profits?
Coupons often increase conversion rates.
Coupons often increase average order values.
However, they don’t always lead to more profits.
In fact, its possible to offer coupons, see your conversion rate go up and see your profits diminish.
In this article we will look at the math you should be conducting to determine the effectiveness of your coupons. This should also help you decide if you should offer coupons or stay away from them.
Baseline Statistics without a Coupon
First you need to establish your non-coupon stats. Take an ad group where you are considering using the coupon and build a simple chart:
| Impression | Clicks | CPC | Spend | Conversion Rate |
Conversions | Average Order Value | Profit |
| 5000 | 600 | $1 | $600 | 2% | 12 | $125 | $900 |
Most of these stats will come directly from your paid search account. However, you will need to layer in your margin if you sell physical goods.
| Impression | Clicks | CPC | Spend | Conversion Rate |
Conversions | Average Order Value | Margin | Profit |
| 5000 | 600 | $1 | $600 | 2% | 12 | $125 | 50% | $150 |
In this formula, profit is calculated by: ((Conversions * Average Order Value * Margin) – Spend)
Coupon Math For Single Sale Items
Often for lead generation sites, sites that sell single item, or membership sites, the average order value does not increase with a coupon. In this section, we will assume that the average order value is stagnant, and then look at the baseline versus a few offers.
For simplicity, we will leave the CTR and the clicks stagnant. If your CTR does start to change, then you would need to take into account the change in clicks, spend, and total conversions.
| Test | Impressions | Clicks | Spend | Conversion Rate | Conversions | Average Order Value | Discount | Profit |
| Baseline | 6000 | 600 | $600 | 2% | 12 | $125 | 0% | $900 |
| Offer A | 6000 | 600 | $600 | 2% | 12 | $125 | 10% | $750 |
| Offer B | 6000 | 600 | $600 | 2.1% | 12.6 | $125 | 10% | $818 |
| Offer C | 6000 | 600 | $600 | 2.3% | 13.8 | $125 | 20% | $780 |
| Offer D | 6000 | 600 | $600 | 2.4% | 14.4 | $125 | 20% | $960 |
Profit in this chart is: (((Conversions * Average Order Value * (1-Discount)) – Spend ).
The worst case scenario is offering a discount and then not seeing a change to conversion rates.
In this selection of offers, only once our conversion rate increases enough to offset the discount did we actually see a change in profit. Often to see a change in profit, you need to see either a nice increase in conversion rates or more total clicks (higher CTR ad copy with a discount offer) to offset the loss of profit on each sale due to the coupon.
Let’s take a look at the same chart; but assume CTR also increased (and CPC remained static):
| Test | Impressions | Clicks | Spend | Conversion Rate | Conversions | Average Order Value | Discount | Profit |
| Baseline | 6000 | 600 | $600 | 2% | 12 | $125 | 0% | $900 |
| Offer A | 6000 | 600 | $600 | 2% | 12 | $125 | 10% | $750 |
| Offer B | 6000 | 700 | $700 | 2.1% | 14.7 | $125 | 10% | $1285 |
| Offer C | 6000 | 600 | $600 | 2.3% | 13.8 | $125 | 20% | $780 |
| Offer D | 6000 | 700 | $700 | 2.4% | 16.8 | $125 | 20% | $980 |
In this case, Offer B with a lower discount and a slight bump in conversion rates is actually a more profitable offer than D which has a larger increase in conversion rates and CTR, but also utilizes a much steeper discount. Bigger isn’t always better.
Now, this does assume that you only make one sale per year. If you have multiple sales to the same customer each year, then you need to take that into account.
Coupon Math For eCommerce
According to Compete, the average sale price without a coupon (in one study only) was $122. The average sale with a coupon was $216. Coupon usage often increases average sale amount. There was a recent study (which I cannot find, if you know where it is please let me know and I’ll link to it) that the average person with a gift card spent $33 more than the face value of the gift card.
Just because its on sale does not mean its free.
Sometimes consumers don’t quite get that advice.
Let’s look at the same chart, but also manipulate the average order value (again we’re going to skip the math of margins for now)”:
| Test | Impressions | Clicks | Spend | Conversion Rate | Conversions | Average Order Value | Discount | Profit |
| Baseline | 6000 | 600 | $600 | 2% | 12 | $125 | 0% | $900 |
| Offer A | 6000 | 600 | $600 | 2% | 12 | $150 | 10% | $1020 |
| Offer B | 6000 | 700 | $700 | 2.1% | 12.6 | $150 | 10% | $1285 |
| Offer C | 6000 | 600 | $600 | 2.3% | 13.8 | $160 | 20% | $1166 |
| Offer D | 6000 | 700 | $700 | 2.3% | 16.8 | $175 | 20% | $1652 |
Almost any offer that affects average order value in any meaningful way along with conversion rate can have dramatic effects on the total available profit.
In this case, every single offer is better than the baseline, but that’s because both conversion rate and average order are being manipulated.
Conclusion
Offering coupons can increase your conversion rates, average order value, and profits. However, you need to be careful that you aren’t discounting your goods and services to a point where you would make more profit by not offering any discount at all.
When discounts are ineffective, your bottom line can suffer.
When discounts work well, you can see a nice increase in total profits.
Just do a little math before you offer a coupon so you understand the change in metrics that need to occur for you to have higher profits while offering a discount.
Coupon Marketing: Does Offering Coupons Decrease Your Profits? is a post from: Certified Knowledge
8 Reasons to Bid on Your Own Branded Keywords in Paid Search
We're sometimes asked "why should I bid on my own branded keywords?" In most cases, the asker wants to know if they can save money (or improve ROI) by not bidding on their brand keywords. It's an interesting question, with a not-so-simple answer. Each click costs money, so yes, theoretically, you can save money by not bidding on your own branded searches. But with that same logic, can't you also save money by keeping it under your mattress instead of in a 401k?
It's understandable to initially focus more on the cost of branded keywords, rather than the value. Cost is a measurable, absolute number that's seen in paid search accounts and credit card statements. The value is usually less-measurable, with some shades of gray in the calculations.
Sometimes it can be tough to quantify the effect of branded exposure, especially in dollars and cents. Our experience shows that branded keywords almost always convert at pennies on the dollar, with very high profitability. That's only for the immediate, measurable traffic though. What about the long-term effects in customers' minds or residual traffic that may come later on? In my opinion, the harder-to-measure effects of "bidding on your own branded keywords" are almost always a reason to spend more on them, not less.
Here are eight reasons why bidding on branded keywords can be a good idea (and a good investment):
- Professional appearance - An ad at the top of the page can give an impression of a bigger, more established and a more savvy company. It suggests that you're anticipating the visitor and welcoming them to your site with a paid ad.
- Ads are ads, organic results are not. With ads, you have absolute control over which messages your searchers will see. You can instantly get a message in front of your customers without waiting 2 months for your site to get re-indexed. You can quickly and systematically test different brand messaging in your ads. You can set start and end dates to your messaging. I wouldn't recommend trying those things with organic listings.
- Better traffic control through a paid ad can help your customers reach your site's best page (according to you, not Google's crawler). Believe it or not, a company's home page is not always the best place to send branded traffic. Your company's top organic search result may not be the most ideal landing page. Is there a different page that's better designed and has a higher conversion rate? If so, use a branded ad to get people there.
- Two links are better than one. One more link on the page makes your site easier to find. It's one more search result that you have control over, and one more chance to create a positive impression of your company. Own as much of the results page as you can.
- Guard your customers from distraction. If someone's on their way to shop at your store, you don't want them seeing other people's ads, offers or companies along the way. Bid on your terms and be the first one to catch their eye.
- If you don't, someone else will. Competitors' ads can show up for your terms too, potentially robbing you of sales and customer loyalty. More commonly, ads from your own affiliates and authorized resellers can chip away potential profits and erode your bottom line. Consider the example of Reebok (below). Each pair of shoes they sell on their own site is likely worth considerably more for them than each sale through one of their distributors. Would they be wise to only rely on their #1 organic ranking in this case?
- Make it tough for your competition - If competitors bid on your branded keywords, then you can raise their costs substantially by simply slapping your ad next to theirs. Yours will very likely have a higher CTR, better position and better quality score. Great for you, bad for them. As a result, you'll reduce their conversion rates, increase their CPA, lower their position and diminish their traffic volume - all while requiring them to jack their bids to compete for your same ad slot. If you don't bid on your own branded terms, you make it much easier (financially) on your competitors who might.
- Prepare customers for their visit. A paid search ad can effectively reroute the visitors' attention to specific events or issues:
- Promotions & Sales - If you have a sale or a special promo, branded ads are the best and fastest way to get the word out to people before they come to your site. Holiday specials, upcoming sales, coupons, etc.
- Company Info - News, product launches, contests, slogans, mottos, credibility, testimonials, phone numbers, etc. Search engines might not show the text you want. If you have a clear and effective "value proposition" that's nowhere to be read in your organic rankings, think branded ads.
- Public Relations or clarifications - Taco Bell recently received some bad press when word got out that their beef was 88% beef. Never a better time for a branded search ad. They bid on "taco bell" and wrote an ad to welcome researchers to their page and prepare them to learn more about their high quality beef (their words, not mine).
Notice that in their ad, they also offered a "limited-time-only" promo for people to try the beef for themselves: An 88� Crunchwrap Supreme. While I didn't "convert" on the Taco Bell site or partake of the Crunchwrap, I was impressed at their reaction to the press, and it had a positive impact on how I viewed the company. Price of a click - maybe $0.15. Price of losing a lifetime customer? That's another story.
Google's released a slew of new ad formats over the last few years that are both eye-catching and functional. You can do some creative stuff with your branded ads to increase the value of your company and give a better user experience. Some new ad formats include:
- Click-to-call mobile ads - shows on mobile devices only.
- Site links - you can send traffic to up to 4 more highly-targeted pages.
- Location extensions show a map of your store(s) underneath your ad.
- Seller ratings place your 4 or 5 star rating next to your ads.
- Phone extensions can track phone calls from your AdWords ads.
Each advertiser's situation is very different so I won't recommend branded ads in all cases. In most accounts that I've seen, branded ads can be utilized and tested much more efficiently, and can really help influence both direct sales and customer perceptions.
If brand loyalty is a big deal to you, then branded ads are certainly worth rethinking.
8 Reasons to Bid on Your Own Branded Keywords in Paid Search
We're sometimes asked "why should I bid on my own branded keywords?" In most cases, the asker wants to know if they can save money (or improve ROI) by not bidding on their brand keywords. It's an interesting question, with a not-so-simple answer. Each click costs money, so yes, theoretically, you can save money by not bidding on your own branded searches. But with that same logic, can't you also save money by keeping it under your mattress instead of in a 401k?
It's understandable to initially focus more on the cost of branded keywords, rather than the value. Cost is a measurable, absolute number that's seen in paid search accounts and credit card statements. The value is usually less-measurable, with some shades of gray in the calculations.
Sometimes it can be tough to quantify the effect of branded exposure, especially in dollars and cents. Our experience shows that branded keywords almost always convert at pennies on the dollar, with very high profitability. That's only for the immediate, measurable traffic though. What about the long-term effects in customers' minds or residual traffic that may come later on? In my opinion, the harder-to-measure effects of "bidding on your own branded keywords" are almost always a reason to spend more on them, not less.
Here are eight reasons why bidding on branded keywords can be a good idea (and a good investment):
- Professional appearance - An ad at the top of the page can give an impression of a bigger, more established and a more savvy company. It suggests that you're anticipating the visitor and welcoming them to your site with a paid ad.
- Ads are ads, organic results are not. With ads, you have absolute control over which messages your searchers will see. You can instantly get a message in front of your customers without waiting 2 months for your site to get re-indexed. You can quickly and systematically test different brand messaging in your ads. You can set start and end dates to your messaging. I wouldn't recommend trying those things with organic listings.
- Better traffic control through a paid ad can help your customers reach your site's best page (according to you, not Google's crawler). Believe it or not, a company's home page is not always the best place to send branded traffic. Your company's top organic search result may not be the most ideal landing page. Is there a different page that's better designed and has a higher conversion rate? If so, use a branded ad to get people there.
- Two links are better than one. One more link on the page makes your site easier to find. It's one more search result that you have control over, and one more chance to create a positive impression of your company. Own as much of the results page as you can.
- Guard your customers from distraction. If someone's on their way to shop at your store, you don't want them seeing other people's ads, offers or companies along the way. Bid on your terms and be the first one to catch their eye.
- If you don't, someone else will. Competitors' ads can show up for your terms too, potentially robbing you of sales and customer loyalty. More commonly, ads from your own affiliates and authorized resellers can chip away potential profits and erode your bottom line. Consider the example of Reebok (below). Each pair of shoes they sell on their own site is likely worth considerably more for them than each sale through one of their distributors. Would they be wise to only rely on their #1 organic ranking in this case?
- Make it tough for your competition - If competitors bid on your branded keywords, then you can raise their costs substantially by simply slapping your ad next to theirs. Yours will very likely have a higher CTR, better position and better quality score. Great for you, bad for them. As a result, you'll reduce their conversion rates, increase their CPA, lower their position and diminish their traffic volume - all while requiring them to jack their bids to compete for your same ad slot. If you don't bid on your own branded terms, you make it much easier (financially) on your competitors who might.
- Prepare customers for their visit. A paid search ad can effectively reroute the visitors' attention to specific events or issues:
- Promotions & Sales - If you have a sale or a special promo, branded ads are the best and fastest way to get the word out to people before they come to your site. Holiday specials, upcoming sales, coupons, etc.
- Company Info - News, product launches, contests, slogans, mottos, credibility, testimonials, phone numbers, etc. Search engines might not show the text you want. If you have a clear and effective "value proposition" that's nowhere to be read in your organic rankings, think branded ads.
- Public Relations or clarifications - Taco Bell recently received some bad press when word got out that their beef was 88% beef. Never a better time for a branded search ad. They bid on "taco bell" and wrote an ad to welcome researchers to their page and prepare them to learn more about their high quality beef (their words, not mine).
Notice that in their ad, they also offered a "limited-time-only" promo for people to try the beef for themselves: An 88¢ Crunchwrap Supreme. While I didn't "convert" on the Taco Bell site or partake of the Crunchwrap, I was impressed at their reaction to the press, and it had a positive impact on how I viewed the company. Price of a click - maybe $0.15. Price of losing a lifetime customer? That's another story.
Google's released a slew of new ad formats over the last few years that are both eye-catching and functional. You can do some creative stuff with your branded ads to increase the value of your company and give a better user experience. Some new ad formats include:
- Click-to-call mobile ads - shows on mobile devices only.
- Site links - you can send traffic to up to 4 more highly-targeted pages.
- Location extensions show a map of your store(s) underneath your ad.
- Seller ratings place your 4 or 5 star rating next to your ads.
- Phone extensions can track phone calls from your AdWords ads.
Each advertiser's situation is very different so I won't recommend branded ads in all cases. In most accounts that I've seen, branded ads can be utilized and tested much more efficiently, and can really help influence both direct sales and customer perceptions.
If brand loyalty is a big deal to you, then branded ads are certainly worth rethinking.
8 Reasons to Bid on Your Own Branded Keywords in Paid Search
We're sometimes asked "why should I bid on my own branded keywords?" In most cases, the asker wants to know if they can save money (or improve ROI) by not bidding on their brand keywords. It's an interesting question, with a not-so-simple answer. Each click costs money, so yes, theoretically, you can save money by not bidding on your own branded searches. But with that same logic, can't you also save money by keeping it under your mattress instead of in a 401k?
It's understandable to initially focus more on the cost of branded keywords, rather than the value. Cost is a measurable, absolute number that's seen in paid search accounts and credit card statements. The value is usually less-measurable, with some shades of gray in the calculations.
Sometimes it can be tough to quantify the effect of branded exposure, especially in dollars and cents. Our experience shows that branded keywords almost always convert at pennies on the dollar, with very high profitability. That's only for the immediate, measurable traffic though. What about the long-term effects in customers' minds or residual traffic that may come later on? In my opinion, the harder-to-measure effects of "bidding on your own branded keywords" are almost always a reason to spend more on them, not less.
Here are eight reasons why bidding on branded keywords can be a good idea (and a good investment):
- Professional appearance - An ad at the top of the page can give an impression of a bigger, more established and a more savvy company. It suggests that you're anticipating the visitor and welcoming them to your site with a paid ad.
- Ads are ads, organic results are not. With ads, you have absolute control over which messages your searchers will see. You can instantly get a message in front of your customers without waiting 2 months for your site to get re-indexed. You can quickly and systematically test different brand messaging in your ads. You can set start and end dates to your messaging. I wouldn't recommend trying those things with organic listings.
- Better traffic control through a paid ad can help your customers reach your site's best page (according to you, not Google's crawler). Believe it or not, a company's home page is not always the best place to send branded traffic. Your company's top organic search result may not be the most ideal landing page. Is there a different page that's better designed and has a higher conversion rate? If so, use a branded ad to get people there.
- Two links are better than one. One more link on the page makes your site easier to find. It's one more search result that you have control over, and one more chance to create a positive impression of your company. Own as much of the results page as you can.
- Guard your customers from distraction. If someone's on their way to shop at your store, you don't want them seeing other people's ads, offers or companies along the way. Bid on your terms and be the first one to catch their eye.
- If you don't, someone else will. Competitors' ads can show up for your terms too, potentially robbing you of sales and customer loyalty. More commonly, ads from your own affiliates and authorized resellers can chip away potential profits and erode your bottom line. Consider the example of Reebok (below). Each pair of shoes they sell on their own site is likely worth considerably more for them than each sale through one of their distributors. Would they be wise to only rely on their #1 organic ranking in this case?
- Make it tough for your competition - If competitors bid on your branded keywords, then you can raise their costs substantially by simply slapping your ad next to theirs. Yours will very likely have a higher CTR, better position and better quality score. Great for you, bad for them. As a result, you'll reduce their conversion rates, increase their CPA, lower their position and diminish their traffic volume - all while requiring them to jack their bids to compete for your same ad slot. If you don't bid on your own branded terms, you make it much easier (financially) on your competitors who might.
- Prepare customers for their visit. A paid search ad can effectively reroute the visitors' attention to specific events or issues:
- Promotions & Sales - If you have a sale or a special promo, branded ads are the best and fastest way to get the word out to people before they come to your site. Holiday specials, upcoming sales, coupons, etc.
- Company Info - News, product launches, contests, slogans, mottos, credibility, testimonials, phone numbers, etc. Search engines might not show the text you want. If you have a clear and effective "value proposition" that's nowhere to be read in your organic rankings, think branded ads.
- Public Relations or clarifications - Taco Bell recently received some bad press when word got out that their beef was 88% beef. Never a better time for a branded search ad. They bid on "taco bell" and wrote an ad to welcome researchers to their page and prepare them to learn more about their high quality beef (their words, not mine).
Notice that in their ad, they also offered a "limited-time-only" promo for people to try the beef for themselves: An 88¢ Crunchwrap Supreme. While I didn't "convert" on the Taco Bell site or partake of the Crunchwrap, I was impressed at their reaction to the press, and it had a positive impact on how I viewed the company. Price of a click - maybe $0.15. Price of losing a lifetime customer? That's another story.
Google's released a slew of new ad formats over the last few years that are both eye-catching and functional. You can do some creative stuff with your branded ads to increase the value of your company and give a better user experience. Some new ad formats include:
- Click-to-call mobile ads - shows on mobile devices only.
- Site links - you can send traffic to up to 4 more highly-targeted pages.
- Location extensions show a map of your store(s) underneath your ad.
- Seller ratings place your 4 or 5 star rating next to your ads.
- Phone extensions can track phone calls from your AdWords ads.
Each advertiser's situation is very different so I won't recommend branded ads in all cases. In most accounts that I've seen, branded ads can be utilized and tested much more efficiently, and can really help influence both direct sales and customer perceptions.
If brand loyalty is a big deal to you, then branded ads are certainly worth rethinking.
