PPC Tip: Improve your bottom line by lowering your click through rate.

Improve your bottom line by lowering your click through rate. Wait, what? Anyone that has ever managed a paid search campaign has raised a questioning eyebrow.

Click through rate (CTR) is the number of users that click an ad versus the number of users that see an ad (Clicks/Impressions). Maintaining a high CTR tells the search engines that an ad is relevant to the queries that trigger it – a high CTR is the key to a high campaign quality score and ultimately a lower cost per click (CPC). In most cases, maintaining the highest possible CTR is the best strategy for effectively managing a campaign; however there are instances where maintaining an exceptionally high CTR can actually increase conversion or cost per acquisition (CPA).

Consider the following scenario. You own a mortgage company in Boston. A majority of your conversions are driven by narrowly targeted keywords geared directly towards your target market like “Boston luxury homes”. To maintain a strong presence in the paid results you bid on broad phrases as well such as “new Boston homes”.

The traffic driven by the broad keywords dwarfs the traffic driven by the narrowly focused keywords, but the conversion rate is lower and the cost per acquisition is higher. Simply ignoring the broad keywords is not an option. How do you offset the cost of a keyword with an inherently lower conversion rate? The solution is visitors before you incur the cost of a click – through the ad copy.

Balance is the essence of effective search marketing, paid search included. The challenge of writing effective, balanced ad copy is designing benefit-driven ads in a fashion that attracts a high volume of clicks while simultaneously weeding out consumers that are not qualified to use your product or service.
Let’s continue examining the performance of our ads for the broad keyphrase “new Boston homes”.

Ad #1 is a very well written ad; it is benefit driven, it effectively differentiates the site from the competition and it gives the user insight to the functionality of the site. However, in the ‘luxury homes’ vertical ad #1 is problematic because it appeals to (and attracts clicks from) the entire home buyer market, very few of which are willing or able to spend the amount required for a luxury home.

Ad #2 is highly effective as well. Like ad #1 it is benefit driven and offers insight into the experience the visitor can expect on the site. However, ad #2 lists pricing information with the intention of decreasing clicks from users who are not in the market to spend upwards of $950K in purchasing a home. The result of running ad #2 is fewer clicks, a slightly lower click through rate, and in extreme scenarios a small decrease in the quality score of the ad group. However, ad #2 will also decrease clicks from unqualified visitors and increase clicks from qualified visitors who were not enticed by ad #1 as it did not directly address their demographic. The end result is a decreased amount of traffic to the landing page, but an increase in the conversion rate as well as a considerable decrease in the cost per acquisition.

Why is this method effective?

The effectiveness of search marketing lies in its ability to provide us huge amounts of data concerning user behavior, but it is impossible to project which keyword permutation a qualified prospect will use to search for product or services for every single query. In paid search we compensate for this grey area by giving each user as much information as possible within the confines of the ad space. The goal is to constantly weed out unqualified users and to reach out to the users most qualified to utilize the product/service.

More than just price

The example used in this instance was related to price, but users can be qualified by a limitless number of factors: size, quantity, application, location, the list is endless. Write ad copy that engages your ideal customer; your bottom line will thank you.