What 2,000+ Audits Taught Us About AdWords

SpyFu is a great way to get a leg up on the competition. You can see your competitors’ keywords, ads, estimated budget and cost-per-click—it’s a treasure trove of competitive insight.

That gets you started. There is still more to learn.

We’re going to equip you with data from more than 2,000 AdWords account audits we’ve conducted at Disruptive Advertising that will teach you how to learn from your competitor’s marketing mistakes.

Sound like a plan? Good. Let’s take a look at what happens after the click.

We Found 3 Major Takeaways

Over the last 2 years, we’ve looked at over $320 million in ad spend, 90 billion impressions, 500 million clicks, and more than 26 million keywords in hundreds of industries across the world.

Amongst all that data, we’ve made 3 important discoveries:

  1. Most AdWords campaigns aren’t tracking conversions effectively
  2. Most advertisers bid on too many keywords
  3. The majority of ad spend is wasted

Odds are, your competition is struggling with all three of these problems—which gives you the advantage. Using the data in this article and your SpyFu research, you can learn from your competition’s mistakes and beat them at their own game.

1. Most Advertisers Do a Terrible Job of Tracking Conversions

On average, only 29% of AdWords accounts have effective conversion tracking in place.

42% have no conversion tracking in place. Another 29% have made a token effort at conversion tracking, but only 29% of AdWords accounts actually know which keywords produce conversions.

Adwords analytics implementation pie chart

Talk about an awesome opportunity!

Without quality tracking, 97% of AdWords campaigns fail. That means 42% of the competition is doomed.

This is something of a mixed bag for you.

Long-term, it means that your competition is running themselves out of business. Short-term, however, your competitors may spend a lot of money trying to outbid you on keywords that aren’t producing results.

And, it’s not enough to track some conversions, either.

On average, a well-tracked AdWords account has a 50% higher conversion rate than the standard AdWords account.

That’s a lot of untracked conversions.

It’s hard to make good marketing decisions without good data. So, if you want an immediate advantage over 71% of the competition, start tracking everything!

2. Most Advertisers Bid on the Wrong Keywords

Hopefully, if you use SpyFu, you understand how keywords relate to search intent.

Paid search advertising is intent-based marketing. Your ads need to show up for internet searches that lead to sales, so you want to pick keywords that indicate a strong purchasing intent.

To do that, you should just bid on every relevant keyword, right?

big bang theory no gif

Unfortunately, it’s nowhere near that simple.

Most advertisers bid on way too many keywords. They’re afraid of missing out on potentially interested customers, so they cast as wide of a keyword net as possible.

The problem is, big nets are expensive.

And, as it turns out, less than 6% of keywords produce 100% of the conversions.

That means 94% of keywords are useless.

congratulations epic fail

Now, you might be thinking, What about attribution? They might not convert on the first click, but I bet a lot of people convert later!

That doesn’t turn out to be the case. Even with a first-click attribution model, only 0.4% of conversions come from keywords that don’t produce direct conversions.

The simple fact of the matter is, over 94% of keywords are useless. But, the question is, do those extra keywords hurt campaign profitability? Keep reading.

3. Most Ad Spend is Wasted

To answer that question, we need to take a look at search terms.

Keywords are how you target the search intent of your audience, but search terms are how your audience actually discovers your ads.

So, if you want to know if your keywords are working, you need to assess your search terms.

Using the Search Term Report

In AdWords, the Search Term report allows you to see which searches triggered your ad and how many impressions, clicks and conversions each search term produced.

If you’re using the right keywords, your ads should show up when people are searching for what you have to offer. Clicking on your ad will take them to a landing page that meets their needs and they’ll convert.

However, if your ads are showing up for the wrong keywords (i.e.,  the wrong search intent), people might click on your ads, but they certainly won’t convert.

Therefore, if most of your search terms don’t produce conversions, you’re bidding on the wrong keywords.

What the Wrong Keywords Cost

As it turns out, 61% of ad spend is spent on search terms that never convert.

But, the more you spend on AdWords, the less you waste on the wrong search terms:

productive vs wasted ad spend

On a per account basis, the statistics are even worse—the average AdWords account wastes 75.80% of its budget on non-converting search terms.

In other words, your competition is probably spending 76% of their AdWords budget on searches that have never and will never produce any value for their business.

Now, you’d think the connection between wasted ad spend would be linear—every 10% increase in wasted ad spend would increase your cost-per-conversion by around 10%.

However, the relationship is actually exponential—every 10% increase in wasted ad spend increases your cost-per-conversion by 44-72%.

cpa versus wasted ad spend

As a result, if your cost-per-conversion is $10.00 and your wasted ad spend goes from 30% to 40%, your new cost-per-conversion will be around $14.43-17.22.

If it goes from 30% to say, 75.80%, your cost-per-conversion could be more than $120!

When you think about it, these results actually make a lot of sense. Every dollar you waste on non-converting keywords is a dollar you could have spent on keywords that convert.

So, if your competition is wasting 76% of their budget on the wrong keywords and you are wasting only 66% of your budget, you could be paying 50% less than your competition for every conversion.

What This All Means for You

Once you understand the relationship between keywords, conversions and wasted ad spend, you can use that information to dramatically improve the performance of your campaigns.

Remember that exponential formula we just discussed? Well, it works in reverse, too.

If you identify your effective keywords, eliminate your non-productive keywords and reduce your wasted ad spend, your cost-per-conversion will decrease…exponentially.

For example, here’s what happens in a matter of weeks when we use this approach:

most important gif ever

As you can see, when you stop wasting money on non-converting search terms, you actually end up spending less and producing more conversions.

Pretty incredible, eh?

And, this principle is fairly easy to put into practice. Here’s how:

 

  • Research new keywords. Use SpyFu to identify competitor’s keywords that seem like a good fit for your account.
  • Set up conversion tracking. Click here for help setting up conversion tracking in AdWords.
  • Run your account for 2-3 months. This will give you good feel for how your keywords are performing.
  • See how much ad spend you’re wasting. In AdWords, wasted ad spend will be listed at the bottom of the report. Compare wasted ad spend to your total spend to see what percentage of your ad spend is going towards the wrong keywords.
  • Eliminate the waste. If a keyword isn’t producing results, get rid of it!
  • And…profit. Since you won’t be paying for useless search terms and keywords anymore, you’ll be wasting less and making more money.

 

Every time you repeat this cycle, you’ll put more distance between yourself and the competition. Pretty soon, you’ll only be paying for their most effective keywords.

Summary

It isn’t enough just to know which keywords your competition is bidding on. You actually have to know which keywords produce meaningful results.

Remember, when it comes to keywords, less is actually more.

This is why tools like SpyFu are so important for successful paid search marketing. They allow you to identify which keywords your competition is bidding on, figure out what is really working and then beat your competitors at their own game.

How do you use SpyFu to enhance your own keyword strategy?

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Recommend readings – Technical Site Audit

This guest post comes from the SpyFu community. Jacob is passionate entrepreneur on a mission to help businesses achieve online marketing success. As the Founder & CEO of Disruptive Advertising, Jacob has created an award-winning, world-class organization that has helped hundreds of businesses grow using pay-per-click advertising and conversion rate optimization.