Is Your Business Wasting 25% of Its PPC Budget? A New Study Says Most Likely.

A typical small to medium sized business spends about $1,200 a month on pay-per-click (PPC) ads, with Google AdWords a popular PPC strategy. But a new study out from WordStream Inc., reveals that 25% of those PPC dollars are being wasted due to ineffective account management practices.

Is your business one of the many throwing good money out the window? Let’s take a look at some of the errors the study discovered.

Missed PPC Opportunities

If done properly, PPC is a proven vehicle for increasing both online search and in-store traffic. But that’s a big IF. The study confirmed that many businesses have these problems in common:

• Poor keyword selection, including irrelevant keywords.
• Low quality scores, which increase the cost per click by 400% (companies with a perfect 10 quality score realize a 50% discount on cost per click).
• Landing pages without conversion tracking installed, so the company has no way of measuring what is and isn’t working.
• Call extensions not set up on all PPC campaigns. The study finds that call extensions increase click-through rates by 10 percent.
• A lack of negative keyword usage. Negative keywords are terms that are similar to your keywords but are different products (e.g., wine glasses and drinking glasses would be negative keywords for a business selling eyeglasses). By not using negative keywords, businesses are paying higher costs for irrelevant click throughs, resulting in a lower return on investment of advertising dollars.

These findings confirm what we see when we take over PPC accounts from other agencies or from clients managing their own campaigns. In fact, in our experience, the majority of small business accounts we review are leaving money on the table because of these mistakes (this case study is a perfect example).

Making the Improvements

It stands to reason that businesses that are not implementing the most basic PPC best practices will not get the maximized value from their search ad campaigns. According to the study, if only five key areas are improved, businesses will see major improvements. Let’s take a look at each of these areas:

1. Mobile Optimization – It's no question that mobile is exploding. But less than 20 percent of businesses have mobile friendly PPC ads, landing pages, or websites. Companies need to accommodate the mobile device user when implementing a PPC ad campaign.
2. Landing Pages – Most businesses have only one landing page and most of the time that landing page is ineffective at converting visitors to buyers or motivating them to respond to your call to action. Using multiple landing pages that target different audiences can dramatically improve performance.
3. Ad Relevancy – Better written ad text that is relevant to your keywords is going to deliver a higher quality score at auction time, which will lower your cost per click and cost per action.
4. Keyword Optimization – Very few businesses use long tail keywords, relying instead on broad match keywords. By using more long tail keywords, these companies will realize more qualified clicks and lower costs per click. Businesses also need to improve keyword relevance and increase their usage of modified broad match and negative keywords. Keyword optimization results in a more targeted and cost-effective PPC campaign.
5. Account Management – No doubt it’s hard for businesses to find the time to manage their AdWords or other PPC accounts. But just 20 minutes a week spent on ad optimization and account management can make a big difference in the results. If you're not spending at least 5-10 hours a month managing your account you're probably wasting a lot of money.

How does your business stack up to the study’s findings? Do you think your PPC campaigns need a repair, a renovation, or a restoration?