How to Tell If You Are Wasting Significant Ad Dollars in Google Adwords

How Do I Tell If There’s A Problem?

The most obvious way to tell if there’s an issue is to check if your campaign is providing leads at an affordable ROI. Outside of this, there are two easy methods to tell if you are accidentally wasting your money on purchasing irrelevant keyword phrases.

A Low Click-Through-Rate (CTR)

The click through rate is a measure for how frequently an ad is clicked when it’s seen (clicks/impressions). In addition to reducing the cost-per-click over time, your click-through-rate is an important measurement for relevance of targeting. If your ads are accidentally being served up for irrelevant phrases, they are less likely to be clicked, which would reduce the CTR. For reference, the industry average Google Search CTR is now in the 1-2% range, although we generally see campaigns in the 2-5% range.

Check The Search Terms Tab

Did you know that the Search Terms list is actually different than the keyword list? Depending on the match type that’s used, it’s possible for these lists to be completely different. For example, if I decide to purchase the keyword “storage”, I may accidentally purchase anything from “data storage”, “storage units” “bedroom storage”, and “cloud storage”.

What Would Cause My Google Adwords Search Campaign To Waste Money?

Competition is continuing to grow as advertising budgets are being allocated online. To compensate for this, many online advertisers are finding it necessary to bid on a larger range of keywords. When done improperly, this can create significant waste by accidentally purchasing irrelevant keywords.

To understand how this happens, you first need to understand how keyword targeting works within AdWords. There are four different ways to bid on a keyword phrase that may look nearly identical, but each have a different effect.

Exact Matching:

Consumers must search for your phrase exactly for your ad to be served up. This is the safest way to purchase a keyword phrase since you know exactly what you’re getting, however this tactic would cause you to miss out on all other similar phrases that you would want to show up for. Keyword variants, known as long-tail keywords, make up as much as 70% of searches on average.

Example of an exact match keyword phrase: [storage units]

Phrase Matching:

Your exact phrase must appear in the order of the searched phrase, however it can be followed or preceded by any other words. For example, if you purchase “storage units”, your ads will still show up for “storage units near me”.

Example of a phrase match keyword phrase: “storage units”

Modified Broad Matching:

Your words can appear anywhere in the searched phrase and in any order, as long as each word with a + is in the searched phrase. This is generally our recommended targeting method since it provides enough control so that you have an idea of what you’re buying but is broad enough to not limit you to a small list of phrases. For example, if you purchase +storage +units +Toronto, then you can show up for a phrase like “the best storage units in Toronto”.

However, you will want to pair this method with a large negative keyword list (a list of words you don’t want to show up for).

Example of a modified broad match keyword phrase: +storage +units

Broad Matching:

Google will serve your ad to anyone who searches a phrase that they consider related to your keywords. None of the words have to match, as long as Google deems the search phrase is related, you’re ad will get served up. From what we’ve seen, these related searches can get very questionable. This is the highest risk method of buying keyword phrases and the most common way that budgets are wasted. For example, if I purchase storage as a broad match, I may accidentally purchase anything from “data storage”, “storage units” “bedroom storage”, and “cloud storage”.

Although there are cases where broad match can make sense, mostly if you have a large budget or targeting isn’t that important, most small to mid-size businesses should avoid using broad match. With this being said, why is broad match so commonly used? It’s very quick and easy to set up and it’s the easiest for a beginner to set up. 

Example of broad match keyword phrase: storage units

Now, why is it so easy to waste money? Because these terms can have multiple meanings, you can easily waste money buying words or phrases that are not related to your business at all. For example the word ‘crown’ could be a tooth crown or a crown you wear. Storage could be related to cloud storage, computer storage, storage units or a storage chest.

By simply confirming you are purchasing the correct phrases, you can decrease your cost-per-lead by eliminating any phrases you might be purchasing that are not related to your business.

To give you an idea of how significant this is, by fixing the keyword match types we saw a drastic improvement for one of our clients in the Healthcare industry. Phrases unrelated to their business were being purchased and by simply eliminating those phrases, we decreased their cost-per-lead by 137% and increased conversions by 145%. You can read the full case study here.

Google Rankings After Site Transition:

Next time you are questioning your results in Google AdWords, check out which phrases you’re actually purchasing. You could be purchasing unrelated phrases and wasting your budget.