Had an unusual opportunity recently to compare two very similar AdWords campaigns. It provided interesting insight into the inner workings of AdWords and how campaigns, that are so alike, can behave VERY differently. Here’s what happened…
One of our clients (we’ll call them “ABC Co”) has an AdWords campaign we’ve been managing for the past 2 years. About a year ago a difference of opinion arose between the founders of ABC Co and, as a result, a few of the original partners left.
And when they did, they founded their own company (we’ll call them “XYZ Co”) that offers the EXACT same service as ABC Co.
During the transition, which took a few months or so to play out and be finalized, the guys from XYZ Co continued to have full access to the AdWords and Analytics accounts from ABC Co. I even noticed during this time that someone from an agency got access to the ABC account so they could see EXACTLY what we had done, and continued to do, in the account.
They knew how the account and campaigns were structured, what keywords generated the most clicks/conversions, what match types we were using, what the bids were, ad copy, landing pages – EVERYTHING!!
Having access to all this gave them a TREMENDOUS advantage when they officially opened for business and set up their own new campaign.
Now there are a few things that are important to know in order for you to understand what I’m about to share with you.
One is that these businesses are in a fairly specialized niche market and there’s a fairly limited universe of keywords to bid on.
We talk about the 80/20 of AdWords where 20% of your keywords generate 80% of your results. Well, that’s definitely the case here (though it’s probably closer to 95/5 in this market).
In fact, there are around 20 – 30 keywords that account for a very high percentage of the conversions in this niche. We’d figured out what they were a while back and the guys setting up XYZ’s account definitely know what these keywords are.
The other factor that’s important to understand is that there’s not a lot of differentiation between the two companies (or any of the companies in this niche, for that matter). What they offer, their pricing, how they operate, and even their websites are all quite similar.
And that carries over to the ad copy. There’s only so much to be said about what the companies in this niche are offering so the ads all pretty much say the same things. That means the Clickthrough Rates (CTRs) of the 2 companies’ ads (CTR being the biggest factor in Quality Scores in AdWords) should be fairly similar.
In fact, XYZ Co actually has an advantage when it comes to CTRs because they have star ratings that run next to their ads (which our ABC Co account does not have yet). And those ratings can make a big difference in the CTRs of ads.
Okay, so we have two companies with essentially identical offerings, similar ad copy/keywords/AdWords accounts going head to head against one another.
Now here’s the interesting part… because the separation between ABC and XYZ wasn’t terribly messy, people from the two companies still talk to one another. And during one of those recent conversations the topic of AdWords account performance came up.
And it turns out that XYZ’s click costs are about TWICE what we are paying per click for the same keywords… and their ads are appearing in essentially the same average position that our ads are!
So why would one account have to pay 2x as much for the same keywords?
Well, I don’t have access to that other account so I don’t know exactly what’s going on in there.
It’s possible, while they had access to what we were doing, they changed things around so much in their new account that it was so poorly structured and organized, their Quality Scores are horrible. However, knowing those guys who started XYZ and how sharp they are, I don’t think that’s likely.
It’s possible that a number of changes we’ve made in how we use match types, organize keywords, use negative keywords, etc. has made a big difference over the past year in the performance of our campaign. However, while we’ve been making changes each month in the account, the overall strategy and structure of our campaigns has not shifted dramatically.
My hunch, however, is that campaign history is the biggest difference between the 2 accounts.
Our campaign has a 2+ year history of split testing ad copy, adding negative keywords, segmenting keywords and ad groups and campaigns to optimize for the most important keywords and much more.
And I believe Google has noticed and this is at least part of the reason we’re being rewarded with click costs that are about half of at least this one competitor.
There may very well be other factors at play here (again, without having full access to the other account, I don’t know for sure).
However, what is clear is that all AdWords accounts are not created equal (even ones as similar as these two are). And when you smartly and consistently optimize your campaigns over the long term, you can end up paying MUCH less for clicks than your competitors.
A 2x factor in click prices is a very big deal. It means XYZ has to convert twice as many AdWords visitors to their site into customers OR make 2x as much per customer to generate the same level of revenue (from AdWords) as ABC.
More than ever, it takes a great deal of expertise, hard work and persistence to manage an AdWords account well. But, as this example shows, the payoff can give you a HUGE competitive advantage.