When it comes right down to it, companies advertise to make money.
Of course, there are a lot of other benefits to online advertising, but ultimately, a successful AdWords lead generation campaign makes money.
In other words, it has a positive return-on-investment (ROI).
Optimize for ROI, Not CPA
A lot of online marketing agencies advertise that they optimize for ROI, but sadly, when it comes to lead generation campaigns, most optimize for cost-per-action (CPA), not ROI.
The fact of the matter is, when it comes to lead generation campaigns, it’s a lot easier to optimize for CPA then it is to optimize for ROI.
However, if you are running ads to generate leads, a conversion isn’t the same thing as a sale.
Sure, if you know what percentage of your leads typically become sales, you can estimate what sort of CPA you’ll need to produce a positive ROI.
The only problem is, this sort of estimate doesn’t account for lead quality.
More Leads Does Not Always Equal More Sales
For example, one of my clients uses AdWords to drive leads for their B2B business. They recently expanded their offer and—since AdWords is a great source of leads for them—they decided that they wanted to try advertising their new offer on AdWords.
At first, it looked like everything was going great. Compared with their average campaigns, the new campaign drove 300% more conversions at a 28% lower cost-per-lead.
Since this client tracks campaign results through to sales and revenue, I was able to take a look at what was happening after these leads converted.
Unfortunately, when I calculated the client’s cost per sale, it turned out that these leads were so poor that each sale from this campaign cost 2.57 times more than their typical sale.
In fact, they were losing thousands of dollars on each sale!
With an estimated CPA approach, this campaign would have looked like a winner. However, these leads closed at 1/5th the rate of their other leads, so the campaign was actually a budget black hole.
Do you see the problem here?
It’s About Lead Quality, Not Quantity
A great CPA often fails to translate into real revenue due to lead quality.
Sure, your AdWords agency might think and/or say, “we did everything to produce leads, it’s your job to convert them,” but if the real problem is lead quality, your PPC campaigns probably need a tweak or two.
And, with the right data, it’s actually fairly easy to make those tweaks.
In my experience, most companies actually have the data they need to optimize for ROI—they just aren’t using it effectively.
True ROI Optimization
“True” ROI Optimization fully utilizes the data in your CRM to directly or indirectly optimize your campaigns.
The question is, how do you use the sales data in your CRM to optimize your AdWords campaigns?
Basically, there are 2 ways to go about it:
1. Automatic Data Integration
Automatic integration is primarily reliant on your Lead Management System or CRM’s capabilities. However, you’ll need to capture and store the GCLID (Google Click ID) in your CRM.
If your CRM integrates directly with AdWords, you should be good to just let things run.
On the other hand, if your CRM does not directly integrate with AdWords, you’ll need to create an offline conversion and export file and upload it into AdWords (full instructions from AdWords can be found here).
2. Manual Data Integration
If you’re unable to set up automatic integration, there’s still loads of sales data you can take advantage of to TRULY optimize for ROI.
Here’s a quick list of common segments you can use to track your AdWords campaign performance through to actual sales and revenue:
- Campaign Name. The name of your AdWords campaign.
- Keyword. The keyword that your lead’s search triggered.
- Match Type. The match type for your keyword.
- Content. What specific ad copy or image did they click on?
- User Location. Where did your lead come from?
- Quality Indicator. Does your lead pass through a quality indicator before becoming an opportunity or ‘quality’ lead? This can be a rating system or status.
- Landing Page. What landing page or variant did they end up on?
- Product/Service. What did the lead end up buying?
Each of these segments allows you to take a deep dive into performance based on profitability and make key decisions to improve ROI.
Depending on the focus of your campaigns, there are many more segments that can be utilized based on what’s most relevant to your business.
If any of these segments are not available in your reports, check with your Lead Management System or CRM’s capabilities to add them. Some of these will work off of specific parameters you tag in your URL, so you’ll also want to coordinate with your PPC Manager.
Finally, if you’re just beginning to capture this data, remember, it takes longer to collect accurate sales data than it does to collect meaningful click or conversion data.
However, once you have the appropriate data, you’ll be in a much better position to maximize profitability and improve lead quality.
Successful lead generation campaigns don’t end with a conversion, they end with a sale. To really get the most out of your AdWords campaigns, you need to optimize for ROI, not CPA.
The good news is, your sales team is probably already tracking most of the data you need to optimize for ROI—you just need to start using it.
By the way, if you’d like some help using the data in your CRM to improve the performance of your AdWords campaigns, let me know here or in the comments. I’d love to help.
Have you seen companies optimize for CPA at the expense of ROI? What do you do to make sure that your campaigns are actually turning a profit?
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