Last Tuesday, you received an email with the subject: “how ‘maximize clicks’ took me by surprise.” (I’ve repeated it at the bottom of this email for your convenience.)
Be sure to re-read the story before you continue, otherwise this won’t make sense.
…
Now, let me share what I think happened.
First, I need to tell you about the product my client is selling and her audiences.
The product is sort of like ketchup, and my client is the only one that sells the brand that we can compare to Heinz; most of the target audience knows her brand, wants the brand, and has a tough time naming any other brands.
Also important: my client sells both to consumers and B2B clients; you and I would be ordering a bottle or two (B2C), and restaurants ordering tens of bottles if not hundreds (B2B).
Based on analysis of the search terms and the transaction data of the campaign that runs on Maximize Clicks, both before and after increasing the budget, here’s my current explanation of why spend went up and profit went down:
- Because of the big brand recognition (‘Heinz’), my client has a far-above-average conversion rate for generic searches (‘ketchup’). Competitors get low value per click for these types of searches -> competitors enter the auction with low bids -> it’s easy for Max Clicks smart bidding to get a lot of these cheap clicks for my client. Increasing the budget of my campaign allowed Smart Bidding to set higher bids for extra clicks from auctions that have higher competition. These are auctions where the competitors enter with higher bids because for these less generic, more bottom-of-funnel-type searches (i.e., “buy spicey ketchup online”) they can convert the click. This resulted in me getting more clicks at higher CPCs that did not have higher conversion rates (sometimes even lower, because our ketchup is spicey, just not as spicey as our competitors).
- Increasing the budget did not significantly increase the number of B2B orders. It did increase the number of B2C orders, but since the average order value of a B2C order is <15% of the value of a B2B order, overall performance went down.
- The number of B2B orders did not significantly increase because a lot of the B2B orders are from repeat customers. These customers go to our website simply by entering the same generic search they used the last time they ordered.
- Increasing the budget for the Max Clicks campaign did not allow us to attract more repeat customers in the B2B segment; we were already showing up for them most of the time.
Lessons learned:
- Google’s claims and recommendations about smart bidding may be true on average, but that does not mean they are true in your specific situation.
- The dynamics of the ad auction and smart bidding are complex, very complex. It is hard to predict the effect of applying major changes to your settings/targeting. So, Always Be Testing.
- Maximize Clicks can be a very interesting bidding strategy if your value per click for the targeted keywords is much higher than the value of the same for your competitors.
Analyzing the results of your test takes a lot of effort. However, this is how you separate yourself from the other advertisers that simply apply Google’s recommendations. This is how you create a competitive advantage in a world where Google is automating easy tasks.
Next steps for me and my client:
– Improve conversion tracking; create separate conversion actions for B2C and B2B orders
– Create audiences for B2B clients and B2C clients
– Restructure campaigns to target both audiences individually (split remarketing and prospecting)
– Retest smart bidding using data from the new conversion actions
It’s going to be fun!
– Nils
PS: Here’s a link to the email, as promised -> https://nilsrooijmans.com/daily/how-maximize-clicks-took-me-by-surprise