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Right Cost to Remarketing Campaigns

Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

Hi,

 

This is a very broad question but I would love to hear what other more senior advertisers are doing regarding remarketing cost.

 

My issue is I have a remarketing campaign I treat as a regular Search one, so when I have to calculate my CPA I do something like:  "OK, I spent $1,000, I sold 4 items: CPA  is $250!!" Easy stuff XD

 

My manager saw this he asked to include somehow the amount spent on getting the users from regular Search campaigns in the remarketing. The idea is to reflect the cost of the campaign is higher than the cost given by Adwords as we already paid some money to bring those people to the site on the first place. 

 

One idea would be to add a percentage of the clicks I need to get a conversion in regular Search campaigns to the final cost.  So for example, if I know I get a purchase each 200 clicks on average, and each click costs me $0.20 then 200 clicks*$0.20/PPC* % of this... but I feel this is going to inflate my costs...

 

Well, please let me know what you think and how you deal with this problem... Thanks a lot for all your help and support!

 

Best,

Sandra 

 

 

 

 

2 Expert replyverified_user

Re: Right Cost to Remarketing Campaigns

Top Contributor
# 2
Top Contributor
Hi Sandra,
Great question!

First of all, in this case, it's important to segment the clicks that you paid for that end up in a list. So you need to create a list where users from AdWords clicks only get added. This probably doesn't need to be said as it's so obvious, but I just wanted to bring it up.

We don't worry about manually doing this. The attribution modelling tool in Google Analytics does all the heavy lifting for you. It even has a dedicated AdWords campaign breakdown so you can see the "real" value of your remarketing list on a first and last click basis (or whatever model you want to use!)

If you don't want to use this tool, you might consider reporting by view through conversions to get a more accurate result rather than using averages and applying that premium to your click costs.

Remarketing campaigns always look a little too good to be true at first glance. However, they're usually still more profitable than counterparts in an account. We use the modelling tool to apply the premium to AdWords visitors only. However, remember, there's ALWAYS a cost in adding users to a remarketing list. There's no such thing as free traffic. Sometimes, organic traffic is more expensive to acquire than AdWords.

Hope that helps somewhat. I'd be interested in hearing what others have to say on this topic too.

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Accepted by Dave_Davis (Top Contributor)
September 2015

Re: Right Cost to Remarketing Campaigns

Explorer ✭ ✭ ☆
# 3
Explorer ✭ ✭ ☆

Hi Sandra,

 

As suggested by Dave_davis, analytics does give you channel attribution details which can be used.

But adwords too has attribution modelling which can be used to calculate the actual (still approx) CPA of remarketing campaigns. You can see guide here - https://support.google.com/analytics/answer/1662518?hl=en

 

From the fact that, for visitors from remarketing campaigns, money has been already spent to get them back to the website, the adwords “cost/converted click ” CPA may be bit misleading.

 

To calculate based on attribution modelling, let’s consider data from the campaigns directly and search funnels in adwords.

Search funnels data is available here

Adwords >> Tools >> Conversions >> LHS link Search funnels >> Top paths

 

Let’s say we have

Regular-Campaign – Regular campaign with diff ad group1, and ad group 2

Rmktg-Campaign– Remarketing campaign with ad group1, and ad group 2

 

Regular-Campaign (Ad group 1) CPC =$1.2

Regular-Campaign (Ad group 2) CPC = $1.8

 

 

And Regular-Campaign spends $500 and few of visitors from these campaigns have been added in remarketing list.

And Rmktg-Campaign spends $200 on campaign 2 (ad group 1 =$90 and Ad group 2=$110. Ad group 1 has 6 conversions)

 

Using data from adwords the CPA would be

$90/6=$15

 

Now let’s calculate actual CPA of Rmktg-Campaign>> Ad group 1 (This calculation can be used at campaign level as well. But to get more precise data ad groups level data can be considered)

 

Now, to calculate the actual CPA of conversions from Rmktg-Campaign>>Ad group 1, add the extra cost attached to it by exporting “Ad Group Path (Clicks)” data from

Adwords >> Tools >> Conversions >> LHS link Search funnels >> Top paths >> Horizontal links - Ad Group Path (Clicks)

 

Now it will give you path of the ad groups which assisted clicks to conversions. Filter the data where Rmktg-Campaign>>Ad group 1 appears at the last in the conversion path

 

Every preceding ad group will be given credit(or cost) for the conversion

 

For example below is conversion path -

 

Regular-Campaign (Ad group 1) > Regular-Campaign (Ad group 2) > Rmktg-Campaign (ad group 1) – And conversions =4 then

 

Now add cost based on avg CPC of the preceding ad groups-

1 => Additional cost of remarketed conversions = ($1.2 +$1.8 ) * 4 => $12   (Avg CPC of preceeding ad groups)

2 => TOTAL cost of Rmktg-Campaign (ad group 1) => $90

 

Total cost = 1 + 2

=$90 + $12 = $112

 

Total CPA = Total cost / Total conversions from remarketing ad group 1

=$112/6 = $18.67   (and not $15 as calculated in the beginning)

 

You can further decide how granular data you want to look into. Because this approach could be used for other ad groups as well.

 

In short, give credits to the contributors in the conversion paths. You can give % weight to the contributors as well.

 

Hope this helps.

Cheers

 

Re: Right Cost to Remarketing Campaigns

Top Contributor
# 4
Top Contributor
Hi, Sandra & all.

I'm a bit late to the party as I was away on the weekend and saw the question on my phone, liked it a lot but did not get the chance to answer due to lack of mobile networks coverage Smiley Happy.

Yes, as Dave has already pointed out, there's no free traffic. However, the attribution modelling tool has a (small) problem. It has a short term memory (max 90 days). So if you have sales cycles which are longer than 90 days, it won't help you too much.

It will also be pretty useless if the length of your remarketing list is longer than 90 days, because someone will be added to the list at a moment that the MCF / Attribution tool cannot reach.

A more simplistic approach would be to look at the profit without remarketing campaigns versus the profit with remarketing campaigns, when you have remarketing lists that last many days. That's also good when people switch devices (and they do) and you completely lose the cookies and any possibility to link a display campaign that showed your ads on a mobile (on the way to work) and then triggered a sale on a laptop / tablet / desktop (at home).

If you really want to go down as low as possible with cost calculation, I think you can assign a visitor-level custom variable to each of your website visitors and then use it in order to calculate the "lifetime costs" and the "per period costs" for a group of visitors.

Then, you can look back, whenever somebody converts through a remarketing campaign, what the total costs were for that visitor, for a period of time of your choice.

Calin Sandici, AdWords Top Contributor | Find me on: Google+ | Twitter | LinkedIn | myBlog
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