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Using Attribution Models To Optimize Your Bidding Strategy

Like cleaning the house, sometimes managing and optimizing your AdWords account feels like it never ends. While that’s somewhat true, there comes a point after weeks, months or even years that your AdWords campaigns are optimized and you’re starting to reap the rewards of your effort.

 

It’s extremely rare these days to start an AdWords campaign and have it perform profitably right off the bat. In fact, it has been many years since I’ve created an AdWords campaign that wasn’t a poor performer the day it started. In fact, I expect every basic (just keywords, ads and bids, nothing else) AdWords campaign I create to perform poorly because I don’t consider a basic AdWords campaign optimized at all.

 

The first goal I have when starting a campaign is to get it to break-even point. This should be done without delay and can usually be achieved by adjusting bids. The next step(s) is to optimize the campaign to bring it over the line and start squeezing every bit of performance out of it that I can and bringing it into the profitability zone. This stage is remarkably easy once you know the basics of optimization.

 

The AdWords help Center is an invaluable resource jam packed full of optimization tips to help incrementally improve your campaign performance. However, there are 4 main areas/pillars of optimization that I would consider the “low hanging fruit”. These are, in no particular order:

 

  • I'm constantly surprised at how many top of page ads I see that don’t use AdWords extensions. You should consider extensions mandatory. While some extensions may not apply to your specific type of business, there are some that can benefit any type of business advertising on AdWords. Especially sitelink extensions and callout extensions. My fellow TC Rakesh recently published a great article on the importance of callout extensions here, it’s a great read. I cannot stress the importance of extensions enough and if you manage an AdWords account, you should consider a campaign without extensions like an ad without a call to action… incomplete.

 

WHAT TO EXPECT – Up to a 100%-200% improvement in CTR and up to a 50% reduction in CPC costs due to improved QS.

 

  • Negative Keywords. No doubt you’re aware of this one but this is such a neglected requirement that it’s important to reiterate. My colleagues in the TC program have already posted some amazing articles on this very topic this week so I won’t delve too deep (Thanks @Neha Gupta @Jon_Gritton and @Kim_Clink ). Just be aware that negatives can make or break a campaign and the work here is never done.

 

WHAT TO EXPECT – Incremental improvements in CTR of up to 100% over time depending on volume.

 

  • Ad Text. Don’t set it and forget it and NEVER assume that the ad that you have is the best performing ad. Creating custom ad text (coupled with custom sitelinks and callouts) for each keyword or tightly themed group of keywords can be time consuming but the cost to reward ratio in terms of the effort put in is sky high. You can see some great articles on this by @Deepak_V in this series here with some additional tips from @ScottyD here.

 

WHAT TO EXPECT – Improvements of up to 500% in your CTR and a reduction in your CPCs all the way down to $0.01.

 

 

In most campaigns, doing nothing more than what was outlined above in the first 3 pillars can bring your account into the “profit zone”. However, it’s in the 4th pillar that the wheat is separated from the chafe. Once your AdWords account is linked to your Google Analytics account, all sorts of magic is possible. While there are countless additional optimization opportunities made available from GA, I want to focus on my favourite and the one that has improved my client’s performance the most. That’s the free attribution modelling tool available to all Google Analytics and Google AdWords advertisers.

 

While the attribution modelling tool is available inside the AdWords UI, I’ll be using the GA UI here to demonstrate its power.

 

First of all, what exactly is the attribution modelling tool and how can it benefit your AdWords campaigns? As usual, the Help Center puts it better than I ever could:

 

“Assign credit for sales and conversions to touchpoints in conversion paths.

An attribution model is the rule, or set of rules, that determines how credit for sales and conversions is assigned to touchpoints in conversion paths. For example, the Last Interaction model in Google Analytics assigns 100% credit to the final touchpoints (i.e., clicks) that immediately precede sales or conversions. In contrast, the First Interaction model assigns 100% credit to touchpoints that initiate conversion paths.

 

You can use the Model Comparison Tool to compare how different attribution models impact the valuation of your marketing channels. In the tool, the calculated Conversion Value (and the number of conversions) for each of your marketing channels will vary according to the attribution model used. A channel that predominantly initiates conversion paths will have a higher Conversion Value according to the First Interaction attribution model than it would according to the Last Interaction attribution model.”

 

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Google Analytics comes with a whole bunch of different default models that you can use for free. You can even create your own. However, there are three in particular that I like to use with AdWords. These can be seen and described below.

 

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Have you ever suspected that some of the keywords in your account who appear to have a negative return on ad spend when looked at in terms of last click might actually be valuable? Have you ever looked at your AdWords display campaigns and admired the “impression assisted conversions” or even the “click assisted conversion value” in your search campaigns and wondered how exactly you could use that to determine the optimum bid for your already (hopefully) well performing campaign? Well, now you can!

 

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To access the attribution reports in AdWords, you can access them from the “Tools” menu.

From there, we can delve into the attribution modelling reports themselves.

 

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These reports are also available in Google Analytics with the additional benefit of cross channel attribution modelling reports being made available so you can see at a much higher level how you’re doing. But let’s focus on the AdWords channel for now.

 

In Google Analytics, the attribution model reports can be accessed by clicking on the “Conversions” menu set, then “attribution” and then “model comparison tool”. Just like in the AdWords interface, you’re presented with a report that allows you to select the specific attribution models that you want to compare. With AdWords, we can compare only 2 models, in GA, we can compare 3 which I find personally a little more useful.

 

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So what are we seeing here and how can we use it to improve the performance of our campaigns? Well, in the GA attribution model report above, I’m only viewing the campaign view of this model. You can click each campaign name to drill down to the keyword level for really granular keyword attribution modelling but for now, I’ll just focus on the actual campaigns.

 

To put this simply, apart from the remarketing campaign, all of our campaigns above are actually contributing more to our campaigns than our standard AdWords and GA reports would have us believe. AdWords and GA standard reports are all based on the “last interaction” model. What this means is that if a user clicks an ad and the user converts, AdWords gets the credit in reports. However, if a user clicks an ad, doesn't purchase, does a search for your brand name and clicks an organic search result for your website and then converts (after up to 90 days), then in your GA reports, “Organic Search” would get the credit. After 30 days, then AdWords doesn't even get any recognition. Doesn't this seem silly when it was your ad that brought that user to your website initially and had it not been for that paid click, that user may never have even heard of your company?

 

Using the above example, in AdWords, after 30 days (and some other edge cases), that keyword that drove the initial click might appear to be performing poorly. You may even consider (or often times be under pressure from management) to reduce your bid for this keyword or worse yet, delete it! In fact, what you should be doing is quite the opposite!

 

In the GA report above, we can see that, at a campaign level, most of the campaigns are actually performing better than it would initially appear and that we can squeeze more performance out of them by actually increasing their bids and budgets. While I have only touched on the campaign level reports, this process of optimizing bids using attribution reports should be done at the keyword or ad group level of the reports, never at the campaign level. However, budget optimizations based on this data can be done at the account and campaign levels.

 

So there you have it. When you're squeezing blood from a stone with your standard optimization practices, remember that there’s a whole other layer of performance improvements to be made. To get to that layer, you need to start thinking about the value that your AdWords campaigns add to businesses sales cycle as a whole and not just interaction your AdWords sourced visitors have with your brand immediately after the click.

 

While it’s especially true for businesses with a long sales cycle, with the proliferation of mobile devices, more educated consumers researching their purchases and social media influencing purchasing decisions, EVERY ONLINE BUSINESS will have (the majority of) conversions that involved multiple touch points.

 

Last click optimization is dead. Touch point optimization is where the smart folk are looking now. Be one of those smart folk.

about Dave Davis

Skydiving and travel obsessed. Director of digital marketing agency Redfly, based in Dublin, Ireland. An marketing agency that specializes in AdWords management, Google Analytics and Google Tag Manager.

Comments
Nisal L Rising Star
August 2015

Such a great article Dave. Thanks so much for this Smiley Very Happy 

Sumanth Sridhar Rising Star
August 2015

Valuable article. Thanks Dave!

Dave_Davis Top Contributor
August 2015

Thanks guys!

Adhit S
September 2015 - last edited September 2015 KathleenG Community Manager

Informative articles, thanks bro

<edited>

 

*This comment was edited by a Community Manager to remove self-promotional information.

Mohammed Z
November 2015
very useful article
Brian C
January 2016

Very helpful and learned a lot. I did not know that Google defaulted to "last interaction" as the report. This does not provide good results as it does require multiple touchpoints to convert a sale.

thong b
June

Thanks for your useful article

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