Your AdWords account might be hiding nasty Monsters

AAEAAQAAAAAAAAY1AAAAJGNiY2ZlNzBhLTAyNGMtNGRkMS04MWRjLTQzYWYxMzYyNjc2NA.jpg

Spoiler Alert: this post takes us on a journey into account structure and management of AdWords Brand Campaigns vs. Non-Brand Campaigns.

Your AdWords account might be a pretty big and complex place.  It might have been built over long periods of time, with lots of different people or agencies contributing to what it looks like today.  However, there are almost always little nasties hiding in the cracks and crevices.  When you're looking across the vast expanse of data, taking it all in, it's easy to miss even large monsters in the totality of the big picture.

Luckily for me, rooting them out is one of my favorite things to do.  That's why I do so many free Account reviews.  Sometimes, the recipient implements the recommendations themselves, and I've made someone's business stronger.  Sometimes, we have a conversation about how I might be able to help more directly, although I don't really do them intentionally as a prospecting step.  Sometimes, the review is read and forgotten moments later--but even then, I had the opportunity to explore a whole new Account landscape, and hunt those little nasties down, and my tools get sharper in the process.  It's a blast, and I love it.

But there's one BIG monster I keep seeing that I wanted to share.  Hear me out, because I'd say about half of the Accounts I've seen are playing host to this profound performance parasite.

Your own AdWords Brand Campaigns might be killing your ROI

Just for clarity, "Branded" or "Brand" Campaigns, in this context, refers to Campaigns centered around searches specifically for your brand, domain, trademark, etc.  This is to distinguish this type of Campaign from "Non-Brand" Campaigns, such as your Shopping Campaign, or category and product-level Text Ad Campaigns.

AdWords Brand Campaigns tend to have very low costs, as a percent of revenue.  This is obviously because these shoppers are already familiar with your brand, know that your site sells stuff, and they're looking to buy said stuff.  That puts them about as far down the funnel as you can get.  Some companies don't even run these Campaigns, assuming that these shoppers are going to find them organically anyway--but it can be a good, low-cost defensive play for many others.

However, if you leave them lumped in with the rest of your Account when you're measuring the success of your AdWords overall, then you've just made a nice, warm, comfy home for this Monster.

Imagine that you are trying to spend 30% of revenue on your advertising, within the Account.  This is the same as saying you need a 3.33x ROAS, just in case you're used to using that metric.  As a percent of revenue, this is sometimes referred to as a Cost of Sale (COS).  Let's say, then that your goal is a COS of 30%.  Let's further assume that your break-even point is 35%--if you spend more than 35%, then you've exhausted your margin.

If you hop into your AdWords account (or perhaps your Agency sends you their performance report for the week), and the Account is spending 28%, you might see that as success!

However, if your Account includes AdWords Brand Campaigns, the reality might be slightly more complex.  The way that Branded Campaigns behave is fundamentally different than higher-funnel Campaigns, and this 28% report above might be the Monster's midden.

Want to see what it looks like when we shine a light into that hiding place?

When you average the performance of these two columns (as they are COS values over different amounts of Revenue), it produces the allegedly great 28% COS number we saw earlier.  However, it's actually hiding the fact that our Non-Brand Campaigns are actively losing us money.  I hate losing money.  It's just not my style.  I generally prefer to do the other thing.

So, how do you kill the Monster?

As we've learned time and time again (Smaug's underbelly from The Hobbit, Achilles and his heel, the Sontaran probic vent in Dr. Who, the thermal exhaust port on the Death Star, the mothership laser guns in Independence Day, the...), this Monster has a secret weak spot.

Measure AdWords Brand Campaigns and Non-Brand Campaigns separately.  That's it!  You should also set different COS targets for the two types of Campaigns.  In our example above, maybe the Non-Brand target should be 30%, but the Brand Campaign target should only be 10%.  And as long as you're measuring them separately, you'll never be infested with the hidden money-losing Monster.

Just remember--this Monster loves Agencies (and all monsters love a lack of transparency).  Many Agencies are financially motivated to give it a cozy home, after all.  If you haven't talked to your Agency about the difference between Branded and Non-Branded Campaigns...  maybe today should be the day for that question!

Don't forget to share this post with someone you think might be harboring this Monster.  You may be doing them a huge favor.  Be a hero.

Have questions?  Drop me a line via the Contact form--I love to talk shop.

Up and to the right!