Mistake in a Pay-Per-Click Campaign Leaves a Business Puzzled

/// Mistake in a Pay-Per-Click Campaign Leaves a Business Puzzled

November 1, 2012  |  Blog

I am going to tell you a story. It is a narrative built around a set of facts and events that happened over the last six months. In the end, the problem I confronted was how to understand what was going on, and I am still not certain that I really know what happened.

In the spring, we stopped getting a certain kind of customer inquiry for the high-end conference tables we sell. At the same time, sales started to contract with alarming speed — to the point where June was the worst sales month I have had this decade. I have not paid myself since April.

Although I did not realize it at the time, the trouble began at the end of 2011. That is when we got a call from a client for a low-cost, modular, folding table. This is a particular configuration of conference table that we had not been making, mostly because the best solution to the problem involves using metal components that we cannot fabricate in my factory. But we had been getting a steady stream of calls for this type of table, and I decided that we should put some effort into developing our own version, which we did. I was happy to add a new product that hit a low but acceptable price point.

We rely on Google AdWords as our primary source of customers. I have been participating in the program since 2004, and I feel I have a good grasp of the basic principles of how to choose keywords and write ads. After a month of running ads for the new modular tables, things were looking good. Not only were we seeing decent traffic for the ads, we were also starting to get a significant number of inquiries. Success! I had developed a new product, supported it with advertising, and the calls were coming in.

I keep track of a bunch of metrics to see how our sales process is working. Beyond the most important number (monthly sales volume), I look at Web traffic; the number of inquiries coming in each day, week and month; the number of proposals written; and how much each salesman contributes to these totals.

My records are kept on various spreadsheets, which are on Google Docs and are shared with my two salesmen. The Web stats are done through the AdWords campaign management screens, which I access by logging into my AdWords account. I keep track of enough information to form a statistical picture of what is happening. And I do this for many other aspects of our operation besides sales. It all adds up to something like Niagara Falls landing on my head. The challenge, of course, is to pick meaning out of all of the information.

As winter turned to spring this year, many of my statistics were looking good. But there was a worrisome trend to sales — the monthly total was falling. These sales numbers say it all: January: $193,154. February: $213,669. March: $135,732. April: $146,677.

I also noticed a change in our mix of inquiries. After our successful product introduction, we were seeing more calls for low-priced modular tables. These were coming from schools, municipal governments and nonprofits. But there was a noticeable slowdown in both large corporate clients and what I call “boss-driven” transactions, our bread and butter. These clients are not as price-sensitive as others, and they tend to make buying decisions quickly.

Maybe I’m unusual, but I like to have a story to tell myself about what’s happening at any given moment in my business. As sales fell in the spring, I put together one of these stories in my mind. The sky was falling again, I concluded, just as it had in 2008 — bosses and corporations everywhere were scaling back on spending. I was about to be victimized by vast forces beyond my control.

That’s what I told the members of my Vistage business group. We meet once a month, and a portion of each meeting is devoted to analyzing the business issues faced by members. When a member presents a problem, the others listen, ask questions and suggest solutions.

Through the spring, I kept the group updated as my sales collapsed, and in May, I told everyone that I felt like the victim of a bad economy. The thing was, nobody else in the business group was having such a hard time. One of the members told me bluntly: “I don’t want to hear any more about the euro or health care or whatever excuses you come up with. This is YOUR problem, and YOU have to solve it.”

It was excellent advice. Complaining hadn’t helped, so I had to keep trying things until we either recovered or went under. But if it wasn’t an outside problem, what could it be? It had to be something about my marketing, and that meant the problem was in AdWords. I went back to the basic issue: no more calls from bosses looking to spend their own money. Where had they gone? Looking at the data again, I spotted a pattern I had overlooked. After I had introduced those modular tables, we started getting more calls for them from schools and nonprofits. These calls tended to come in the morning or middle of the day. Unfortunately, neither schools nor nonprofits have much money, so these inquiries weren’t generating much revenue.

Bosses, who actually have decent budgets, tend to call late in the day. I started tracking to see whether the ads for our higher-priced tables were appearing throughout the day — and sure enough, by about 2 p.m., they had stopped running. My daily budget had not been exhausted, but Google was showing only the ads that got the most impressions and the most clicks, the ones for the inexpensive tables — even though their click-through rate was much lower than the rates for my more expensive tables. In other words, my budget was being wasted. It was putting ads in front of people who were not as interested in our products and could not really afford them. But Google’s algorithm saw the total number of clicks generated as evidence of success, regardless of whether we closed business.

So I started telling myself a new story — not that the economy was collapsing but that my AdWords spending was going to the wrong people. Fortunately, there is a simple fix for this. You can fragment a campaign into smaller campaigns and give each its own budget. That way, ads for one product won’t drain traffic from other products.

The first week after the changes included the Fourth of July, and we got few calls. But the following week there was a significant jump, and for the first time in a month, there was a nice sprinkling of boss calls. In July, our sales were $144,893 — not where I wanted them to be but not awful. At last, in August, we got back to our target, closing $200,607 in new orders. September was also strong: $220,361. And in October, we hit our target in the first three days of the month.

My cash is still way behind where it was at the beginning of the year, but if sales stay strong, I should recover before the year ends. I think my problem is fixed. That’s the story I’m telling myself, anyway.

Link: Mistake in a Pay-Per-Click Campaign Leaves a Business Puzzled

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