Declining ROI in Adwords

[mhkatz]

I have been tracking my Adwords ROI and conversion rates since last December. Through the end of March, my conversion rate was around 0.6%. Suddenly, around the beginning of April, it took a dive to 0.2% and continues to decline when I look at my stats on a weekly basis. During the same period, my Overture conversion rate has remained steady.

Are others experiencing such a decline in their Adwords campaigns? Any explanations?

[cline]

Current conversions lag long-term conversions. Don't seriously fret about the data until it's a month old.

Are you experiencing increased competition?

Is your product seasonal?

[Shak]

is this for

Google Only
Google and Search partners
Google and Content
Google, Search partners and content

?

Shak

[skibum]

Depending on the market, more competition may be to blame. More ads, more choices, less sales to each advertiser.

[mhkatz]

My campaign has all partners and content enabled. If seasonality were an issue, I would expect the click counts to be lower, but they are not. If competition is the problem, wouldn't I see the same dropoff in Overture? Or is google's advertising growing faster?

[quebrada]

I have seen the same type of drop. The traffic remained the same but my conversion dropped to where it was no longer profitable to buy the words. They had been working for several months and towards the end of april they just stopped converting.

[edit_g]

Just a quickie - doesn't a 0.2% conversion rate indicate that a complete rethink is in order?

[edit] or 0.6 for that matter [/edit]

[nyet]

doesn't a 0.2% conversion rate indicate that a complete rethink is in order?

Depends on the good or service you are selling. Our conversion rate is .08% but our service costs thousands of dollars.......

[edit_g]

Depends on the good or service you are selling. Our conversion rate is .08% but our service costs thousands of dollars.......

Good point well made. Let me just take my foot out of my mouth. :)

[wattsnew]

Perhaps many folks are just returning for a second visit to see if you have anything new to sell?

I also find that as I grow my AdWords keyword inventory, the newer words/ads cannot be quite a spot-on relevant as the older ones - so I probably get more look 'n leave visitors. My CR is slightly less than last year overall.

2c.

[Robsp]

In my experience there no direct relation between CTR and clicks and conversion rates. There is a seasonal influence in that some parts of the year people want info on products and other times they buy (like with digital camera's people tend to buy those before holidays). This is all very product and services specific.

To summarize.Just because CTR is good does not mean you have buyers visiting.

[mhkatz]

Thank you all for your insights.

I have done some more analysis on my sales in March and April and have found that the ratio of actual sales of the items on the web site to my overall PPC advertising spend remained constant over the two months, despite the drastic decline in the online conversion rate in my Adwords campaign. Apparently many more buyers decided to phone in their orders instead of ordering online in April. It still seems strange to me that the measured conversion rate in Adwords changed so suddenly while the Overture and natural search results did not.

[eWhisper]

In my experience there no direct relation between CTR and clicks and conversion rates.

I agree if the ad position doesn't change. If you add ad position to the above, then I think there is a factor involved.

For higher positions, I usually see higher CTR, and I also see lower conversion rates for these higher positions.

For lower positions the CTR rates drop, but the average conversion rate goes up.

[tamarz]

March & April were good. i have seen conversion ratios dropping by some 25% since the beginning of this month, and it's getting worse by the day.
I was used to a conversion rate of about 2%, now its more like 1.3% and still dropping.

[dude]

After six months of using Adwords, there is only one conclusion: Adwords is for Google revenue, not yours!

The whole of adwords is geared towards maximising the revenue to Google it is a by product if you make sales.

You will find the "re-enforcements" force you towards widening the focus of your keywords, and nothing is gered towards maximising sales which only you know ( dispite Google believing they know all)..

Also you may find that in a lot of cases the clicks have nothing to do with actually displaying content to the clicker so conversion rates have no direct relationship to clicks, clicks are only directly related to fees you pay google....

Hope this helps..

[rich42]

I just did a major evaluation of my adwords ROI. It's way down from what it was a year ago.

I'm in an increasingly competitive industry - so that's probably some of it.

Some of it's also been me pre-emptively increasing bids on keywords that I 'just knew' would result in good conversion rates. Mistake.

Also have seen some really strange ROI patterns that make me believe there's something stinky going on (ie 'widgets' creating sales, and 'blue widgets' not, when I actually specialize in 'blue widgets').

I've definitely had click spam problems in the past - but now I just can't tell. Either I'm imagining it - or they've gotten good at it (tip - don't piss of your competitors).

My plan of action:

Lower the bids (it's less traffic - but if it's not profitable I don't want it)
Disable content targetting
Monitor ROI religiously
Delay quitting day job for another 2 months