This is a guest post by Bjorn Espenes, founder of several Internet businesses including one that processed over $1 billion in online sales for clients. Most recently he co-founded Finch with Eric Maas bringing 10 years of building optimized eCommerce software experience to the PPC industry. You can read more about how to optimize your Pay Per Click on the Finch Blog. If you would like to write for ColderICE, please contact us.
Have you heard people talking about the “click funnel” or “assisted clicks?” Exactly what is it? It refers to searches for certain keywords as part of a discovery process where people make certain searches before they do the search that leads to the actual purchase/conversion.
An example might be when you search for “discount vacation” before you search for “Dubai discount vacation” where the first search result does not convert and the 2nd does convert. Easy enough? It depends on whether you look at the relationship after the fact (what consultants do to offer you their opinion) or if you are looking at it before you have to pay for the first click (what we do to optimize the ROI on your money). Get the picture?
There is an army of bloggers and consultants feeding advertisers with lies about how this works, and this makes our job more difficult because we need to pick apart why it simply does not work that way. Is there a relationship between the “assisted clicks” and the “converting clicks?” Absolutely. Is it a predictable relationship that you can act on to optimize cost/performance? For the majority of the scenarios the answer is a BIG no! Here is why:
Given the choice of paying for a click that will convert or assist, which one will you pick? I thought so
Only after exhausting the conversions you can get for your cost threshold should you explore going to the next level and look at assisted clicks. Or should you? Paying for assisted clicks means that you will pay for TWO clicks to get one conversion, thus increasing your cost per acquisition.
Is the relationship between the first and the second click tight enough that you can, with confidence, predict that you will hit your cost threshold? What the consultants will not tell you is how often the assisted click will turn into a conversion, giving you this formula:
CPA = (# assisted clicks * CPC) + (CPC for converting click / conversion rate)
The double hit will most often kill your CPA target.
- Let’s assume you can get yourself past the above: Unless all your keywords are in position No 1, you are likely better off increasing the target for the converting clicks (these are direct conversions) instead of betting on something indirect and less reliable and unproven. Allocating budget for assisting clicks will increase your CPA dramatically (because now CPA is CPA + cost of all assisting clicks per conversion). Why not simply raise the target for the converting clicks?
Consider this example: You pay $100 CPA for a B2B lead. You decide to allocate 25% of the budget to assisted clicks. If you take the 25% away from the existing budget, you are taking budget away from certain conversions and putting it towards indirect and uncertain conversions; not very smart.
If you add 25% to the existing budget, why not allocate it to what has proven to work and be willing to pay $125 CPA? Which one do you think will produce better and more predictable results?
- Stretching even further, let’s say that after the above you can still justify allocating budget to an assisted click. What makes you think the person doing the initial search is loyal to you? Not only do you need to make room for someone clicking on your first ad, but they also have to pick you from the 8 ads on the first page of their second search, AND then turn that into THE converting click. So now you are paying for this:
CPA = (# assisted clicks * CPC) * (CPC for converting click / conversion rate)
It is very easy in hindsight to explain and show that an assisting click leads to a conversion, just like it is easy to guess the score of a game after it is played. Player No 7 passed the ball to Player No 9 who scored, therefore player No 7 has equal value as player no 9! This is a true statement if player No 7 is the one who ALWAYS passes the ball to Player No 9 who then ALWAYS scores. Is that likely to happen? NO! What makes you think it will happen with your budget in PPC?
Everyone can explain what happened in the past, but the one who can predict what will happen in the future holds the keys to big success. Can you? At Finch that is what we do; with our pay per click optimization we predict what will happen with great accuracy.
The only case where a click funnel (assisted click) strategy can be helpful is when a campaign has position #1 for all the keywords and still is inside the cost target. Then it becomes a viable strategy. If that is not you, go to www.finch.com to get a specific analysis of what should be changed and why those changes will produce positive results in your existing campaigns.