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How to select key performance indicators in performance marketing?

KPI

Brandon Sanderson once said that it’s not the goal that matters, but the way you get to it. This may be true at some level of generality, but if you want to measure the effectiveness of your actions, you need an indicator that will tell you if the actions you take are delivering the desired result. A requirement for a reliable assessment is the selection of appropriate performance indicators (KPIs). Simply collecting data without interpreting it later is worth nothing at all.

At the very beginning it is worth pointing out that marketing goals are not always the same as sales or business goals. A strong brand supports sales, but when you conduct branding activities, you will not measure their effectiveness by the number of products sold or leads generated. Of course you can try, but you will quickly come to the conclusion that your campaigns are ineffective, especially if you look at the last interaction in the customer’s purchasing path.

You can choose the goals depending on the stage in the marketing funnel where your customers are, or the micromoments, which are their intentions. Let’s discuss both models below.

Marketing funnel – stages in the customer’s purchasing path

funnel

The sales funnel is a visualization of the user’s path from the first interaction with the brand to the purchasing stage and beyond.

  • The first element on the path in most models is brand awareness and reach, meaning the moment when the customer acquires knowledge about the company, realizing its existence.
  • The second element is the interest, where the customer is considering a possible purchase of a product or service.
  • The third stage is the desire, which is the state before the transaction is finalised, a critical moment for most businesses. In some types of campaigns we can talk about a warmer lead.
  • The penultimate stage is the purchase. Contrary to what many marketers think, this is not the last stage.
  • The last stage is the loyalty, meaning the customer’s willingness to recommend the company to acquaintances and to buy again.

The marketing goals for each stage will be different. Measuring the effectiveness of all activities with the same measure may result in drawing wrong conclusions and giving up forms of promotion that are actually effective.

Brand awareness and reach

According to the Google CEE and IPSOS report published in September 2018, the e-commerce client is characterized by being spontaneous and enjoys direct contact. On the other hand, before he or she starts looking for specific products online, has brands offering the solutions he or she needs in the back of his or her head. This means that brand awareness and reach have a strong influence on purchasing decisions.

A strong brand has a significant impact on the company’s sales results. Big brandy is aware of that and that’s why they spend huge amounts of money on advertising in the press and television year after year.

If your budget is limited, you can take advantage of alternative forms of promotion that the Internet provides. Video advertising on YouTube and Facebook, programmatic, content marketing… these are much cheaper channels than TV advertising and have the same goal – to reach the largest possible audience with the broadcast message.

You can of course give up branding and focus on prospecting actions from the very beginning. Just remember that prospecting campaigns do not sell by themselves, they only increase your online exposure. By creating a Google Ads search network campaign or Facebook Lead Ads, you only make it easier for the user to reach you. Whether they will take advantage of your offer is a completely different matter.

The indicators you should pay attention to when running reach campaigns are: reach, engagement and frequency. These are data available in most advertising panels. Reach will tell you how many people have seen your creation. Engagement will tell you if users are paying attention to your creation. Frequency will tell you how often you reach a unique user with your message, that is, how many times one person has seen your advertisement.

Google Ads also allows you to measure conversions when they are displayed. This works in such a way that if a user sees an advertisement at any stage of his path, the system will consider that it has positively influenced his decision and will assign the merit of the graphic advertisement for causing the sale. The precision of this type of data may vary, but it can be treated as an auxiliary tool to assess the effectiveness of advertising activities. To access the conversion after display, you need to create a target via the conversion tag from Google Ads. Targets imported from Google Analytics do not have this functionality.

Another, although more expensive, solution is Brand Lift campaigns. These are special campaigns on YouTube enriched with questionnaires with previously prepared questions. After the end of the campaign, the system selects two groups of recipients: users who have seen the advertisement and those who have not seen it. Then both groups display the same set of questions. This may be a question of the following type: Where would you buy a smartphone in the first place? In Company A, Company B, Company C or Company D? This allows you to check whether people who have seen the advertisement are more responsive to the mention of your brand than people who haven’t seen it. At present, a weekly budget of $5,000 is required to launch a Brand Lift campaign. The campaign must last at least seven days.

Interest

The easiest way to keep track of the increase in interest is to follow the number of subscribers to the mailing database, the growth of the Facebook community, YouTube channel subscribers or blog readers. It is also worth knowing whether your advertisement makes customers more willing to engage in the content available on the site.

The easiest indicator to measure interest in the offer will be the number of sessions in Google Analytics. The session is a unique visit and lasts 30 minutes by default. In the settings you can extend the maximum duration of the session to 4 hours, which will be sufficient for most portals. Nevertheless, you should have in the back of your head that each session is limited.

Many people working on improving engagement focus on bounce rate and average session duration. These are not the best indicators. First of all, a high bounce rate doesn’t always mean something bad. A high rate of single-page visits is very often in the case of e-commerce stores, because customers after becoming familiar with the product description and its price do not feel the need to further explore the site.

The average session duration is also imprecise because it does not count the time spent by the user on the last page. Analytics is not able to collect data from a pageview that was not followed by another interaction. If someone spent 5 minutes on three tabs on your site and left the page, in GA you will see the session duration of 10 minutes (i.e. time without data from the last subpage). This is a big problem, considering the fact that we spend the most time statistically on the last page, because there is the information we were looking for.

The solution to the problem may be choosing other KPIs. If you want to collect more real bounce rate data, you can use the Countdown Timer rule in GTM. It will cause that after a specified time the system will automatically send a signal to the GA server.

Another way to measure engagement is to measure the scrolling depth. Tracking scrolling in Google Tag Manager is very easy to set up and requires only selecting the appropriate variable types (selecting all three from the Scroll category) and a specific rule (Scroll depth). It is worth noting that GTM allows you to track both vertical and horizontal scrolling. When you manage to set scrolling as an event, you can go a step further and define it as a goal in Google Analytics, where the conversion will be scrolling e.g. 80% of the page.

Another KPI can be subscription to a newsletter, download an e-book, telephone contact with customer service, visiting a stationary store, generating a discount code, downloading and registering in a mobile application, etc. These are all interactions that indicate that the customer is interested in the offer, but has not yet decided to make a purchase. All interactions should be set as events in Google Analytics, Firebase or another tool that you use to study user behavior to help you draw conclusions.

Desire

Desire is the stage where the customer is determined to make a purchase. In e-commerce stores, the measure of effectiveness is the number of baskets abandoned. In the service sector, companies examine the quantity and quality of leads provided by marketing.

By monitoring the quality of traffic from different promotion channels, you will be able to determine which actions cause an influx of converting users and which only burn the budget. Of course, the problem may be on the shop, sales process or offer side and you have to check it before you change your campaign settings.

Remember also that in the model based on a sales funnel, interactions related to the shopping cart or contact form take place only after the customer gets acquainted with the brand (awareness stage) and after the interest phase.

If you decide to base your strategy specifically on this model, know that each step requires a different form of advertising and different performance indicators. If you record an ad spot on YouTube, do not measure its effectiveness by the number of abandoned baskets. If you write an educational article, do not measure its effectiveness by the number of leads generated. Their long-term goal is to make you sell more, but in the future (closer or further). Other types of campaigns are used to generate sales.

Purchase

Favorite stage of every entrepreneur, marketer and salesman. The final goal of advertising activities and the basic efficiency indicator – purchase. Here the choice of KPIs is simple and comes down to measuring the quantity of products or services sold.

If you handle all previous stages with appropriate forms of advertising and optimize their performance based on appropriate performance indicators, the number of incoming customers should systematically increase.

Loyalty

Often forgotten or ignored stage in the marketing funnel. It indicates the customer’s readiness to recommend the company and make new purchases. One of the ways to measure loyalty is to measure the number of purchases made by the same users and to monitor the company’s mentions in social media and opinions on services such as Google My Company.

Of course, this is only a theoretical model that illustrates the complete path of the customer. In practice, the user does not always pass all stages of the path. Otherwise, no new business would generate sales from the very beginning without investing large volumes of money in brand recognition and educational materials. We know this does not happen in real life.

When we make purchases in a random neighborhood store, it is very unlikely that we have ever heard of it. We do not always educate ourselves before buying a specific thing or service. Sometimes the purchase is spontaneous, dictated by the need of the moment. For this reason, it created an alternative way of modeling purchasing intentions, named micro-moments. 

Micro-moments

micro moments

Micro-moments are the motivations of users who are currently looking for information on the web. These motivations are temporary and situational, and largely determined by external factors. According to Google, every customer’s interaction with a brand is unique, but most of them can be attributed to one of four micro-moments:

I want to do – they are people looking for educational materials to do something themselves. How to bake a sponge cake? How to replace the battery in the phone? How to fix the door lock? When it comes to behavior, this moment resembles a stage in the marketing funnel called interest and can be measured by the same performance indicators. The consumer is looking for information to be able to do something without your help. At this point it is not ready to buy, but if you give him a value, next time you will have more confidence and more likely to benefit from the offer.

I want to know – a micro-moment similar to the previous one, with the difference that it is focused on obtaining information. It can be a query about the weather, news from the country or the world, cinema repertoire, bus schedule etc. A person seeking information is not a customer who wants to buy something. Perhaps the customer came to the site to look around, check prices, delivery methods, read reviews, view photos. This entry is valuable because it can result in sales in the future. The micro-moment also resembles a stage in the marketing funnel called interest and can be assessed using the same performance indicators.

I want to buy – this is a person entering the site with the intention of making a transaction. As you can see, this is just one of four reasons why a customer can visit a site. To measure effectiveness, you can use the same indicators as for the stages of purchase and desire in the marketing funnel.

I want to go – these are usually local searches when a consumer searches for something in his location. Pizzeria, hospital, hairdresser, neighborhood shop, the nearest gas station. According to Google data, nearly 25% of queries of this type end with interaction with Google My Business. If you have a local point of sales, it would be good to set up a business card on Google Maps. There you will find statistics on how customers find your business card and what they do when they find it. If you link your Google My Business profile to Google Ads (by adding a location extension), additional data about visits to the stationery store will appear in the Google Analytics account integrated with the advertising panel.

Micro-moments are easier to understand and quicker to master than a strategy based on a marketing funnel. They also require less sophisticated advertising campaigns. If you run a local business or are just starting your promotion on the web, you can start by optimizing your campaigns for them. The most important thing is to know what is the goal of your activities and how to measure their effectiveness in the most objective way. The rest is a consequence.  

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Discovery Ads – Overview of the possibilities

Discovery Ads

Google is not slowing down when it comes to expanding its advertising offer. Recently, the advertising portfolio of the giant from Mountain View has expanded with Discovery Ads. It is an advertising format whose effectiveness will be supervised by, among others, artificial intelligence algorithms. What are Discovery Ads and why you should be interested in them? Read more! 

In late 2016, Google launched a new service called Feed. It was basically an update of the application, which focused on combining bookmarks in one place to make it easier to keep up to date with news on various topics, such as sports, news, entertainment, etc. In July 2018, the feature that allowed users to follow topics of interest to them was significantly improved. In September 2018, another change took place. Google Feed became Google Discover. The goal of Google Discover is to guide users through the information and content they are looking for, even without having to enter a specific search query.

How does it work? Google Discover shows users a summary of the content chosen based on their interaction with Google services and the content they have chosen to follow. However, this is not a typical news feed. Discover can display older information if the algorithm finds it interesting for the recipient.

As you can read on the platform page, “In Discover you can receive the latest news on topics of interest to you, such as your favourite sports team or news site, without having to search for it. You can choose the types of information you want to see on the Discover tabs in the Google application or while browsing the internet on your phone“.

The application was appreciated by users. At the end of 2018, Discover boasted over 800 million users. Such a large audience could not go unnoticed by the Google advertising staff. As a result, a new advertising format was created – Discovery Ads.

Discovery Ads – what do you need to know?

First, Discovery Ads were created to allow the search engine to monetize the traffic that takes place within Google Discover. It should be mentioned, however, that Discovery Ads will not be limited only to the space occupied by Discover. They can also be displayed in Gmail (in advertising tabs, where they look the same as regular ads) and YouTube (in the home feed, where they look like native ads in a channel with large images displayed). However, they will not be visible in SERP (pages with search results).

Since Discovery Ads are not available in the traditional search network, an advertiser should not focus on specific queries and keywords, because they simply will not be. Who our ad will be displayed to depend on your interests, activity on Google Discover and YouTube, as well as downloaded applications from Google Play. In our opinion, Discovery ads are ideal for building brand awareness and I would recommend this strategy to advertisers who want to use this format in their campaigns. 

Discovery Ads simultaneously limit the possibility of action and, on the other hand, create completely new opportunities. Since they will not respond to specific inquiries, advertisers wishing to use this format will have to devise a completely new advertising strategy, built around creating brand awareness, communicating the company’s activities (they can work perfectly well in CSR activities) and inspiring customers (for example, by showing them possible applications of the product or color combinations).

Discovery Ads format

When you run the Discovery ads setup panel, you have the possibility to add:

·         one URL address of the target page,

·         at least one painting,

·         logo,

·         and a maximum of five headers and five descriptions.

Google will then use its artificial intelligence algorithms, namely machine learning, to display the best combinations of headers, descriptions and graphics to potential customers. Advertisements shall appear in places with the highest efficiency and in an optimal combination of the above mentioned elements. On this occasion, it is worth mentioning that users who use Discovery ads will be able to present one static image or decide on the form of a carousel, which allows moving multiple graphics within one advertising creation.

How to run Discovery Ads?

A new ordering system was designed for the new format. You can run Discovery Ads through the Discovery campaign panel in Google Ads. After logging in to Google Ads you go to tab Campaigns. In the next step you choose the goal of the advertisement and go to the panel of campaign type selection. Select the “Discovery” option, which should be visible at the very bottom.

In the next steps, you choose the locations where the advertisement shall be displayed, the language and goal of the campaign, on the basis of which the billing shall take place. At this point it is worth noting that Discovery Ads are charged in the CPC model. After completing the next steps (daily budget, types of target groups – based on their geolocation and interests, etc.), you can go to the creation panel of a new Discovery Ad. You provide the URL of the target site, send at least one horizontal image and one logo.

Technical requirements

The platform also sets a series of requirements for the advertised content. The graphics accompanying the advertisement may not include Call-to-action. The advertisement should be legible and specific – it cannot mislead the recipient. Similarly, the so-called clickbaits are prohibited. Finally, image quality is also important – the graphics must be sharp and meet Google Ads standards. What is more, Google looks very unfavorably at graphics imitating a clickable button (e.g. with a cursor indicating where to click).

You can upload up to 15 images for one creation. The minimum resolution of the horizontal image is 600 × 314 and 300 × 300 for square images. For ads displayed on YouTube, the recommended resolution is 1200 × 628. You can also upload square images, measuring 1200 × 1200. In addition, files should not exceed 5 MB. For logos, a square image in the above-mentioned resolution of 1200 × 1200 shall be the best choice.

Up to five different headers (up to 40 characters) and up to five descriptions (each up to 90 characters) can be placed for testing purposes. The preview shows what the target advertisement will look like. Underneath the advertisement there is a button with CTA, it is the only place where you can invite the recipient to undertake a specific action. However, here too, you have limited possibilities, because Google only allows you to select a specific button from a list that includes eleven proposals.

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Showcase shopping ads – Overview of the possibilities

showcase shopping ads

Google is not slowing down. New advertising formats are appearing (we have already written about Discovery Ads and Gallery Ads), and existing solutions are undergoing major modifications (recent update of eCPC optimization). Another change in the Google checklist is the appearance of Showcase Shopping Ads. If you have an online store, then read on!

The idea of Showcase Shopping Ads is to present several products from a particular category to the customer. A secondary goal is the possibility of building awareness of your brand in a potential customer. Unlike other Google Shopping ads, clicking the Showcase Shopping ads does not redirect the customer to the target page, but instead, a larger ad will develop which will present a catalogue of relevant products.

Imagine a hypothetical situation when a client enters “snowboards” in the search engine. He is not looking for any particular model, he does not know what shops offer this type of equipment, but he wants to understand the market and compare different models and offers. In such a situation Google SSA will be perfect. They allow the customer to present several products from the same category.

Another important feature of Google Showcase Shopping Ads is the ability to customize the presented content. For example, you can set your ad to present only the best-selling products or products that are of exceptional interest in a given month/season.

As with other ads for e-commerce, Google’s algorithms are based on the data entered the Merchant Center when they decide when to display your ad and to whom. At this point it is worth mentioning that there are currently three types of ads available for online store owners:

·         Product Shopping Ads

·         Local Catalog Ads 

·        Showcase Shopping Ads, which we are covering in this text 

Google Showcase Shopping Ads in practice

As mentioned earlier, this advertisement may appear when someone searches for a wider term, such as “backpacks”. Then Showcase Shopping ads show products that match the search term, but also graphics and photos that show the lifestyle with which you want to identify your brand.

When someone clicks on a Showcase ad, it develops and reveals your products that are best suited to a particular request. The advertiser can choose up to several dozen products or an entire product category to present in Google SSA.

Google recommends starting by advertising large groups of products, from which it can then form smaller subgroups. It is crucial to understand how the new advertisement works and only then start optimizing it. And what can you do to make your ads appear as often as possible? Google has a short and simple answer – create as many as possible!

Payment model

When you decide on Google Showcase Shopping Ads, you have three options to pay for your campaigns:

·     Maximum CPE (cost per engagement): you set the maximum price you are willing to pay for a given interaction. The fee is charged when someone directly clicks on a link in an advertisement, extends it or takes 10 seconds to familiarize themselves with its content.

·        Maximizing clicks: this model is built to get the most interactions in Showcase product ads within your budget.

·      ROAS (return on ad spend): the point here is to obtain the highest possible conversion value or revenue with a target return on established advertising expenditure.

How to create a Showcase Shopping ad?

To be able to run this type of advertising, a number of requirements must be met. To start, you need to create a Google Ads and Google Merchant Center account. After logging in to Google Ads you go to the Campaigns tab. You choose a shopping campaign and create groups of advertisements. One of the available group types is Showcase Shopping.

In the next steps, you choose the method of payment and groups of products to advertise. In the next steps, you adjust your advertisements: you create a header image (Google recommends 1200 × 628) and text:

·         Heading (optional, up to 24 characters)

·         Description (optional, up to 120 characters)

·         Destination and display URL

Detailed instructions on how to prepare Showcase Shopping Ads can be found here. Currently, Google Showcase Shopping Ads are available in selected markets including Canada, Australia, Brazil and the United States, and in Europe in Germany, France, the United Kingdom, Ireland, the Netherlands and Sweden. Content provided for ads must meet Google Shopping’s policy and the advertised product data should be updated at least once a month.

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Swirl, Virtual Try-On, Beauty Try-On – VR and AR ads on Google and YouTube – Overview of the possibilities

At the beginning of last year, Google announced major changes in the advertising formats available on Google and YouTube. The largest search engine in the world is moving towards 3D and augmented reality. The goal? To help the customer familiarize himself with the product as well as possible before making a purchase decision.

3D in marketing is nothing new. The automotive industry was one of the first to adapt it to its needs. It was on the websites of car manufacturers that you could see 3D models of offered cars, which – due to 360o rotation – could be seen from all sides, without moving from the computer screen.

Google decided to follow the same path and introduced 3D advertising, known as Swirl. These ads are designed primarily for mobile users, but can also appear on the computer screen. The creators of this format wanted to enable customers to familiarize themselves with the product as accurately as possible without having to go to the manufacturer’s website. Already during the viewing of the advertisement, you can precisely watch the product and learn additional details related to this.

Google will help you develop a Swirl ad

To encourage customers to use the new format, Google offers help to those advertisers who do not have 3D models created in their resources. In such a case, you can use the support of Google production partners who will create a model suitable for advertisement. One of such Google partners is NexTech AR Solutions, which is cooperating with Google to introduce a series of 3D advertisements for its customers. The company predicts that the year 2020 will be a breakthrough period for this new form of promotion, during which interest in this form of promotion should significantly increase.

However, this is not the end of support for companies willing to launch a three-dimensional promotion. Brands that have already created 3D models can easily create an advertisement using the 3D/Swirl component in Google Web Designer. The campaign can be launched through the Display & Video 360 platform. More information can be found here. Google has also introduced a new editor on its Poly platform (poly.google.com), which will allow advertisers to edit 3D models before publication in the form of Google Swirl advertising.

One of the first companies choosing this form of promotion was the tycoon of the fragrance industry, Guerlain, which used this format to advertise the Aqua Allegoria fragrance. The advertisement was not limited only to the possibility to turn the bottle. During the interaction with the object (turning), additional buttons are being displayed, allowing to get more information about the product. The creation can be viewed at this link

YouTube Virtual Try-on/Beauty Try-On, so YT extends reality

YouTube is not idle either. The platform decided to introduce an AG (Augmented Reality) solution. The novelty was launched in mid-2019. The new form of advertising is called Virtual Try-On or Beauty Try-On. The name is not accidental, this form of promotion is intended to be used primarily by beauty advertisers to promote cosmetics.

How does this advertisement work? When it starts up, the smartphone screen displays the image from the front camera, so the client can see himself on the screen. She can, for example, choose the colour of her lipstick that interests her. Once the shade is selected, it will automatically be applied to her lips, so she can try out if the colour matches her, without having to visit a store. At the same time, the user can follow the YouTuber participating in the advertising campaign to get advice, product reviews and other information while ” trying” on. It is worth noting that virtual product samples work in the full range of skin tones.

Under the panel allowing you to choose a specific colour there is information about the producer and the name of the product, including the price. You can also go directly from the advertisement level to the producer’s store through the “shop” button located in the lower right corner of the screen.

This time the pioneer turned out to be MAC Cosmetics company, which used new AR ads to present a new model of lipstick. Google claims that during the test campaign, about 30% of people among the group to which it was displayed decided to launch the AR platform, who spent on average over a minute with “virtual lipstick”. However, there are no detailed data. In the beginning, the advertisement could only be launched through the internal YouTube network of influencers, famebit.com.

First effects and link to the test

Since mid-October 2019 AR Beauty Try-On has been available for brands worldwide in beta version. Beauty Try-On will be combined with YouTube Masthead and TrueView ads. NARS Cosmetics is one of the first brands to display TrueView and Masthead ads with Beauty Try-On feature. According to YouTube data, the ad has already reached more than 20 million women, each of whom has tried more than 2/3 of all available shades on average.

If you want to test AR Beauty Try-On, open this link on your smartphone. Right below the video you will see a “try it out” button. When you click it, the front camera of your smartphone opens. After pointing it at your face, you can check the different shades of lipstick that Youtuber is talking about. The recording does not stop during your “tests”, so you “try on” a new lipstick and listen to information about it.

To order an AR Virtual Try-On advertisement, contact your account manager or YouTube technical specialist, it is ordered in the same way as a traditional YT masthead or TrueView advertisement.

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eCPC – does smart bidding really work?

ecpc

In the second half of 2019, a new possibility to choose the enhanced CPC (eCPC) settings appeared in Google Ads. With this change, you can choose whether you want eCPC to optimise your advertising rates in terms of conversion numbers or conversion values, without increasing your assumed advertising budget. With this recent change, it is worth considering whether the enhanced CPC is actually a step forward and smart bidding should be the industry standard or whether manual actions are still better? Let’s check it out!

Generally speaking, a company advertising in Google search engine has two options for setting advertising rates. It can either be done completely manually, on the CPC (Cost Per Click) model or combined with the smart bidding strategy, which is offered by the eCPC model, by name – enhanced/improved (not to be associated with effective CPC which is the calculation of cost per click on the CPM model). However, is it really a step forward and manually managed campaigns will soon go down the drain? It turns out that not necessarily, or at least not immediately.

How does eCPC work?

The enhanced CPC is designed to set advertising rates to optimise the number and value of conversions (e.g. the value of the shopping cart or the value of other actions resulting in conversion). In simple words, eCPC increases the rates set by the user in situations where the probability of sale (conversion) is higher and reduces them when the probability of conversion is lower. Currently, eCPC can be applied to practically any kind of promotions in the search engine, from Google Ads, through video (YouTube), to Google Display Network. 

When rates are optimized for conversion, the enhanced CPC adjusts the rate every time an advertisement qualifies for display and the click is likely to lead to conversion. It is also possible to set eCPC to maximize conversion values. In such a case, eCPC takes into account not only the probability of the conversion but above all, its predicted value. When selecting the first option, Google focuses on generating numerous transactions, regardless of their value. In the second case, the algorithm focuses on the higher value of conversions (e.g. higher value of the shopping cart).  

It is worth noting that eCPC constantly analyses its actions and “learns” to work more and more effectively. To this purpose, it leaves some traffic for standard maximum CPC rates and compares the two sets of results, adjusting its work to the results obtained. According to Google’s recommendation, the first results should be visible after at least two weeks. Google ensures that the eCPC model will be more effective or at least as effective as a traditional manual CPC. 

The algorithms when assessing the likelihood of a transaction occurring, take into account such factors as browser location, browser type, user demographics, time of day, day of the week, as well as the history of your Google Ads account

eCPC in practice

Does practice confirm Google’s promises? It turns out that in many cases it does, but it is not without drawbacks. Let’s consider a hypothetical case of an online store offering sports shoes. The owner sets the maximum rate at 1 GBP per click and selects an enhanced CPC. The Google Ads algorithm draws attention to an auction where the advertisement achieves good results. However, the minimum bid eligible for this auction is 1.20 GBP per click. In this case, eCPC will ignore the set maximum rate per click and run a rate of 1.20 GBP to ensure that the advertisement is displayed. Your advertisement is actually displayed, people are clicking it, shoes are selling. You have just achieved more revenue.

However, an increase in revenue does not necessarily mean an increase in profits. The price of shoes has remained the same, which means that you have earned less on every pair sold, and the cost of advertising (clicks) has just increased by 20%. In the original version of eCPC, the algorithms were allowed to increase your advertising rates by up to 30%, after the update, there is no specified threshold. Google’s algorithms are supposed to try to keep the rates close to those specified by the user

In most cases, the search engine delivers on its promises regarding the eCPC model. According to IgniteVisibility.com data, such eCPC tactics have improved Return on Investment (ROI) for 70% of users. There are a lot of pre- and post-running eCPC statements on the network. Here are examples of results:

  • Insurance company: 38% increase in conversions, over 27% decrease in advertising costs
  • Mobile applications company: almost 20% increase in conversions, 9.7% cost reduction. These results appeared within “a few weeks” since the launch of eCPC. 
  • Taxi company: the increase in conversions by almost 12%, decrease in cost by over 35%. In this case, it took a month to achieve this result. 

Does this mean that eCPC is the perfect solution without defects? Unfortunately not, let’s take a closer look at it.

When will eCPC fail? 

First of all, eCPC will not pass the exam for campaigns with a small number of conversions (less than 15). If you manage an ad account with a small number of conversions, eCPC algorithms are likely to simply increase the cost per click and keep the volumes of conversions at the current level. This is because there is not enough information on which Google’s artificial intelligence can build traction and therefore improve its results. 

Secondly, using the eCPC model, however, deprives some measure of control over your campaigns. Of course, you don’t immediately become an incapacitated observer who’s unable to take any action, but experienced marketers appreciate full control over what happens to their advertising account. And eCPC takes some of that control away. 

And finally, as we mentioned earlier, passing the torch to eCPC algorithms can increase the cost of advertising at any time and by the minute. This should be taken into account when planning advertising activities and to calculate whether the profit after raising these costs will still be acceptable. If not only a one-time transaction is important to you, but also the opportunity to get a loyal customer who will come back with new orders – most likely it’s worth a shot.

Teach eCPC Micro-conversion

A good way to “learn” Google’s algorithms how to work is to use micro-conversions, which are one-time, completed actions from the client. These can be such behaviours as:

  • A certain amount of time spent on the site
  • Number of products viewed
  • Number of subpages opened per page

In the majority of cases, a customer who has viewed several products in your e-shop has a better chance of buying something than a person who closed the site after 10 seconds. On this basis, you can “teach” eCPC algorithms which clicks are valuable. After some time, this will translate into displaying ads at a higher rate for those people who have a better chance of making a purchase. As a result, the number of transactions will increase and after some time you will be able to move to ROAS.

eCPC – the future of Google Ads and your company?

There is no one universal answer to whether an enhanced CPC is better than manual control over your account. It is true that the manual rate-setting guarantees predictability and consistency of campaigns and their costs. On the other hand, there are a number of case studies where the improvement of campaign effectiveness after the introduction of eCPC is clearly visible. The safest way to do this is to carry out a series of tests that will show whether eCPC is defending itself in the case of your campaigns. If this turns out to be the case, it is worthwhile to implement at least part of your advertising campaigns in the eCPC model. 

Probably in the near or distant time horizon, Google will strive to promote the eCPC model. Apart from other issues, it will give the search engine better control over the advertising expenses from which it profits. Therefore, it is worth at least familiarizing ourselves with this system and treating it as an integral part of advertising campaigns. When it becomes a standard, this will not mean a revolution in advertising campaigns.