WordStream reveals new data on SMB Paid Search

Didit Editorial

8 years ago

September 21, 2016: Popular digital marketing site WordStream.com has published the results of a large-scale (15K account) study on SMB paid search and its results are instructive — and cautionary — for small businesses thinking of buying clicks from Google and the other engines.

Here are the highlights:

1. SMBs are under-utilizing negative keywords. Negative keywords are powerful filters that limit the chance that your ad will be shown for an irrelevant query. The result is better campaign performance. But WordStream found that few negative keywords are being added to the SMB accounts it monitors. As WordStream’s Larry Kim noted, “even if they don’t impact Quality Score, negative keywords are critical for high ROI because you’re eliminating wasteful spend (clicks from people who aren’t going to buy anything) and re-routing that money to more useful campaigns – all good things.”

2. SMBs often do not enable Conversion Tracking on their sites. Conversion tracking closes the marketing loop by directly tying ad spend to conversions, thus providing a way to clearly reckon the impact on sales and determine actual campaign ROI. Only 46 percent of SMB marketers surveyed by WordStream had conversion tracking enabled. This is a bad situation because unless one understands what happens after a prospect clicks on a paid listing, it’s very difficult to compute what that click was worth. Fortunately, installing the Conversion Tracking tag is something that SMBs (or their agencies) can get accomplished with minimal time and expense.

3. Quality Score and CTR metrics are rising. Google’s elimination of right-rail ad positions back in February appears to have eliminated a lot of low-quality paid listings that formerly ran there. The byproduct of this appears to be an improvement in average QS. For SMBs, WordStream pegs the average QS at 6.5, with average SMB CTR improving from 2.7 percent (in 2015) to 3.23 percent. That’s a big improvement that should hearten SMBs (if they can maintain or beat this average): even a marginal improvement in CTR can provide major benefits, most importantly in terms of getting marketers a better Quality Score, which will lower effective ad costs in Google’s auctions.

4. Expanded Text Ads are boosting CTR. Google added Expanded Text Ads (ETAs) earlier this year. ETAs provide marketers more room to sell and tell within the traditional text ad format. Instead of a single headline field with a 25 character limit, two fields are available that will accommodate a total 30 characters. Description fields also expand, from two lines offering 35 characters each to a single field that will accommodate 80. According to WordStream, ETAs are capable of improving CTR by up to 400 percent. While it’s impossible to say whether your campaigns will enjoy such a radical improvement, this evidence is sufficient to warrant a series of controlled tests.

Analysis

WordStream’s data validates the notion that SMBs — as a class, often find paid search a daunting marketing channel. While the engines’ self-serve advertising platforms make it easy to buy clicks, many SMBs find themselves at a structural disadvantage when facing competitors whose budgets are less constrained, can afford either agency services or fee-based 3rd party bid management tools, and can tap into the kind of specialized knowledge base required to run sophisticated paid campaigns on Google, Bing, and the other engines.

At the same time, however, this new data doesn’t pain a bleak picture for those SMBs which — by doing just a bit of heavy lifting — can put themselves in a much better position by leveraging ETAs, negative keywords, and employing conversion tracking. While these steps in themselves might not be sufficient to completely level the playing field, they can reduce the “large marketer advantage” traditionally enjoyed by deep-pocketed competitors.

You can read the complete WordStream.com SMB data study here:
http://www.wordstream.com/blog/ws/2016/09/20/adwords-ad-data