I'll just be blunt here. You leave lots of profits on the table when you make the critical mistake of not AB testing your marketing efforts.
What Is AB Testing?
AB Testing is simply the process of comparing two marketing approaches with each other to see which one performs better. The fancy term is called multivariate testing, but for the sake of this post, let's just stick with AB testing. For this discussion, let's talk about 2 kinds of testing:
- Ad copy AB testing
- Website landing page AB testing.
Why You Should AB Test?
Let's say you are running a Google Adwords campaign selling magic carpets. You write your one ad, then load up your keywords and wait. A few days go by, and voila, you make a sale. You run the numbers, and the good news is you are profitable. You think, "Hey, this is great! I am making money!"
AB Test Your Ad Copy
Let's use a VERY simple example. Let's say over a period of 7 days, your ad gets 100,000 total impressions for your keywords. And let's say your ad is gets a 1% click through rate (CTR), with an average cost of 35 cents per click. So you'd get 1000 clicks at a total cost of $350.00. With a website conversion rate of .05% you sell 5 rugs at $100 each for a gross profit of $500, and a net profit of $150. A 43% ROI. Not bad at all!
Now you say, "Hey, I want more traffic!" So now what? Bid more per click? Up your budget? Look for more keywords? You decide to up your bid per click to 40 cents. That increase sends you 1500 clicks and more exposure, but at a higher price. Total cost is $600. You sell 7 rugs. Gross profit is $700. Net profit is $100. ROI is still a solid 17%. Even though your net profit is lower, let's say you are happy for the additional 500 clicks for branding your name and the additional marketing data you gathered.
You decide you want even more traffic so you keep increasing your cost per click, your budget, and adding more keywords. However, at some point you hit a ceiling. You can't afford to bid more because that will eat too much into your profits. You budget is also maxed out. So what to do, what to do?
Now let's step back and try this. Instead of increasing your click cost, or adding more keywords to get more traffic, let's just increase your click through rate on your Google ad to 1.5%. Now here are the new numbers:
Now you'd get those 1,500 clicks @ your initial 35 cents. Total cost is $525. With the same website conversion rate, you sell 7 rugs. Gross profit is $700. Net profit is $175. ROI is 33%.
Ponder This...
Simply by reworking your ad copy and increasing your CTR by a half a percent, you achieved a 16% higher ROI than you would have if you had raised your maximum PPC cost. You can imagine how many thousands of more dollars you'd earn as you scale this up to larger business numbers. That is why you want to AB test.
AB Test Your Website Landing Page
You can also dramatically increase your profits without spending more money on additional advertising just by improving your sales conversion rate on your website landing page itself. This is perhaps the most overlooked, but powerful strategy by online marketers. From the example above, if you increase your sales conversions
only by one tenth of one percent - I will say that again - if you increase your sales conversions only by one tenth of one percent - this is what the numbers would look like:
Total cost remains the same at $525 for those 1,500 clicks at 35 cents per click. With the new website conversion rate of .75%, you sell 9 rugs! Gross profit is $900. Net profit is $375. ROI is now a whopping 71%.
Enough said. :)
How Can I Easily AB Test My Ads?
A fast way to AB test is through Google Adwords. When you setup your Google Campaign, instead of writing just one ad for your Adgroup, write two immediately. Then go into your Google "Edit Campaign Settings" choose "Optimize Ads." this way, Google will begin serving up the more successful ad as it gains a higher CTR.
Keep an eye on your CTR. After 100 or so clicks, check it. Ignore the CTR on the content network since that tends to be lower. Focus on your Search CTR. Delete the poor performing ad, write a new one, and try to beat your winner. Of course, you can always increase your budget, and add keywords, but always have 2 ads running no matter what. It may shock you when you see what kind of ad copy really performs best.
How Can I AB Test My Landing Page?
Google to the rescue yet again. They offer a relatively robust multivariate tool called Website Optimizer. It allows you to test multiple variables simultaneously. For example, you might test two different headlines, two photos, and two offers. What’s great is that Google serves up all different variations. Based on your conversion success Google arrives at the best combination of page elements. Installation may be a bit tricky, so you may need your programmer, unless you already know how to install scripts and code on your pages. Learn more about Google's Website Optimizer here.
Conclusion
The reality is that when it comes to marketing, it really matters very little about what you think will work. Your customers determine what works and what doesn’t. That’s why you need to test, test, test!
May increased profits fill your pockets!
PPC is crucial if you want traffic today.
Posted by: Orange County Advertising Agency | Tuesday, June 10, 2008 at 01:18 PM