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I wish there was one rule for paid search return on investment (ROI), but there are so many business types, strategies and plans out there that it is hard to justify a general benchmark.

One thing I have found very eye opening though is to track ROI down to the keyword level. For every conversion, we want to know exactly which keyword, campaign, and ad group caused it, and whether it came from the Google site, search network, or content network.

All you need to implement this is a good web stats software and special tracking urls.

I have one free generator tool that covers some basic stuff up at: http://vortex.successvideo.net/quick/qt.php that can get you started and I also have an article that tells you how to make them yourself at: http://marketingnewsblog.adwordstraining.org/node/15

You will find some keywords bring about a lot more conversions than others.

In the beginning if you are having real ROI problems you can just put more emphasis on the keywords that are bringing you the best results, and once you have an ROI that is acceptable, you can bring other keywords in, and test different sales copy on your landing page, or split test different landing pages.

There's lots of ways to tweak ROI but usually what I do is:

1) Make sure you have tracking for everything and use it

2) Plug the leaks- dump the keywords that bring no conversions over a long period of time, like 90 days or so.

3) Next, try some different landing page copy, and look for changes either up or down with your stats. Hire a real professional copywriter here, don't be cheap.

4) While monitoring your webstats on every change, tweak the design of your web site. If you aren't sure what to do, leave the website alone and just change the copy.

5) Often this is enough to double your ROI, but there is one other thing you can do depending on your business. This has often been described as a "sales funnel".

THE SALES FUNNEL:

Any business has to attract new customers somehow, get them excited, and get them to buy, to be crude about it. The bigger the dollar amount you are asking people to spend, the more work you have to do to get them into the buying mood. For a lot of businesses, just getting them to be able to call a salesperson is a huge step. So whatever your business is, break your sales process down into the following actions as appropriate:

1)Newsletter signup
2)Free download (You DO have something people can download free right?)
3)Leads with presales questions
4)Qualified leads either by a qualifyer or salesperson
5)Phone calls completed
6)Proposals
7)Closed Deals

Again this is hard to generalize like this, because if you had a simple site that sold CD's, you would not need to hire salespeople to close a 14 dollar sale, but the key here is to look at each step of the sales process and your website and look at the actual cost and efficiency of each part.

Now here is where the sales funnel comes in: Your website should get people to respond enough to get you newsletter signups and freebie seekers, but the key thing you need to know is what your average percentages are for conversion of each part to the next level, and how much it costs you.

Sometimes you want as many people responding as possible, so you offer something free, a free download, a free white paper, a free shareware, whatever the case may be.

If this gets you so many unqualified leads that it is wasting the time of your salespeople you fine tune your Adwords campaign and your website to get less quantity, but higher quality, and even to the point of putting the price in your Adwords ads themselves.

This makes far less people click, but prequalifies that they are more serious buyers, and your conversion ratio and ROI will be higher. So the point here is you can have a big funnel at one end, getting smaller as you go, or you can start with a smaller funnel and make it efficient. And each step in the funnel can be tweaked according to your business, if you can figure out what each of those numbers are on average.

Its another way to look at ROI than most people do, but having owned many businesses, I have found that if you can take things and break them down into parts you can fix the part that actually may have a problem, and leave the parts that actually are working, so you don't end up throwing out the baby with the bathwater on occasion.

Well, there's my 2 cents.

Steve Blom
Publisher
Adwordstraining.org