Advertisers cannot usually directly increase the number of searches on any particular keyword phrase. We basically find keyword phrases searchers are using in a research tool or make up combinations that don't appear in the tools and put ads where those searches will see them.
The keywords with the most traffic are the most general. They may apply to things other than what you're advertising and they are usually used by people early in the buying cycle.
For example, if someone searches on "lighting" using just that one word they may be looking at some kind of lighting but neither we nor they know what kind yet. They could be considering buying:
a fixture for the ceiling in their house
a chandelier
a ceiling fan with lights
wall sconces
free standing lamps
full spectrum lighting
outdoor lights for their horse arena, basketball court, etc.
lights for a walkway
lighting for a pool, spa, or watergarden
Because lighting will have a lot of traffic most advertisers will be bidding on it and the cost per click will be higher than for a more specific keyword phrase related to lighting.
You probably only sell one or a few of these types of lighting and have no way of knowing what they're really looking for when you buy that click.
And a person searching for just "lighting" is probably further from making a decision to buy simply because they are searching for such a general term. If they already knew what they wanted they would probably use more than one word to describe it.
So, you're buying more clicks - for more per click - and they're less likely to buy now so your conversion rate will be much lower and your cost per conversion will be much higher.
Not good - and very possibly not profitable - as you could easily spend more on advertising than you make on the sale.
Now let's say we bid on some more specific to VERY specific lighting related phrases. There will be fewer bidders, a lower cost per click, fewer clicks, and a much higher probability of generating a sale.
That adds up to a cost per CONVERSION that can easily be 90% lower and possibly over 1000 times lower. Here are some real numbers:
general keyword, cost per conversion $100+ per sale
specific keyword phrase, cost per conversion $10 per sale
very specific keyword phrase, cost per conversion as little as $0.02 per sale.
It is easy to see that if your average profit per sale is $60 you're losing money on that general keyword, making a nice return on the specific keyword phrase, and making almost pure profit on the very specific keyword phrase.
Once you understand this you can manage your bids accordingly. Add more specific and very specific phrases. Dramatically lower bids or even pause those really general keywords, reduce clicks with different ad wording and add as many negative keywords as you can.
[ Message was edited by: flyingrose 08/01/2006 09:12 pm ]
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