What’s the formula for PPC success? Columnist Jacob Baadsgaard has tips on how to significantly expand your market share without wasting your ad spend.

Pay-per-click advertising is all about buying online market share. People are searching online for something relevant to your business, and you pay to show up in that search.

It’s a great model, provided that those impressions actually turn into sales.

Unfortunately, even if your PPC efforts are producing profitable sales, most business owners and account managers live with the nagging feeling that their ad spend isn’t producing properly.

The market share is there; you just can’t seem to capture it!

Fortunately, it’s not that difficult to get things turned around. In fact, with a few simple changes, I’ve seen many companies double their market share without increasing their PPC budget.

That means more clicks, more conversions and — most importantly — more sales.

So how do you double market share without increasing ad spend? It’s easier than you think.

The Problem With Keywords

Most PPC campaigns suffer from keyword inflation. The average account manager seems to wrestle with the unspoken belief that major segments of their customer base are using as-of-yet undiscovered keywords in their online searches.

Afraid of missing out on a marketing share goldmine, they bid on any keywords that might be used by a potential customer.

The problem is, this approach actually reduces market share.

How? To understand the situation, let’s go back to Marketing 101 and take a look at the definition of “market share.”

market share (n): the percentage of total sales volume in a market captured by a brand, product, or company.

It turns out that online market share doesn’t have anything to do with how many search terms trigger your ads. Instead, your market share is determined by the percentage of searchers in your market who become customers.

Since your budget is finite, any money you spend on keywords that don’t produce conversions or sales pulls cash away from your productive keywords. It has to come from somewhere, after all.

That means you have less budget to spend on search terms that improve your market share — which means you are losing market share.

Forget the competition; your own search terms are cannibalizing your market share!

The High Price Of Keyword Inflation

Awhile back, we audited a PPC account for a future client that had spent more than $1.3 million on AdWords. Incredibly, despite spending more than $50,000 a month on their ads, they were losing 72 percent of their potential market share to budget limitations.

At first glance, the solution seems obvious — just increase the budget and you’ll quadruple sales, right?

Well, that works, but only if you are making a reasonable profit… which they weren’t.

The problem was that most of their budget was being wasted on the wrong search terms — 98.9 percent of their 4,050 keywords were producing < 1 conversion per month!

As a result, 14 percent of their ad spend was producing 62 percent of their conversions.

And, with all the other keywords siphoning off their budget, their productive keywords weren’t showing ads 72 percent of the time.

That’s not good.

The productive 1.1 percent of their keywords were 6.4 times more likely to convert and had a 77 percent lower cost-per-acquisition (CPA) — which meant they had the potential to triple (or more) the company’s conversions.

And yet they were only showing 28 percent of the time.

Why? So the company could “increase” their market share by bidding on more keywords?

Doesn’t really make sense, does it?

More Market Share for Your Money

There are three basic steps to improving your online market share: 1) track down your top keywords; 2) get rid of your useless keywords; and 3) maximize your market share.

Step 1. Track Down Your Top Keywords

The funny thing about this whole situation is that most business owners and PPC account managers know off the top of their heads which search terms drive the best traffic to their site.

When I audit accounts, I usually ask, “Which keywords are your best performers?” The answers are almost always in perfect alignment with the data.

So most people know what they should be spending their budget on… and then they spend their budget somewhere else.

To see what you’re really spending your PPC budget on, you need to pull a Keywords report. Open AdWords, set the date range to three to six months and click the Keywords tab.

Now, click the Filter drop-down menu, then click “Create filter.” Depending on how you measure success, you can then choose which metric you want to screen for.

Here, I’ve set it up to show me all of the keywords with a conversion rate over two percent.

Once you’ve got this data, you can look at a variety of information:

• What percentage of your ad spend do your top keywords account for?
• Are specific campaigns built on your best keywords?
• Which ads are your best keywords linked to?
• Are impressions on your high-performing campaigns limited by budget?
• Should any of your keywords be split off from their existing campaign to form a new, more targeted campaign?

Once you’ve got a good feel for how your keywords are performing, it’s usually a good idea to dive into the search terms report and take a look at which actual queries are driving the best results for your business.

Your search terms (also found under the Keywords tab) can provide a ton of additional insight into how your audience is interacting with your keywords.

This is important, because even keywords that appear to target the right intent may get lots of clicks and impressions for totally irrelevant searches.

However, using your search terms report, you can uncover exactly which queries produce value and turn those queries into keywords for new campaigns!

Additionally, you can filter for things like “Conversions = 0” to see which keywords or search terms are performing badly.

With your best- and worst-performing keywords in hand, it’s time to stop diluting and start improving your market share.

Step 2. Get Rid of Your Useless Keywords

At this point, you’ve probably discovered that a huge percentage of your ad spend is going to waste.

Don’t worry, you’re not alone.

If your PPC campaigns are like most of the 2,000+ AdWords accounts we’ve audited, 12 percent of your keywords are producing 100 percent of your conversions.

To make matters worse, the worthless 88 percent of your search terms are probably consuming 61 percent of your ad spend.

Fortunately, it’s fairly easy to fix this. Just stop wasting money on the wrong keywords.

Simply by eliminating your budget-sucking keywords, you can expect to see your acquisition cost go down and your conversion rate go up — all while actually spending less on PPC!

And… cue the happy dance.

Now, you could stop at this point and just enjoy getting more for less.

However, now that you’ve actually got things working the right way, why not put that newly liberated money towards actually increasing your market share.

Step 3. Maximize Your Market Share

Here’s where things get really exciting. By redirecting your previously wasted ad spend towards your effective keywords, you can finally start using your budget to grow your market share.

Remember that client I mentioned earlier? When they were spending 86 percent of their budget on crummy keywords, their effective keywords never had a chance to shine.

But when we took their wasted budget and used it to fund their killer keywords, here’s what happened:

Within a matter of days, their ads were showing up for twice as many relevant searches.

Extra impressions and clicks are nice, but market share comes from “sales volume,” not “impression volume,” “click volume” or even “conversion volume.”

The real question is, how did this change affect sales?

Within one month, sales increased by 52 percent. After six months, sales nearly tripled!

In addition, cost-per-sale dropped by 78 percent, which meant that they were spending 25 percent less for 3x more sales.

Now that’s how you grow market share!

All of this growth came from a very simple shift in focus. Instead of bidding on every conceivable search term, we focused their budget on the keywords that were producing sales.

As a result, we went from paying for clicks to paying for market share.

Now, the results aren’t always this dramatic, but over the years, we’ve used this approach to help dozens of clients double, triple or even quadruple their market share.

In some cases, you might end up spending $10,000/month on only five exact match keywords, but if those keywords drive the maximum market share for your business, those are the keywords you should be spending most of your budget on.

Conclusion

The secret to improving your online marketing share isn’t finding ways to increase your keyword count. The secret is to fund the keywords that count.

Your top keywords should get your top dollar.

Of course, if you have a brilliant new keyword in mind, it’s always a good idea to test things out. You just want to make sure that your core ad spend is focused on your best keywords.

The formula for PPC success is really quite simple — find your winning keywords, eliminate the losers and put all that extra budget into getting every last click out of your high-performing search terms.

It takes a leap of faith to stop bidding on all those possibly profitable keywords, but if you do, you’ll find that account management is easier, market share will grow, and you’ll finally start to realize the potential of PPC marketing.