It’s not often you’ll find me writing any doomsday type of posts. But this is your AdWords strategy wake up call.
There’s a pandemic going on in almost all managed PPC accounts, and it’s slowly sinking your ROI without you even knowing it.
But there’s a reason why you can’t steer clear of the iceberg.
It’s because you’re not controlling what’s happening beneath the surface.
What’s The Iceberg Effect?
The Iceberg Effect happens when what you see above the surface in your PPC accounts doesn’t match up with what you can’t control beneath the surface.
In other words, your ratio of what you can’t control vs what you can control is too big.
Let me explain with an example.
Take a simple look at an AdWords Search network campaign.
Depending on the keyword match types you use, the keywords you’re bidding on are not the end result of what you’re paying for.
Your search terms are what you’re paying for.
And if your search terms don’t match your keywords, then you’re not able to control them.
What do I mean by that?
Take a look at this screenshot:
If you take a close look at the right hand column (the Keyword column), you’ll notice that each Search term in the left hand column is completely different.
There’s no equal match.
In fact, the Search term to Keyword ratio in this specific scenario is 132:1.
What this advertiser thinks he’s paying for is a click from the keyword “file for bankruptcy”, but instead, he’s paying for different Search terms with insanely different conversion intents.
Just look at what this advertiser was paying for:
bankruptcy attorney orange county
filing bankruptcy for llc
how much does it costs to file bankruptcy
bankruptcy attorney reviews
filing bankruptcy for student loans
buying a house after bankruptcy
what is chapter 7 vs 13
Do you think all these Search terms convert at the same level as the keyword ‘file for bankruptcy’ that was being bid on above the surface?
This is what The Iceberg Effect is.
It’s the ratio comparing what you can’t control (the Search terms) to what you can control (the Keywords). Your goal is to get that ratio down as close to 1:1 as possible.
If you don’t, then your discrepancy is too high.
As you can probably tell, each Keyword match type has a different size iceberg that lives beneath the surface.
[Exact Match] = Smallest iceberg
“Phrase Match” = Bigger iceberg than exact match
+Broad +Match +Modifier = Bigger iceberg than phrase match
Broad Match = Biggest iceberg and bigger than all other match types
As you progress down the list of match types above, your audience (and iceberg) slowly grows in size due to the extra impressions your ads are now earning.
But it doesn’t just stop with the Search network.
Your PPC Ships Are Already Sinking
Okay, so now you have an idea of what The Iceberg Effect is. In a minute, we’ll talk about how to fix it and how you can make your PPC ship iceberg proof.
But before we do that, let’s look at how your Display PPC campaigns, Social PPC campaigns, and other dimensions are suffering from the same issue.
The Iceberg Effect in Display PPC Campaigns
When it comes to regular Display campaigns (using AdWords for example), you have a lot of tools and targeting options to add multiple layers to define your targeted audience.
When I was asked to do a webinar with Kissmetrics, I mentioned that the Display targeting options you have are like the layers of a burger (was I hungry at the time? Most likely).
The more layers you add, the bigger your Display burger gets, but the smaller your audience gets.
So even if you added multiple layers to your Display campaigns, your automatic placements (what’s below the surface) will most likely be bigger than your predetermined targets (what’s above the surface).
You’ll notice in the example above, that mobile apps, Gmail, YouTube, and regular URL placements are adding up the ad dollars spent.
And perhaps you wouldn’t care to look deeper since the cost per conversion matches your goals across all those placements (all conversions are around $4 or less).
But what if those Automatic placements all performed differently on the end-sales side (the point where you’re actually making money)?
The Iceberg Effect in Social PPC Campaigns
Just like The Iceberg Effect is prevalent in Search and Display PPC campaigns, it’s actually worse in Social PPC campaigns.
To take an example from Facebook, you have the option of targeting in an AND or OR fashion.
You either keep increasing your audience size or you keep reducing it by adding more and more targeting requirements.
But regardless of you increasing or decreasing your audience, you’re adding multiple requirements that all have simple performance metrics above the surface, but perform wildly different below the surface.
So this is where you must consider separating out your campaign targeting without making your audiences too small.
So far, in Facebook, you’re only able to breakdown the demographics of your targeting to see how they individually perform. You can’t do that with Interests targeting or other targeting criteria that you’ve set.
Now that we’ve looked at Facebook ads, let’s take a quick look at Twitter.
With Twitter, the same Iceberg Effect slowly takes place.
You want to create a big enough audiences to get traffic, but then you want to slowly start chopping away at the iceberg that’s beneath the surface to improve your PPC performance.
Luckily with Twitter, you can break down your bigger targeted audience into smaller bite-sized pieces so you can get your iceberg ratio closer to 1:1.
The Iceberg Effect in Dimensions
As you’ve already learned, The Iceberg Effect is the negative effect of advertisers not breaking things down into simpler terms.
But regardless of which PPC platform you use (Search, Social, Display, Video, etc), there will always be universal icebergs you have to consider too.
These universal icebergs are:
Geography – Where you visitors are physically located. Each state within the U.S. will perform differently, and each city within each state will perform differently.
Device – The devices your visitors are using all perform differently in regards to conversion rates and cost per conversion.
Day of week – Depending on your industry, each day of the week can perform remarkably different than another.
Hour of day – Each hour within the day will eventually perform differently and you’ll find that certain hours of the day are better at targeting compared to others.
A thing to keep in mind as you break down your PPC campaigns: Understand that changes in conversion rates (from conversion optimization tests), impact predetermined bidding rules you may have set for the above universal icebergs.
The Iceberg Effect in Sales
To take it one step further, your SaaS or lead gen marketing efforts are even more misleading than what you might think.
Take the Keyword performance example below:
On the surface (and depending on what type of conversions you’re tracking), Keyword 1 is performing better than the other Keywords, since it has the lowest cost per acquisition (CPA).
But as soon as you look at the sales rates, things change.
From what you see inside your PPC account (the visible part of the iceberg), your keywords might all be doing great, but below the surface, only a few keywords are actually making you money.
With this in mind, it’s vital you start looking into what’s actually making business sense.
By slowly decreasing the size of your iceberg, you’ll be able to spend less money on advertising, improve your sales funnels, and turn your ROI even higher than what it was before.
How To Iceberg Proof Your PPC Campaigns
If you want to decrease the size of your icebergs (and gain more control over your PPC accounts), then you’ll want to decrease your Search term to Keyword and Automatic placement to targeting discrepancy.
This means making smaller ad groups with smaller targeting criteria.
To accomplish this, you’ll want to focus on Single Keyword Ad Groups (SKAGs) where all new Search terms are extracted to create new SKAGs.
This will help bring your Search term to Keyword ratio closer and closer to 1:1, where virtually no iceberg is present in that ad group.
As you can see, the more granular you are with your PPC campaign build outs, the better.
And this isn’t just so you can control what’s beneath the surface in a better way, your new granularity will fundamentally improve your Click-Through-Rates, Quality Scores, Cost-Per-Clicks, and most importantly, your Cost-Per-Conversions.
Eventually, your Search term report will start looking like this, where your top Search terms match your Keywords:
In addition to SKAGs that you can create on the Search network, you’ll want to focus heavily on exclusions in all your other PPC channels and campaigns (Social, Display, and Video).
Once you start looking at which demographics or interests that aren’t performing well, then you start adding them as exclusions or create smaller audiences that don’t include targeting criteria that isn’t performing well.
Here’s What’s Next
Your PPC campaigns might already be performing well, but that’s only until your icebergs get too big.
By looking underneath the hood of your PPC campaigns, you’re quickly able to see how your current campaigns could be performing so much better, without much effort.
Keep chopping away at your icebergs, and you’ll be able to reach the conversion golden coast of New York City like Jack and Rose were hoping for.