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Its Friday afternoon, no one’s blogged on here for a while and I’ve been asked to step up to the plate without mentioning SpyFu. I should’ve been thinking of what to post for a few days now but I’m afraid I’ve been a bit distracted…

So, I’m sitting in a bar with a nice cool pint. I lean back in my chair and look around; what do I see?

That guy over there, he’s got one friend opposite him but he’s talking so the whole room can hear.”He’s not targeting his efforts” I think to myself, “expensive strategy but I guess he’s making a lot of impressions. I suppose his CTR can be quite low and he can still have a lot of success.” At this point I realise that AdWords has ruined my life but I can’t stop myself…

Thin skinny guy, black coat, black hair, band t-shirt. Leaning against the bar, nearly finished his drink. Looks like he’s watching the girls in the booth by the window.But he’s too slow, they’re leaving. Hang on, they’re not, some of them are just going to the toilet. But not all of them. Black haired guy finishes his drink and walks nervously over. There are two girls left, one them’s wearing a band t-shirt. I can’t hear what he says but I think “That’s more like it. He’s targeting his market”

Now who’s that? One guy, group of girls. The leggy blond doesn’t look particularly interested but one of her friends is flicking her hair and touching his arm. The guy is slowly ignoring the rest of the group and turning to face her. “Bidding too low” I remark, “he can’t keep his position with blondie.” Then I give him the benefit of the doubt; “placement targeting; he knows what converts best for him.”

Back to the skinny guy. He’s sitting on his own now; “high bounce rate?” I think as he gets up to go to the bar. But maybe not; band girl is coming out of the toilets, she looks at the booth where her friends are and then scans the rest of the bar. “Rookie error, he should’ve 301′d to his new location.” The girl pauses, lonely by the toilet door but not for long; “Are you looking for someone?” I hear. “Is that bidding on a competitors keyword?” I think. Skinny guy comes back around the bar with two drinks, his new friend smiles and walks over. “Brand recognition in action. And he gave her an incentive for a repeat visit.”

I see my own date in the door so I stand up and wave. I’m unusually tall, so my ad copy stands out from the crowd. I know she like this place, one of her friends told me, I hope just being here is good enough landing page optimisation. How forward should I be? Calls to action are good right? Perhaps it is at this point that my analogy breaks down, I don’t want to be too forward. Still, I hope I get a conversion.

Wouldn’t it be great if you could convince your competitors that they had to spend big in order to keep up with you? If they use SpyFu to estimate your ad spend and CPC then you can. I’ve looked at what SpyFu say about their own algorithm and techniques and then I’ve combined this knowledge with what I observed last week to come up with these ideas about how to turn SpyFu into a double agent.

Firstly let’s look at how SpyFu calculate their Ad Spend and CPC estimates. Then I’ll show you how to use this knowledge to increase SpyFu’s estimates of your Ad Spend and CPC without spending any more money.

How Does SpyFu Estimate Daily Ad Spend?
The onsite help, also available in The SpyFu Instruction Manual says this about calculating Daily Ad Spend:

When we calculate Daily Ad Budget, we start with all the keywords that we have seen a domain advertise on. We eliminate overlapping keywords. For example, “race cars”, “luxury cars”, and “cars” becomes “cars”. Then, we take into account the current and historical positions that we have seen the domain’s ad appear for each given keyword. Based on the position of each ad, we estimate the price that the domain likely pays for the keyword. Basically, we then add up all the custom individual keyword costs per day and we arrive at the Daily Ad Budget.

Let’s add in what we already know about SpyFu to our new knowledge from the above passage:

• SpyFu uses its web scraping database to get a list of all the keywords a site advertises on.
• Overlapping keywords are eliminated.
• A daily cost is estimated for each keyword given its ad position.
• The total can then be easily found.

I’ll look at this step by step:

Web Scraping: Reading the Internet
Velocityscape (who own SpyFu) have a massive web scraped database. If your ad appears on one of the first few SERPs for a term then they will know about it and have a record of it, unless the term is relatively unusual. This is why estimates are better for accounts with a large number of impressions; such accounts either bid on lots of relatively common terms that will be scraped by SpyFu or they bid on a few very general terms which are also covered. Accounts that bid on lots of low traffic, long tail keywords might not get picked up at this stage so SpyFu will not have very good data on them.

Ignoring the Long Tail
The example that SpyFu gives for eliminating overlapping keywords is clearly far too restrictive; I doubt they would lump “race cars” and “luxury cars” into “cars” but you rarely see three word keywords whilst using SpyFu and, personally, I’ve never seen a four word one. Accounts which bid mainly on long tail keywords will have lower impressions and a lower daily ad spend but SpyFu does not take this into account, ignoring the long tail and lumping everything into a more general query.

Counting the Cost
The accuracy of the daily cost estimate for each keyword is a tricky one. If they work it out by considering an average CPC for each keyword multiplied by an estimated number of clicks then their accuracy depends not only on their CPC estimates (see below) but also their estimates of CTR’s. Since all this is done by a computer CTR estimates will depend only on ad position and not on the ad copy which the folks at the Mind Valley Labs tell us can make a massive difference.

What About CPC?
I’ve just said that the Daily Ad Spend estimate depends on the accuracy of the CPC estimate. So if you can manipulate what SpyFu thinks about your CPC then you can manipulate their Daily Ad Spend estimate as well. So how does SpyFu estimate CPC?

If you take the Average Cost per Click of every keyword that a domain advertises on, add them all up, and divide by the total number of keywords, you will have the Avg Cost/Click for a domain. For example, if a domain advertises on 3 keywords with Avg Cost/Clicks of $1, $2, and $3, respectively then the Avg Cost per Click for the domain would be $2.

This is clearly a load of rubbish. The following table shows that SpyFu’s method only gives the correct answer if there is the same number of clicks for each keyword:

Now look at the table if each keyword gets a different number of clicks:

In this case the average CPC is 21/9=2.33 not 2 as SpyFu’s method tells us.

At $70/month for a subscription I hope that SpyFu doesn’t really estimate CPC in this way.

Assuming the SpyFu algorithm does actually estimate CPC in this way then their estimate will be most accurate when the standard deviation in the number of clicks for each keyword in an account is small. As we have seen the method gives the right answer in the case where all keywords receive the same number of clicks, it also wouldn’t be far off if the number of clicks was dominated by a few keywords.

Estimates for Individual Keywords
Of course, all this depends on the accuracy of their estimates of average CPC for each keyword but to say any keyword has an average CPC ignores one of the most fundamental parts of AdWords. No one can accurately predict the CPC for an ad without knowing how the quality score system works. I’m sure SpyFu has the technology and capacity to scrape landing pages as well as search results; they can then apply their own quality score algorithm but I can’t imagine their results are very accurate.

The AdWords API has a service that will estimate CPC for a given keyword but I doubt SpyFu use it: The API service is designed to be accurate when it can access campaign and ad group quality scores for the account it is being used for; this information will not be available for SpyFu.

Get on With It!
Enough waffle. Now we’ve looked at how SpyFu’s estimates are calculated lets look at what you can do to change them, without actually changing you account of course. None of these methods have been tested and some of them require information that I don’t know, but if what SpyFu says about itself is true then at least the first two of these methods should work.

Bid High
SpyFu do not know what your click through rates are. They calculate daily spend on an estimated daily spend for a given keyword which is probably based on an average CTR depending on the ad position. So if you use a high traffic keyword with and bid enough that your ad gets a good position then SpyFu think you are spending a lot of money. But what if your ad text was so bland that the real CTR was incredibly low? Then you’d be spending a lot less than SpyFu thought.

Bid on the Long Tail
Bid on the long tail of a really expensive keyword. SpyFu even published a list of the most expensive keywords to make this easier for you. The idea here is to use the way SpyFu lumps long tail searches together in order to convince them that your CPC is huge. For example top of their top list is “conference calling companies” at $52 a pop. As I’ve said, I’ve never seen a four word keyword in SpyFu so try bidding on something like “free conference calling companies.” The term “free” is common enough that SpyFu will probably scrape for it so their algorithm should record you bidding on “conference calling companies” but your actual CPC will be lower because people will bid less for the word “free.”

Of course the algorithm might decide to cut your keyword down to “free conference calling” instead so you should bid on a variety of “x conference calling companies” to make sure your long tail is shortened to the keywords with the maximum CPC.

Bid at the Right Time
SpyFu’s database is not updated very frequently. Most things I’ve read say it’s only redone every 60-90 days. Spend a lot when SpyFu does its update and you’ll appear to be spending that much for the next three months. Take these update figures with a pinch of salt; I can’t find anything official about this and quite a few blog posts about SpyFu appear quite biased against it.

When is SpyFu’s next database update due? I don’t know. It is also possible that their data gathering goes on all the time but they only do their calculations every three months. If this is the case then this method won’t work. Unfortunately I think this probably is the case.

Bid on the Right Place
SpyFu’s owners, Velocityscape are based in Phoenix, Arizona. Assuming their scraping is all done from there then a high spend ad group targeted at their location will be scraped and analysed by them as if it covers the whole web. Unfortunately things are unlikely to be that simple.

I doubt the whole of Velocityscape’s scraping operations are centralised; SpyFu UK would indicate that they have at least one other location. This is not a big barrier, campaigns can be targeted at more than one location but if they scrape using something like the AdWords Ad Preview Tool this method won’t work at all. Does anyone know anything about this?

Control the Double Agent
Always remember that SpyFu works both ways; while you’re using it to spy on your competitors, they are using it to spy on you. But also remember that you have complete control over what information SpyFu can gather about you and, to a certain extent, you can manipulate that information.

It would be an interesting challenge to see who can get the highest estimated daily ad spend for the lowest actual budget. Let the games begin!

I was doing some keyword maintenance today and noticed something new when I hovered over the magnifying glass tool beside a keyword:

It looks like Google are being more explicit with their quality scores. I haven’t noticed this before but rather than being an accidental leak this time it’s been integrated into Google’s changes to make quality score more transparent.

I’m not sure how much this will change advertiser behaviour. Perhaps knowing that a keyword is nearly “Ok” will encourage people to optimise their landing pages and ad descriptions further, rather than just pausing.

More information is also given for keywords with poor quality scores:

In this case we are told that no ad will be run on broad match, but that the ad can be triggered on a phrase match.

How will this new information affect the way you run your AdWords campaigns?

For those of you not in the loop, spyfu.com is a web service that provides information on who is bidding on what keywords as well as further information on competitors’ daily ad spend as well as their average CPC. The startup squad have a great article on what spyfu does and how it does it.

No Mr Bond, I Expect you to Disagree.

Everyone seems to have an opinion on how useful spyfu is, ranging from the standard “it works/doesn’t work for me” to the commonly held belief that it is only really useful for large accounts. People disagreeing on the Internet? It’s time to try science!

The Experiment

I selected 20 of SEOptimise’s clients, discarded two of them for using foreign currencies (spyfu has a UK and US version but I didn’t want the hassle of fiddling with exchange rates) then ignored a further two when spyfu provided no data on them. I then compared the percentage accuracy for SpyFu’s estimates for daily ad spend and CPC with the actual daily spend and average CPC as well as the number of impressions the ad generates. I even drew graphs.

The Perils of Percentages

I decided to work with percentages rather than actual pounds and pence for two reasons; client confidentiality and because there is such a massive variation in budgets and CPC’s across the selected accounts. Considering percentage variations means that a £10 error on an account spending £1000/day counts less than for one on a spend of £10/day. But you knew that already, didn’t you?

One side effect of this is that, particularly on a graph, it looks like the lower estimates are a lot more accurate then the upper estimates. However, this is because the lower estimate is never less than zero so it can never be more than 100% different from the actual value.

Enough writing. Time for some pictures.

Bigger is Better?

With a bigger account, spyfu has more data so its estimates will be more accurate. Right?

This first graph is of the error in spyfu’s ad spend estimates against total ad spend. I expected that the error would be less for big spending accounts.

As you can see, it looks like my hypothesis is correct (at least for the upper estimate, which tends to dominate these charts) but then the error increases again for the account with the largest ad spend. There are three possibilities here:

1. Accuracy is unrelated to ad spend.

2. Accuracy increases with ad spend and the last result is just a freak

3. Spyfu is actually most accurate somewhere in the middle range of ad spends.

To me, option 3 seems the most unrealistic and option 2 the most likely. Let’s check by looking at CPC. . .

O dear, this graph of CPC error against total ad spend shows no correlation of any sort whatsoever.

You’re Using the Wrong Big

Ok, so it might be unfair to say an account is big just because it spends a lot of money. Spyfu uses web scraping so it should be more accurate for account with a large number of impressions.

The following graph shows the percentage error ad spend against the number of impressions the account has generated:

This graph looks very similar to the Ad Spend Error vs. Ad Spend graph, probably because daily ad spend is quite closely linked to the number of impressions an account gets.

The graph of CPC error against number of impressions, below, also doesn’t show any correlations.

The graphs so far, particularly for CPC show that there is not a strong relationship between the size of an account and the accuracy of spyfu.

Assuming our largest account is just an anomalous result I think there is a case for saying that estimates of daily ad spend are more accurate for the larger accounts but that the error in CPC does not improve (or get worse) as account size increases.

Spyfu’s algorithm is a bit of a mystery, perhaps it calculates CPC entirely separately from daily ad spend. Perhaps comparing CPC with the size of the account is like comparing apples and pears.

Comparing Apples and Apples

Now let’s look at graphs for the CPC error against actual CPC:

My goodness, there might even be a trend there. It looks as though the upper estimate gets more accurate as CPC increases. The account with the highest CPC is an anomaly since spyfu has given both a lower and upper estimate of 0; any PPC marketer with common sense would ignore this anyway.

This next graph shows the same information, but with the upper estimate plot removed so that it is easier to spot trends in the lower estimate:

So as CPC increases the lower estimate actually gets worse. This is all very confusing, what does it all mean?

What’s Going On?

So far the results seem to indicate the following:

1. Spyfu’s estimate of ad spend is more accurate for larger accounts whether size is measured by ad spend or number of impressions.

2. The accuracy of the CPC estimate does not depend on the account size.

3. The upper estimate for CPC improves as CPC increase, but…

4. The lower CPC estimate gets worse as CPC increases.

What Does This Tell Me?

Nothing at all. The sample size is small and the correlations are weak; you would be a fool to use this data to decide how accurate spyfu is. Besides, it’s not like the four conclusions written above are even quantitative. It would’ve been much more useful if I’d been able to say “The lower estimate of ad spend for an account is within 50% of the actual value 90% of the time” but as you have seen the results do not support anything like that. The best I can hope for is that someone will be intrigued by what they’ve seen here and decide to test clients from their own MCC. If they have more data, or if lots of people with not much data arrive at the same conclusions then perhaps I can say I was onto something.

So SpyFu is Useless?

Far from it. When it provided information, true ad spend was within spyfu’s estimates 71% of the time (ignoring the accounts for which it returned 0) with CPC being slightly better at 79%. I will continue to advise and act as if true ad spend and CPC lie within spyfu’s estimates because the information it provides is better than no information at all.

Following XL Airways going into administration last week and yesterday’s announcement that Lehman Brothers are filing for bankruptcy, many competitors have quickly setup PPC ads targeting brand queries to take advantage of this.

Below are the ads appearing on Google for XL and ads have quickly started appearing today for Lehman Brothers as well:

This obviously wouldn’t have been possible before Google opened up brand bidding, but is this a good thing? Personally I’m quite impressed with how quickly competitors have acted and surely for people searching for alternative flights to XL this has to be useful.

Hi, I’m Richard Fergie, the newest guy at SEOptimise. I’ve been with the company a week now and I’ve just taken (and passed) the Google AdWords exam. I’ve been asked to do a blog post about it so (in the best SEO blog tradition) I decided on doing a top 10 list of things I’ve found useful. Here goes…

1. The Official Resource
The AdWords Learning Centre. If you are a visual or aural learner head straight for the multimedia lessons. If you’re in a hurry, need a quick reference or learn best by reading there are also text lessons. The AdWords learning centre is Google’s own training tool for AdWords so I’d say it is the best resource for presenting information on all of Google’s ad policies in a clear and concise way.
The Learning Centre breaks its course down into short sections (the longest unit is supposed to take 15 minutes) so it is easy to just do a bit at a time and there are also handy quizzes on each subsection.

2. More from the Horse’s Mouth
It’s also worth having a browse through the official AdWords blog to see what’s new in the world of PPC. As Google’s official mouthpiece this blog gives an insight into what Google thinks is important about AdWords. Pretty useful when you remember who sets the exam…

3. O’Reilly Books: Is There Anything They Don’t teach?
Google Advertising Tools published by O’Reilly. Most of this book is aimed at AdSense users; people trying to make money by allowing Google to place PPC ads on their websites. However, the final two sections are entitled “Working with AdWords” and “Using the AdWords APIs.” The APIs section is a lot more detailed than the AdWords Learning Centre and I have to say that most of it went over my head but the “Working with AdWords” section is very good for running you through all the basics of using AdWords.

4. Learning by Doing
I’ve been quite lucky in that I’ve been able to play around with SEOptimise’s own PPC campaign. Messing around like this is a great way of learning so if you do get the chance to even just look at someone else’s already running account I’d jump on it. Expect to see the SEOptimise campaign go from strength to strength now after Kevin actually reviews the ads and keywords for the first time in ages in order to check on my ‘improvements!’

5. Learn. Rank. Dominate. I’ve Got the First Part.
seobook.com turns up sooner or later whenever you are looking for SEO and PPC resources. They have a whole PPC training section of which I think the Pay Per Click 101 video is the most useful.

6. PPC Podcasts
More resources for those of you who are fed up with reading; check out webmasterradio.fm’s PPC-Rockstars which has short podcasts on a variety of PPC issues.

7. A Heroic Resource
The PPC Hero(s) promise “Heroic Feats of Pay Per Click Management.” Check out their best posts for some great tips and things to watch out for. They also have a very detailed quality score handbook.

8. More on Quality Scores
And speaking of quality score, there is a simple AdWords Quality Scores Factors Chart at the bgtheory.com blog. I had a few of questions on my AdWords exam about what sort of things influence quality scores and what sort of things are influenced by quality scores. This chart clarifies this in a very easy to read way.

9. Even More on Quality Scores
Another good quality score resource is from Redfly Marketing who do a mini case study with 10 Ways to Increase Your AdWords Quality Score. 3 out of 10 posts about quality score might seem excessive, but I think it’s fair to say that any aspect of AdWords that does not affect the quality score is affected by the quality score so getting your head around all the interlinked factors is good exam preparation.

10. And Finally…
I’ve got to mention ppcblog.co.uk, mainly because straight after my test I visited their trademark policy change post. I think the exam was slightly out of date in that it did not group the UK and Ireland in with the US and Canada with regard to trademark policy and after reading their blog post I know that I was right in thinking that the rules about bidding on restricted trademarks are the same in all four countries. Unfortunately I don’t know if I got the question right (by assuming the test just wasn’t up to date) or if I was barking up the wrong tree or even being led astray by a tricky examiner.

That’s all for now folks. Let me know what you think or if you have any other good resources for me to learn from.

Google AdWords have today released a new feature which allows My Client Centre account managers to create campaign templates and share them with managed accounts.

The Google help centre has some information about the campaign templates, I’ve only created a very basic template but this does look like a very useful feature to speed up the setup process for new client accounts or similar campaigns.

I’ve created a quick guide to show how you can create and share campaign templates. The template setup follows the same process as creating a new campaign, it’s just created though the MCC account instead of the individual account. Each template can then be applied to quickly create a new campaign for a selected client account.

1) Create Campaign in Google AdWords Template Center
Please click all images for full-size versions:

2) Publish Campaign
Once you have created a campaign template you need to publish this by clicking into the campaign and selecting the publish button, changing the status from draft to published:

3) Select client and click “Template Library”
And once the campaign is published this will be available to apply to managed client accounts as part of their new template library:

4) Create Campaign from Template
All you need to do is set the campaign name, geo-targeting, URL, budget and start/end dates:

5) Save Campaign
Once the setup is saved, the new campaign will be added to the account and you’re ready to go!

Google AdWords seems to be rolling out some useful features recently, last week it was the snapshot date range comparison and today’s is the option to change number, date and time formatting.

This is a great addition for UK users to avoid any confusion between US and UK date formats.

Here’s the Google AdWords account alert (click for full-size/readable image):

Until now if you’ve heard about the Google AdWords dynamic keyword insertion it’s likely that it’s through a blog or forum, but last week the Google Help Centre added information to answer seven common questions about keyword insertion.

Personally I’ve found keyword insertion can be a great method of improving an adverts clickthrough rate by dynamically inserting the exact query string into the ads title, description or URL. The keywords searched for are also highlighted in bold which helps to draw further attention to your ad, potentially boosting it’s CTR.

The new information from Google is great as this clears up any misconceptions which people may of previously had about keyword insertion, making sure that advertisers have all the details they need to use this method effectively. One concern I had was how keyword insertion affects your ads quality score, for example if an ads quality score is calculated using the default text rather than the dynamically created version, but Google explains that “each keyword’s Quality Score is determined after the keyword is triggered and inserted into the ad seen by the user”.

There’s plenty more information in the Help Centre which is well worth a read even for people who have been using this tactic for a while.

I found this quite funny; doing some keyword research for cleaner searches on Google AdWords one of the suggestions was “crap cleaner”, at least it’s honest I suppose:

Maybe I should setup a test as the competition is unsurprisingly very low. The broad match suggestion for scrubber (sorted by relevance?) might also throw up a few unwanted clicks too!