Dynamic Search Ads: A Case Study

Do you have gaps in your keyword targeting? How would you even know if you have gaps in your keywords? This is an area of PPC that is difficult to fully account for but is, nonetheless, an important responsibility in campaign management. If you utilize dynamic search ads (DSA), you are essentially letting Google take the reins. It’s a little uncomfortable for account managers to let go and let Google automate a campaign, but if it’s profitable, why not?

How Dynamic Search Ads Work

Dynamic search ads work from Google crawling and indexing your website. Once a user puts in a search query that’s relevant to your website, Google will show your ad. Google will dynamically insert a headline that’s relevant to the user’s search query and dynamically insert a landing page that’s relevant. That’s what I mean when I say you’re allowing Google to take the reins in this campaign type.

It can be scary to have what’s essentially an algorithm have control over a campaign, but after my first time using DSA, I think this algorithm knows what it’s doing. A lot of people in the search community used to hate DSA campaigns because they showed ads to irrelevant search queries. Since DSA’s launch, Google seems to have made a few modifications because almost all of the search queries in this case study are on point.

One of the most exciting features of DSA is that 25-character-limit headlines no longer apply. This is a feature many advertisers would like to see rolled out across normal search campaigns.

Introduction to the case study

The client is a large e-commerce business with hundreds of products in a small but high-margin niche. I suspected some gaps in our keyword targeting due to its large amount of products and my unfamiliarity with that particular B2B niche.

I’m also a big fan of constantly testing new ideas when it comes to managing AdWords accounts. Some are hits, some are misses, but as long as you cut your losses early and optimize those hits, things tend to work out well. If you’re not constantly testing new strategies and tactics for your clients, then why are you getting paid for your expertise? Experimentation can and will lead to new high-performing campaigns for your client.

With that thought in mind, I dived into my first DSA campaign, having spent a few hours reading up on the topic.

Search query optimization

I started off the campaign with a $20/day budget, which seemed sufficient to gather data quickly to optimize. At an average cost per click of $1.03, I was generating about 20 clicks a day.

Initial click-through-rates (CTR) were less than impressive, averaging about 1% a day, give or take half a percentage. The account on average generates a 5.5% CTR on search campaigns, so that initial CTR was underwhelming.

One of the many things I read about DSA was to keep a close eye on search term reports and aggressively add negative keywords. After a few days, I ran a search terms report and only had to add three negative keywords. Not nearly the overwhelming irrelevant clicks that some of the articles I read were stating. My guess is that Google has tweaked DSA to increase relevancy between website content and search queries.

I continue to run search term reports every couple days and add negative keywords. The search terms, on the whole, seem to be very relevant, and I encourage others to look into DSA campaigns.

Dynamic ad targets

Dynamic ad targets are the targeting option for DSA campaigns.  They allow you to segment different product categories that Google sees on your website. AdWords tells you what percentage of your website is covered with each dynamic ad target.

According to Google, “Website coverage shows the percentage of pages that belong to a particular dynamic ad target out of all the pages in your website’s domain that Google has indexed. Negative auto targets are only counted if they overlap with positive auto targets. Since pages on your website can belong to multiple dynamic ad targets, your website coverage may exceed 100%.”

There are multiple ways you can segment your website’s content into manageable pieces to manage bids and budgets.

Dynamic ad targets categories

URL Contains

This to me is the most straightforward way to segment your dynamic search ads. This will work well if you have unique URLs for each product type or page you want to target. If, for example, you have the word “shoes” in several different URLs, you may need to get more specific to drill down to a product category.

Page Title Contains

This option will segment your products based on what the H1 tag of each page contains. Typically the H1 is an overview of what’s on the page, which makes it a good option to use for segmentation.

Page Content Contains

This option targets certain words that appear in your website’s content.

Category

The dynamic search ads system uses Google’s organic search index for your website to see the themes of your website content. Once Google’s system identifies these themes, it creates “categories” that you can target. Entering your own category instead of choosing from AdWords’ categories may prevent the system from properly targeting sections of your website. That’s because our system needs to match the landing pages from your website with the categories you create, and sometimes it’s difficult for our system to understand those categories.

Combination Targeting

Much like setting custom parameters in Google Analytics, this option allows you to segment using multiple combinations of the above targeting.

Case study results

As you can see, the CTR was less than impressive, which leads me to believe that Google’s dynamically generated headlines aren’t the most appealing, given the account’s historical 5% CTR for search campaigns.

A click conversion rate of 3.16% isn’t awful given the low cost per click and the high average order value and high-margin nature of the business. For some accounts, a 3% click conversion rate would be disastrous, but for this one it’s fine.

The campaign has a 400% return on investment, enough to make it profitable. Next, I’ll be looking to scale this campaign and maintain profitability.

My thoughts on dynamic search ads

After my first DSA campaign, I’ve come to think of it as a solid account tactic for a few large e-commerce businesses. It makes the most sense for companies with inventory that constantly changes and building and maintaining normal search campaigns for thousands of products is time intensive.

If you have a large e-commerce client who has decent margins, I recommend giving dynamic search ads a try. I’m likely to do a part two of this case study involving the ramping up of this campaign. I’ll link to that post when it’s out.

Case study update 6/12

After dialing in on more negative keywords and expanding the amount of coverage DSA has on the clients’ website, the click-conversion rate has increased to over 5% and has generated nearly 1000% ROI.

Typically the longer a campaign has been running and the more data I have to work with, the better I can dial a campaign in and increase the ROI.

At the moment I don’t think DSA is a good fit for all of our clients, but on this client account, it works well. I’ve increased the campaign budget to $40/day and it’s still limited by budget. As long as the ROI is there, I’m going to keep nudging this campaign budget higher to maximize profitability.

If you think DSA is a could be a good fit for your organization or clients, feel free to reach out and we’ll have a discussion about it.

If you need help with your online marketing strategy, feel free to contact us for a free customized consultation.