Recent innovations in online advertising mean that’s it’s easier than ever to get campaigns up quickly. If you’re a new advertiser, you can sign up with an ad network like AdWords or ReTargeter and start competing with professional advertisers in minutes. But because it’s so easy to get campaigns up, it’s also easy to make critical mistakes that can kill a nascent campaign before it can ever get a chance to turn a profit.
It’s taken me five years and hundreds of thousands of dollars spent testing to learn to avoid these crucial errors. Making even one of these mistakes can make the difference between a lucrative campaign and a complete failure.
Spending Too Little
Many new advertisers start on an ad network with a very small budget- like $20 a day. Then, when they blow through that budget without getting any conversions they throw their hands up, and assume that the traffic source just doesn’t work.
The traffic source might not work, but you might have also just gotten unlucky with your first few clicks. Your traffic won’t always be evenly distributed. Letting the campaign run a little longer might result in a whole bunch of conversions coming later.
A good rule of thumb to remember is that it takes about 30 actions to reach statistical significance. So wait until you’ve gotten at least 30 clicks or conversions before making a decision- and be sure to budget accordingly.
It’s important to remember that most campaigns start out losing money. It takes a lot of careful optimization and testing to turn a campaign into a consistently profitable driver of traffic. So don’t worry if you’re not hitting your CPA targets at first- if you’re close, give the campaign time and keep optimizing.
Spending Too Much
Of course, it’s also important to not overspend on a campaign that simply isn’t performing. This type of error is most common on AdWords, because many new advertisers blindly follow Google’s suggested bids and complain when the campaign loses money. Suggested bids are simply that- suggestions- and shouldn’t be followed 100% of the time.
If Google suggests high bids, it’s almost always worthwhile to invest in improving your quality score and clickthrough rates rather than overspending on traffic your competitors are getting more cheaply. Instead of continuing to plow money into expensive traffic, figure out how to get that same traffic more cheaply. Some intelligent keyword management or bid optimization could save you a lot of money and make a campaign profitable.
Scavenging for Long Tails
You’re probably familiar with the myth of the long tail keyword- that, somewhere out there, there exist highly relevant long tail keywords and traffic sources that cost far less than the much more obvious ones.
In 2011,unless you’re a very sophisticated advertiser, you’re not going to find any penny clicks out there. If a keyword in your niche is much cheaper than the other ones, it’s probably because your competitors have already tested it and found that it doesn’t convert. If you insist on chasing long tails, you’re most likely going to be stuck nibbling on scraps like an effete turkey vulture after the bigger advertisers have already scooped up most of the premium traffic.
The fact is that the majority of the traffic is at the head, and if you want to get significant traffic volume quickly, you’re going to have to pay up and play with the big boys. Again, optimizing your conversion funnel and creatives will lead to much greater results than scavenging for obscure keywords.
Over-optimizing Things That Don’t Matter
Another issue that vexes many novice advertisers is the problem of overoptimization. They figure that, before spending money on traffic, they need to make sure that that traffic is converting as well as possible.
So they spend weeks writing different headlines, designing and redesigning landing pages, and doing everything except launching campaigns. It’s a good to have decent landing pages and creatives before launching campaigns, but the only way you’ll only know something’s working is by testing- so get out there and build some great campaigns!
Ilya Lichtenstein is the CEO of MixRank, a competitive intelligence tool for display ads that automatically finds your competitors’ best ads and traffic sources.