Adwords 80/20 (Owning your own backyard)

By Posted in - Blog & Site Traffic Control on May 17th, 2012 0 Comments

You may have heard about the 80/20 rule before. It can apply to many things in marketing, as well as life in general. 80% of satisfaction in life most likely comes from 20% of the people you know .

In some ways it’s as vague as the term “conversion rate”. Conversion rate could apply to any metric in marketing as well as life. When a guy goes out on the town looking for phone numbers from girls, he’s probably highly concerned with his conversion rate (how many girls he asks/how many girls give him the digits).

For the sake of this blog, and in hopes we don’t try to apply it to EVERY element of life (it could perhaps get awkward), we’ll relate it to Search Marketing

80/20 as it relates to Adwords is by no means a novel, patented Site Traffic Control concept. It was popularized primarily through Perry Marshall. The general premise is that 80% of your leads and sales comes from 20% of the keywords in your account. This philosophy leads to the Perry Marshall “peel and stick” method which we use heavily today.

Although the concept is simple, the practical application is sometimes complicated, especially if we are considering lead generation being the goal.

Say we’re developing a campaign for a home renovations company and we have a search marketing account with 850 keywords, all siloed out nicely into logical campaigns and ad groups. The call to action for each of the campaigns is “Download the 7 things to avoid when hiring a Contractor” – and let’s assume, like most lead generation campaigns, we’re only collecting name and email to generate the opt-in.

When we apply the 80/20 concept, we come to the conclusion that out of the 850 keywords we’re going after 170 are probably going to give us the most potency, at least right away.

That’s when having a low barrier to entry like a simple email opt-in hurts us in search marketing (if we’re not tracking correctly). The problem is that we’re dong such a good job of compelling someone to look at our free stuff that we lose sight of our target. So while a long-tail keyword like “cheap or DIY contractor” could be performing well from an opt-in and cost per conversion standpoint, it still doesn’t represent our bread and butter which might be something like “arizona drywall repair”.

The great equalizer in search marketing is ROI and namely, prospects actually pulling out their wallet and making a purchase.

If we’re tracking this data through Infusionsoft or any other reputable CRM then we should have a pretty good idea which terms lead to a sale (please get in touch with us if you don’t know how to track keyword searches in Infusionsoft). Once we have the tracking in place, we get awesome visibility into what constitutes our 20%.

..and it goes a little deeper than that.

If we have a max daily budget of $50, and we’re targeting keywords that aren’t as “sales friendly”, we run the risk of spending an inordinate amount on “80%” keywords, thereby decreasing the amount of times we’re shown for our “20%” keywords.

The lesson that we should take from all this is that TRACKING is CRUCIAL. I’m not talking about Click-Though-Rate, and I’m not even talking about Conversions or Conversion Rate. I mean tracking all the way to sale to determine what constitutes your 80 and what constitutes your 20.

This is not to say that expanding your keyword list and your reach in the market is not crucial. It absolutely is, and all of our goals in business should be related to scalability and growth. But until we are able to own our own backyard, it is virtually impossible to take over the world.

In what way have you applied the 80/20 rule in your business?

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