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Vincent Corneille
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Case Study: Can a New Local Domain Cut Costs on AdWords?

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Google AdWords is a great way of driving highly qualified traffic to your site to reach your business objectives. The premise is pretty simple: your ad appears for relevant searches on Google and you pay for each click you receive. Businesses spend many thousands of dollars each year on their AdWords budget – often into the hundreds of thousands. Because of the large investment in this area, PPC specialists are always searching for ways to improve results and reduce costs. After all, even a 10% improvement can have a massive impact on your yearly AdWords budget.

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Over the past few months, we have completed a series of tests to evaluate the impact of migrating an AdWords campaign to a new .melbourne domain in an effort to improve results and save money. The results are listed below, but first, let’s provide some background context on page rank and quality score.

What you need to know

Logically, the higher your ads appear in Google’s search results, the more clicks you will get and the more users will visit your site. Sounds good, right? But what happens if your competitor bids higher than you for your keyword? How does Google determine who should appear at the top of the page? This comes down to a calculation called ‘page rank’.

Page rank = quality score x maximum bid

Quality score is a determination of how relevant your ad and website is to the user’s search. Page rank was invented to keep AdWords fair, and to reward websites for bidding on relevant keywords. At the end of the day, if you are searching for new shoes, the last thing you want turning up in your search is life insurance.

Still confused? Let’s break it down further.

Quality score breakdown

Quality score is calculated by Google based upon a variety of factors, but can be broken down into three major categories:

1. Landing page experience

2. Ad relevance

3. Ad click through rate (CTR)

A high quality score is rewarded by Google by offering you a reduced cost per click (CPC) against an average quality score. Likewise, a low quality score is penalised by Google by increasing your CPC against an average quality score. The relative amounts are shown in the image below.

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Image source: WordStream

As you can see, improving quality score in your AdWords account can have a big impact on CPCs and improve your bottom line.

How can local domains help your quality score?

Using a new local domain can affect two of the three major quality score factors: ad relevance and click through rate. When a user searches for something in Google, the search term is highlighted in the ad URL and description. This feature is designed to make relevant ads stand out visually to the user, which in turn can improve click through rate. Another interesting observation is how the new local domains themselves visually differ from the commonplace .com and .com.au, and will often stand out amongst competition, therefore aiding in an increased CTR.

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Click on image to enlarge

The test

Our client’s local industry keywords were competitive and incurred a CPC of approximately $6 to remain in competition with other businesses in Melbourne. With a daily budget of $70, each click was very important to the business and any improvements would have a noticeable impact on results. We migrated their website onto a .melbourne domain and began measuring the results.

Results

After a few days’ period of adjustment, we saw a decline in the CPC and an improvement in the quality score. The CTR in the account was variable and had some peaks and troughs during the period, eventually settling slightly above the past results. Below summarises the findings of August (.com.au) versus September (.melbourne).

Figure 1 – Adwords Quality Score Comparison
The CPC for this client decreased 19% to an average of $4.57 per click and the average ad position went up 13% to 2.0. Most importantly, we saw an 18% decrease in their cost per conversion, meaning that the client received more business for less budget!

 

CTR CPC Av. Pos Quality Score
.com.au 2.40% $5.71 2.3 4.0
.melbourne 2.75% $4.57 2.0 4.3
Change +14.5%  -19%  -13%  +7.5%


The bottom line?

From this simple strategy, we were able to generate some remarkable results. It appears that this new URL had a great impact on results for this local business. Like all experiments, however, more subjects are needed to validate the true effects of switching to a local domain. Will you be next?

Buy a local domain via our handy registration page – visit domains.wme.melbourne now.

 

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By Vincent Corneille


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