Get an overview of the potential waste in your Google Ads account
Before we talk about Cost Efficiency, if you're not already familiar with the Pareto Ads Risk Analysis Feature, check out this article here to get a macro view of which categories and metrics are evaluated.
Quite simply, the Cost Efficiency category aims to help you assess whether or not there is any waste in your Google Ads account.
We'll help you understand the main metrics:
1. keyword share
This metric analyzes how much you spend on search terms that have activated your ads for a given keyword and how many of these terms you control, either by negating or buying as a keyword.
But do you know the difference between a search term and a keyword?
Search terms are the words used by users when they search Google's search page for what they want to find. Meanwhile, keywords are those to be applied to your content and Google Ads campaigns. In other words, some search terms can activate your ad, because Google identifies it as an approximate variant of a keyword "present" in your campaign.
As a result, in the example above, only 20% of the investment is being directed towards the keywords, which demonstrates the need to work on negating and adding search terms.
Remember that this control is essential because it allows you to minimize spending on search terms that don't bring you qualified results. Also, to make your job easier, follow the suggestions on the Cards: Daily Search Term Check, New Keyword Found, Negative this Term) in your Workflow.
In addition, to compose all these analyses you can also analyze the funnel at the bottom of the Pareto Ads Time Insights page and evaluate this distribution of Keywords and Search Terms throughout each stage of the funnel (searches, impressions, clicks and conversions) and how this is impacting on your cost.
2. RLSA
The acronym RLSA is used to refer to Remarketing Lists for Search Ads. This means that you can customize a search campaign for people who have already visited your site, adapting bids and ads.
So, in Risk Analysis, this metric evaluates whether your account is using remarketing audiences in search campaigns with positive bid adjustments for them. With this strategy, you'll invest more efficiently, prioritizing bottom-of-funnel users.
In the example shown, we see that the RLSA indicator is 13%. This means that you work with bid adjustments for remarketing audiences in 13% of your search campaigns. To increase this metric, we suggest that you add remarketing audiences and give them positive adjustments, according to your strategy.
3. Pareto Ratio
In this metric, we return to the concept of search terms and keywords. It was created by Pareto to measure the ratio between the cost of all search terms and the cost of only those terms that convert. In other words, we're evaluating whether your account is balanced in the proportion of spending on terms that convert or not.
Therefore, if this metric has a low score, it could mean that:
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You may be being conservative by "betting all your chips" on a few keywords. With this attitude, you end up restricting the reach of your account and becoming dependent on the results generated by a few words.
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Or you could be spending a lot on terms that don't convert, and not doing a negativity job with them.
Let's look at this example:
In the printout, we are at 54% in the Pareto Ratio, a proportion that falls within a medium risk framework, i.e. we are at more than half the cost of the search terms. So, depending on the account scenario identified above, we could consider (1) adding new keywords or (2) going negative.
So, now that you're up to speed on the main Risk Analysis Cost Efficiency metrics, head over to Pareto Ads and check out your results! That way, you'll have a good idea of what's being done in your account and what can be worked on.
If you want to know more about Pareto and Pareto Ads, just check out our website!
