PPC managers often tend to focus on areas that receive the most traffic. However, search queries that only generate a few clicks (so-called “long tails”) may also contribute significantly to generating revenues, and may represent important performance drivers.
The long-tail theory is based on the works of Malcolm Gladwell and refers to the online sale of niche products. The central idea is that even products of little demand may generate high sales figures in total, since they generally have a much wider reach online.
Using example data from an online fashion retailer, I have analysed the long-tail traffic potential, and indeed, I discovered that it contains great potential that often goes to waste. In the following, I will explain this potential in more detail.
Analysing Search Queries in Shopping and Search
For this analysis, let’s look at our online fashion retailer’s search queries in terms of their monthly revenue. In this context, we will particularly focus on those queries that receive only few clicks– both Google Search and Shopping. The aim is to determine their share of total revenue.
I will first determine the average number of clicks for all search queries: On average, each search query in this customer’s account generates 2.33 clicks per month. Now, I will look at all the queries that receive two clicks per month or less, in order to determine what share of the total revenue they have.
The analysis shows that 40% of the online shop’s search queries are looked up twice per month at most, yet they generate 38% of revenues.
If you only take Google Search queries into account, you will see a similar picture. 44% of these queries are clicked on just once or twice per month, yet they generate 40% of revenue. A closer look at the distribution of sales shows that, while certain queries generate high levels of traffic, a large share of the total sales comes, in fact, from search queries that are rarely clicked on.
What is the Actual Performance Level of Long Tail Keywords?
Let’s take our investigation one step further. Instead of looking at search queries, I will now focus on the keywords in our Google Search account.
As there is more than one search query that matches each keyword (e.g. blue shoes, buy shoes for the keyword “shoes”), I first need to work out how many clicks each keyword generates per month. In this particular online shop, on average, each keyword is clicked on roughly 6.8 times per month. So, we will focus on the keywords that generate 6 clicks per month or less.
The results of this keywords analysis are notably different from those of our search query analysis. Keywords that generate six clicks per month account for 11% of revenue.
Nevertheless, keywords that generate only a few clicks are still highly profitable. Due to 50% lower CPCs and a significantly higher conversion rate (+24 %), the return on ad spend (ROAS) of long tail traffic is almost three times higher. Hence, it is worthwhile to cover the long tail part of your PPC campaigns as thoroughly as possible in order raise their profitability.
Why are Long Tail Keywords so Profitable?
In order to answer this question, let’s take another look at the keyword “shoes.” There are multiple search queries that match this keyword (e.g. blue shoes, buy shoes, Adidas shoes). If users are looking for blue shoes, ideally they should be shown pages containing blue shoes. If users type in buy shoes, they are more likely to actually purchase shoes than someone who only looks up shoes.
Therefore, if we add other variants such as blue shoes, buy shoes and Adidas shoes to the existing keyword “shoes,” we will possibly get less queries and less clicks per keyword, but be able to direct users to more interesting websites and to create custom-tailored ad texts. The bids for these keywords can also be adjusted individually. Those keywords that reflect purchase intent should be priced higher than keywords that indicate that users are still in the initial stages of the buying process.
Long tail traffic contains great potential that often goes to waste. My analysis has helped us determine how much revenue can be realised with long tail traffic. If there is a large gap between the long tail queries’ revenue share and the share of long tail keywords, you should add more keywords to your account.
Campaign management tools such as camato will help you create custom-tailored ad texts that guarantee exact links to suitable landing pages and that optimise your bid management across the entire account.