Maximizing US Retail Profitability via Geo-Targeting

Why is Geo-Targeting so important in the US?

Google identifies user locations based on their IP addresses to understand where people are – allowing advertisers to tailor their bids to searchers in different locations. In vast countries like the US, this kind of leverage can make a significant difference to your PPC campaign performance. Being able to assign more spend to profitable areas and less to areas where sales are slow means better budget efficiency and increases the profitability of your PPC activity.

The way to do this is via the bid adjustment features in Google AdWords and Bing Ads, called Geo-Targeting. The feature has been around for years and I’ve seen it used in a number of different ways, but it’s surprising to see it so underused across countries like the US.

State-level targeting is a great way to get started, you’ll be surprised at the difference in searcher behaviour from one state to another! From there you can dive deeper and look at region and city performance to get even more granular.

Let’s jump right in! I’m going to show you where you need to look to discover this hidden data and how to use it to improve your campaigns.

How Do I Know Which Areas are Good in the First Place?

The challenge many advertisers have is understanding what historical performance there is in different locations to begin with. For most, without looking at the performance reports, there is only perhaps a gut feeling for the areas which perform. Luckily, we all have access to some hard data showing exactly what we need to see.

For Google, the data you need is hidden in the “Settings” tab of AdWords:

AdWords Settings

Under ‘Locations’, choose to view the location reports for ‘Where your users were” (user locations). This produces a report listing locations and their associated campaign performance during that time-range.

In order to make an assessment of the State-level performance, it is possible to use the ‘View’ drop-down to get state level data (it is necessary to have a location highlighted first):

AdWords Settings

Note: Here is where you can also choose to go more granular into region, city, zipcode etc.

Once the report is generated, you can download it and fire up your favourite spreadsheet software.

Using the magic of Pivot Tables it is possible to consolidate all your campaign data into a simple ‘Performance by State’ report. Your report should include the essentials: impressions, clicks, costs, converted clicks and revenue (if available). Every other KPI you might be interested in can be worked out from these.

What Differences in Performance Will I See?

Having run these reports across multiple accounts including thousands of campaigns covering millions of retail keywords, we know what variance can be seen in this industry. The data show CPC differentials against the average CPC for this segment. Data is taken from the retail sector. The most expensive states have 13% higher CPCs than average, and the lowest are 15% below average. Below, the results are visualised as a heatmap overlay.

CPC Heatmap

The top 3 states with highest CPC

  • New York (+13% above avg)
  • California (+10%)
  • Massachusetts (+3%)

The top 3 states with lowest CPC

  • Delaware (-15%)
  • Maryland (-13)
  • Mississippi (-12%)

Data specific to your own account may differ, but there will be a clear distinction between the top and bottom performing states.

Running the same evaluation for CR%, Cost per Order (CPO) or Earnings per Click (EPC) will help you to make the decision for the Bid Adjustment necessary to focus spend where it performs.

It may become clear that higher bids in some states are outweighed by the great conversion rate or revenue volumes that they generate. In these circumstances, compare the metrics which are important to you – it may mean increasing CPCs where they are already high, but would result in more volume at an acceptable cost ratio.

Tips for Taking Geo-Targeting to the Next Level

– As described above, it is possible to get data at a more granular level within the US. Use the data at city level or region level to augment the state level targeting.

  • Example: California is performing 10% better than average overall, but San Jose is performing 20% worse than average – use state level bid up-weight for California with a city level down-weight for San Jose.

– Use Geo-Targeting which is analysed at campaign level, rather than an aggregation of the whole account (process explained above). This approach will be suited to each campaign, but it requires enough data in the analysis to be statistically viable.

– For targeted local campaigns, make the most out of the Google Geo-Targeting options to include only the most relevant searchers

– Combine data from internal CRM or Tracking systems, or from other channels to create a more holistic view of shop performance in different locations.

In summary, Geo-Targeting is a great tool which every PPC campaign should be using, especially in the US and other countries where IP location accuracy is strong.

I hope this article has helped you understand how it helps to improve performance and has given you some ideas for how you can get it implemented in your own campaigns! If you have any comments or questions, please get involved below.

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Robert Davis

Robert Davis is a teamlead of ten PPC experts at crealytics. A PPC veteran with over 8 years working in the PPC industry, Robert has driven successful projects across multiple industry verticals. Specialised in the latest and greatest ecommerce search and Shopping strategies, he pushes the envelope when delivering performance.