Geo-Targeting Isn’t Just for Local Businesses Anymore

Do you use geo-targeting in your paid search ads? The answer is probably “yes” if you only sell products to certain areas. However, the answer is probably “no” if you sell products nationally. That may be a mistake.

Most people think of geo-targeting settings for two reasons: either supporting the geographic areas their business supports, or for local promotions or events. While geo-targeting makes perfect sense in those situations, using geo-targeting in even your regular campaigns can have some significant advantages, even if you already have a successful paid search account.

Why should you geo-target your successful paid search campaigns? Basically, geo-targeting provides another layer of data, deeper than the keyword level. It expands on the knowledge of which keyword is performing, and adds information about which state a keyword is performing in. This allows your bidding decisions to be made with better data based on these regional factors:

Competition: The number of advertisers is different for each region. While you may not be geo-targeting, many others are. So your CPCs can, and will, be very different.
Product price: What costs $100 in West Virginia may cost $200 in New York. Therefore, your CPA metrics can and should be different for each region, because revenue will vary based on location. This impacts your ROI and, therefore, your allowable CPC.

Conversion rates: Some regions are in better economic situations than others, and are more likely to purchase and convert. In other cases, one region may have users that are more Internet savvy, etc. Many factors can affect conversion rates, and these factors will vary by geography.

Brand awareness: Your brand may be stronger in some parts of the country. This might be based on the way various media is purchased, or store locations. This difference will impact your CTRs, and therefore your quality score.

Ad copy: It may be hot in Florida and cold in Maine. There are also regional differences in what things are called, or ways things are talked about. The message in your ad copy could target these differences.

Here is some example data that demonstrates the differences we’re seeing for our clients. This difference has led to some eye opening conclusions and strategies that are being implemented in search campaigns, as well as throughout other media types.

State Profit Per Click
New York $0.25
California $1.23
New Jersey $0.75
Texas $0.86
Ohio $2.50
Maine $1.32
New Hampshire $0.23
Washington $0.42
Florida $1.01

To technically implement this strategy, duplicate any given campaign exactly as it stands today. For example, if you have a campaign called “Tennis Shoes,” copy it and call it “Tennis Shoes — New York” for targeting New York (or whatever geo-targeted region you like).

You can take two approaches with the original “Tennis Shoes” campaign. You can either remove New York or keep it national. I suggest you keep it national, so that those folks who can’t be identified geographically are still able to see your ad. This is especially important if that campaign is already working well, and allows your campaigns to maintain current traffic levels.

The only downside to this is the duplication of your keyword list. For example, if you were managing 200 keywords in your “Tennis Shoes” campaign, now you’re managing 400 keywords across both campaigns. This can add work to your bid management and reporting duties. However, the impact this can have to your campaign metrics should easily justify the slight workload increase.

Start slowly and think about the states or regions that will get you the most “bang for the buck.” For this strategy to work, you don’t even have to select a single state (although it makes it much easier for reporting and digesting the data). It can be a collection of states, regions, cities, etc.

The basic idea is to dive deeper than your keyword level, gain insights into how your campaigns are performing and optimize against that data.

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