The Iceberg Effect in Marketing
We know that you usually don’t see your Pay-Per-Click (PPC) campaigns as a critical issue. But you should know that lots of your conversions and earnings are being lost in the depths of what we will call the Iceberg Effect in your campaign.
If you have seen Titanic you will know why icebergs are so dangerous. And you can imagine why you would want to avoid crashing into one during your smooth sailing towards your goals and earnings.
What Is The Iceberg Effect?
Let’s start simple. Imagine an iceberg. Every iceberg has two parts one above and one below the surface. Now visualize your campaigns. The part above the water symbolizes your keywords. And the part below the water symbolizes the search terms that people do.
Now let’s see what actually is the Iceberg Effect when it happens? The Iceberg Effect happens when what you see above the surface in your campaign isn’t the same as the one beneath the surface.
Know that you’ll always have more Search terms than Keywords. You know that you control your keywords because you set them. But do you know how to gain control over the search terms?
Here is one example of what we talked about so far:
You’ll always have more Search terms than Keywords.
Do you notice that there is only one keyword, but so many different search terms? You want to avoid that. Mind that the keywords you bid on are not what you’re paying for. Your search terms are what you’re actually paying for.
To gain control over your search terms, you should make sure they match your keywords.
How to make sure you “Pay For The Right Search Terms”?
Remember how in the previous picture the Keywords and the Search term were completely different. Knowing that there could be one Keyword with countless Search terms and the fact that you pay for are your search terms, you can analyze better the example.
You can see how in this example the advertiser thinks he is paying for clicks from the keyword “file for bankruptcy.” But what he is paying for is the different Search terms with insanely different conversion intents — how much does it costs to file bankruptcy; buying a house after bankruptcy; filing bankruptcy for student loans; what is chapter 7 vs 13; bankruptcy attorney; bankruptcy attorney reviews; filing bankruptcy for llc; bankruptcy attorney orange county.
Do you think all these Search terms convert at the same level as the ‘file for bankruptcy’ keyword that was being bid on above the surface? Of course not!
And this is the Iceberg Effect. This is how most of your Google Ads strategies are being ruined or prevented from reaching their full potential.
What you should remember is that the Iceberg Effect is obtained by making a ratio between what you usually can’t control (the Search terms) to what you can always control (the Keywords). The end goal you should have is to achieve a ratio as close to 1:1 as possible.
Different Keyword Match Types
When creating a text ad in your PPC campaign, you can select among a few match types: exact match, phrase match, broad modified match, or broad match. Each match type in your Google Ads account has its advantages and disadvantages. But let’s see what do the different types have to do with the Iceberg Effect and its size.
- Broad Match = causes the biggest iceberg of all types;
- +Broad +Match +Modifier = causes smaller iceberg than broad match;
- “Phrase Match” = causes smaller iceberg than the previous two;
- [Exact Match] = causes the smallest iceberg of all.
But before we start getting into how to avoid the Iceberg Effect we should check what are the cases with your: Paid social ads, Display campaigns, and other forms of PPC that can suffer from the same type of issue.
The Iceberg Effect in Display PPC Campaigns
When it comes to regular Display campaigns (like in Google Ads, for example), you have many options and tools to add more specific targeting. The more specific targeting will add additional layers that will define your audience to the level you want.
Imagine your targeting like a sandwich.
The more layers your target has the smaller your audience gets. But that’s the whole point, right?
So the thing is that even if you add multiple layers to your Display campaigns, your automatic placements (below the surface) will most likely be bigger than your predetermined targets (above the surface).
Here you may notice that in the examples above, Gmail, YouTube, and regular URL placements add up the ad dollars spent.
And perhaps you wouldn’t even bother looking deeper since the cost per conversion is within your goals across those placements (all conversions are around $4 or less).
But what if those Automatic placements all performed differently on the end-sales side (the point where you’re making money)?
Facebook and Twitter Campaigns and The Iceberg Effect
The Iceberg effect is worse for social media platforms. Let look jow it affects Facebook and Twitter.
In it, you can target in an “OR” or “AND” fashion. That means you can either reduce your audiences by adding more and more targeting requirements or you can bet on a very wide audience.
No matter which way, you choose, remember that the different requirements that you add all have simple performance metrics above the surface but always perform differently below the surface.
Having that in mind our suggestion will be to consider separating your campaign targeting without making your audience segments too small.
Here the Iceberg Effect can accumulate over time.
You need to start by creating a big-enough audience to get traffic. First, you do that, then you can start chipping away the ice from the iceberg undersurface in order to improve your PPC performance.
In Twitter just like in Google Ads, you can break down your bigger audiences into smaller ones to achieve the 1:1 Iceberg ratio you aim for.
The “Universal” Iceberg Effect
As we already said the Iceberg Effect is the negative effect of advertisers not breaking things down into simpler terms.
So it is time to talk about the universal icebergs that you have to consider and that they are always there no matter the platform.
These icebergs are:
Day of week: Depending on your industry, each day of the week can perform remarkably different than another
Geography: Where your visitors are physically located. Each country will perform differently, and each city within it will also perform differently.
Hour of the day: Each hour within the day performs differently. You’ll find that certain hours of the day are better at targeting compared to others.
Device: The devices your visitors are using also perform differently when it comes to conversion rates and cost per conversion.
One more thing to keep in mind as you break down your Google Ads strategy across your PPC campaigns. Changes in conversion rates (from conversion optimization tests), impact predetermined bidding rules you may have set for the universal icebergs above.
If you can increase conversion rates on your landing pages, you can positively impact your universal iceberg bidding rules and may discover more opportunities to improve your campaigns.
The Iceberg Effect in Sales
To take it one step further, your SaaS or lead gen marketing efforts are even more misleading than what you might think.
Take the Keyword performance example below:
On the surface (and depending on what type of conversions you’re tracking), Keyword 1 is performing better than the other Keywords, since it has the lowest cost per acquisition (CPA).
But if you look at the sales rates, things change.
You might think that all of your keywords are doing great. But if you look deeper you will find that only a few of them are making you money. And after earning money is the goal it makes sense for you to start looking deeper in order to decrease the size of your iceberg.
That will lead to:
- Improving your sales funnels;
- Spending less money on advertising;
- Taking your ROI higher than ever.
The secret strategy you want to know…
You already understand what is the Iceberg effect, why it happens, and that it happens no matter what advertising platform you use. So it is time to give you a clear strategy on how to avoid it and how to get that golden 1:1 ratio.
All you have to do is decrease your Search term to Keyword and Automatic placement to targeting discrepancy.
Or even more simply said start making smaller ad groups with smaller targeting criteria.
To achieve that, you have to generate Single Keyword Ad Groups (SKAGs) by extracting Search terms and creating individual ad groups for these keywords.
The more segmented way you build your campaigns, the better. This isn’t just going to allow you to control the size of your iceberg, it will fundamentally improve your entire Google Ads strategy: Cost-Per-Conversions, Cost-Per-Clicks, Click-Through-Rates, and Quality Scores. Imagine how cool it will be when your Search term report starts looking like this:
And finally, when building your strategy and sorting your keywords we advise you to focus on adding the appropriate exclusions in your campaigns.
Once you find which demographics or interests aren’t performing well, you shouldn’t forget to add them as exclusions. Or you can create smaller audiences that don’t include targeting criteria that aren’t performing well.
In Conclusion…
We hope our article was useful. Now you know:
- What is the Iceberg Effect;
- What are you paying for when setting your campaign;
- The different Keyword Match Types;
- How the iceberg Effect, affects your Search, Display, Facebook, and Twitter ad campaigns;
- What are the universal Iceberg effects;
- Iceberg effects and how it affects your sales.
And of course, the strategy that will help you avoid the iceberg. With that information, you are fully equipped to have smooth sailing toward your goals. Now is the time for you to apply what you learn in practice. Don`t wait. Improve your strategy today.
Originally posted on https://marketingtime.net/the-iceberg-effect-make-sure-your-google-ads-strategy-isnt-slowly-drowning/
