Why we Built Segments
We built "Segments" to help you quickly identify the sections of your Adwords account that are doing particularly well and those that doing particularly poorly, as measured by CPA.
Before segments, you had to use Adwords' native "Dimensions" tab. But only a few dimensions were available and useful, and you had to calculate each CPA and how it compared to your CPA targets. Getting sub-segments of a segment was only possible via downloading an excel report and building a pivot table in Excel. You needed to be motivated and you needed to know specifically what you wanted to look at.
There was no easy way to explore CPA performance across various dimensions of your account.
Now, with segments, you'll immediately discover where to strategically reduce spend and where to allocate time & budget in your account so that you can grow conversions and reduce CPA.
These are the segment types we look at currently:
- Hours of Day
- Day of Week
- N-Gram "Root words": Top words, pair of words and trio of words found in search queries (a good explanation of what this is here.)
How to read the the graphs
Here, we're looking at the "Campaigns" segment type.
Each segment (colored block) represents a campaign in your account. You can hover over a block to see which segment (in this case, campaign) it is.
Here, there are 17 blocks in total, which means there are 17 campaigns. The length of the block represents its cost over the last 90 days. A big block means this segment represents a large portion of your account's cost.
A segment's color and position on the Y axis represents its "distance from the target CPA". So if a segment is at the top in the -40% green category, that means that its CPA is -40% or less than the target CPA -- it's a very efficient segment and you should look to grow it! (for example by expanding the KWs in that campaign and/or by increasing budget and bids.)
Inversely, if a segment is in the red +40% category, that means that its CPA is 40%+ higher than the target CPA. You should look to make that campaign more CPA efficient (for example by reducing bids, or pausing KWs entirely.)
If a segment is in the dark gray +/-10% category, it means that it's CPA is roughly in line with the target CPA -- it's between -10% lower and 10% higher than the target CPA.
If a segment is in the light gray "0 Conv." category, it means that it doesn't have any conversions and thus doesn't have a CPA. Note that if you see a very long bar in this category, that's a red flag -- it would mean a segment has a lot of spend, and no conversions -- that's probably not a good thing!
What the columns of the tables mean
This is the name of the segment. In the example above, it's a campaign called "Adwords automation". Pretty self explanatory :)
The cost of that segment over the last 90 days. In the example above, the campaign "Adwords automation" spent £1,064.84 in the last 90 days.
The number of conversions in that segment over the last 90 days. Note that the conversion types we include in "Conversions" is set in your campaign group settings. By default, we include all "include in conversions" conversion types.
This is the target CPA of the campaign group. If you haven't set a target CPA for this campaign group, we'll use the average CPA of the account. You can modify campaign groups and target CPA(s) in your client's client settings.
This is the CPA of the segment over the last 90 days. The calculation for CPA is: Segment Cost / Segment Conversions. In the example above, £1,064.84 / 15 = £70.99. The conversion types used are defined by your campaign group.
“Difference” is calculated with the following formula: (Target CPA - Segment CPA) / Target CPA. This represents the % difference between the segment’s CPA and the target/average campaign group CPA. In the example above, we can see that the segment's CPA (£70.99) is -21.08% lower than the CPA target (£89.95).
A negative -XX% difference (green) means that the segment has a CPA that is XX% cheaper (better) than the campaign group average/target. A positive +YY% difference (red) means the segment is YY% more expensive (worse) than the average/target. A gray ZZ% difference, means that the segment’s CPA is roughly in line (+/- 10%) with the average/target.
Note that this profit metric isn't really going to reflect your actual, real-life profit. Instead, it's a blend of CPA and conversion volume designed to help you quickly gauge the "importance" of a segment.
“Profit” is calculated with the following formula: (Target CPA - Segment CPA) * Segment Conversions. “Profit” is a measure of how much money you’re earning/losing in a segment.
For a true Profit/Loss measurement, set your Target CPA to your break-even point. Your break even point is the amount per conversion when you make $0 profit. So if you sell widgets for $50 and after costs of $30, you make $20 per widget, your break even point is $20. If you pay Adwords $20 per widget sale, you make $0.
You can modify campaign groups and target CPA(s) at any time in a client's client settings.
To illustrate how profit/loss works, *pop quiz!*
Q: Which is better given a target CPA / break even point of $50: 10 conversions at $40 CPA, or 6 conversions at $30 CPA?
It's hard to tell right? You can tell by calculating "profit":
10 conversions at $40 CPA: profit = ($50 - $40) * 10 = $100
6 conversions at $30 CPA: profit = ($50 - $30) * 6 = $120.
A: So 6 conversions at $30 CPA is better.
Drilling down into a segment
By clicking a segment, you can drill down and identify the sub-segments and their performance within that segment. For example, we can click into our "Adwords automation" campaign to reveal the available sub-segments.
Here we can see that within the "Adwords automation" campaign, the search queries containing the word "adwords", "automation" and "automated" are doing well, but those that contain the word "google" aren't interesting. Overall, we should expand keywords in this campaign but avoid using the "google" in them.
The Left-hand sidebar
At the top of the page, you'll see an option to see the summary of your best and worst performing segments. Click them to jump to more detail about them!
We hope you love segments and that it acts as an easy way for you to improve your account!