This is a guest post from John Funk, an inbound marketing specialist for SevenAtoms, a digital marketing agency based out of San Francisco.

Pay-per-click (PPC) advertising is often considered the top way (or, at the very least, one of the top ways) for eCommerce stores to expand their customer base and increase their sales. And since every eCommerce store owner knows the potential power of advertising, it’s frustrating when you start investing money into ad campaigns and don’t see those great results you’ve heard about. 

Why do some stores seem to excel with advertising while others don’t? The reason could very well be that there’s a fatal flaw in your advertising campaign—one you haven’t recognized yet, but you’ll need to fix if you want your PPC investment to translate into sales.

In this article, we’ll explore five of the most common mistakes eCommerce stores make with their PPC campaigns that can seriously affect conversion rates—so you can correct those mistakes and start improving the performance of your advertising campaigns.

Many business owners and advertisers put up a PPC campaign without setting any specific goals or monitoring their results. The thought is: Why should I bother when I know the desired result is to get more leads and make more sales?

In order to create PPC campaigns that really work, it’s just not that simple. Sure, you want to generate leads and conversions, but keep in mind that not all leads are created equal.

The first step: You need to know who your ideal customer is and identify your target market. Let’s say you have an eCommerce business that sells car parts and you want to target owners looking for a certain model of transmission. In this case, your ads should include the exact keywords they would use when searching online for the product.

Here’s an example of some brands advertising specifically for Nissan transmissions.

Once you’ve zeroed in on your target customer and market, you should also take into account the particular aspect of your business your ideal lead is looking for (using the previous example, you would want to highlight transmissions in your ad copy, not air conditioning parts or novelty hubcaps).  

Now that you’ve taken care of all the fundamentals, you need to set goals: What sort of conversions are you hoping to see in this campaign? How many new visitors do you want to drive to your site, and what percentage are you hoping will convert? How much are you willing to spend on a daily basis and how long are you willing to spend that amount?  The key to a successful PPC campaign is setting specific, measurable, achievable, realistic, and timely (SMART) goals. Without those goals, you’ll have a hard time properly analyzing your performance.  

Simply getting additional leads is not enough. To accurately measure and assess the performance of your campaign, you need to know how many leads you’re getting, where they’re coming from, and what they’re costing you. 

Most advertisers use the Return on Ad Spend (ROAS) to measure the profitability of an ad campaign—but that only measures how much money you bring in for every dollar spent on advertising. It doesn’t tell you how much that customer is worth over the duration of their relationship with your brand. 

That’s why customer lifetime value (CLV) is one of the most important metrics to eCommerce stores—especially when it comes to paid acquisition. For one, CLV can help you develop strategies to acquire new customers while retaining current customers and maintaining your profit margins. It can also help you identify the most valuable customer segments to your company and help you spot early signs of attrition.

Once you know the lifetime value of a customer, you can better determine what to spend on a particular advertising channel, market, or campaign to achieve your long-term revenue goals. For instance, if our hypothetical car parts business is selling high-end parts typically bought by owners of luxury cars, and the business finds it has an average CLV of $400, it would be reasonable to target higher PPC ad bids and spend more to acquire customers. If, on the other hand, the business only sells discount spark plugs, the average CLV would almost certainly be lower—in which case, the ad spend needs to be lower as well.

CLV allows you to focus on the bigger picture; by knowing this metric, you can adjust your PPC bids accordingly to attract new customers and stay profitable.

A lot of things can go wrong if you don’t advertise on the right keywords—and there’s more to picking the right keywords than just haphazardly plugging in a few phrases that relate to your product and calling it a day.  Here are three other important things you need to keep an eye on when you’re refining your list of keywords.

Bidding on irrelevant keywords

A lot of business owners and advertisers who are new to the PPC game tend to bid on every keyword someone might use to find their business. After all, casting the widest possible net will bring in more leads, right? Not necessarily. In fact, having a small number of high-converting, well-targeted keywords can work a lot better than having a lot of keywords that don’t generate traffic or conversions. 

So, what’s the experts’ take on this issue? Most agree that if you are working with a limited advertising budget, you’ll be better off by using keywords with strong purchase intent. You can consider using broader keywords that target people in the earlier part of the sales funnel (those who are in the research phase) if you have a bigger advertising budget.

Bidding on your brand name

A lot of companies bid on keywords that include the name of their company thinking it will help them dominate the search engine rankings page and control their messaging for cheap. But, odds are, you’re already triggering organic search results and traffic on your brand name, so what’s the use of bidding on it? If someone’s searching for your brand name, they don’t need to see your ad—that’s just a waste of money.

Unless a competitor is bidding on your company name and directly addressing you in their ad, there’s no need for you to bid on your brand name. It’s better to spend your money on keywords related to your product or service.

Not maintaining a negative keyword list

If you want to get the best ROI for your ad campaigns, don’t forget to set your negative keywords. This is one of the simplest solutions that can help you save a lot of money when running a PPC campaign—but is a solution a lot of advertisers and PPC managers take it for granted. You worked hard to come up with a great keyword list, so don’t jeopardize your efforts by neglecting your negative keyword list.

What do we mean by negative keywords? When someone searches for those keywords, you  don’t want your ad to appear. This simple trick alone can help you avoid paying for not-so-relevant search clicks. 

For instance, this is a small portion of the negative keyword list for a PPC campaign executed for one of our clients, Seal Skin Car Covers, which sells custom-fit covers for vehicles like cars and jet skis. 

Some of these negative keywords are on the list because searchers are looking for items that Seal Skin doesn’t sell: car cover buttons, or covers for specific parts like car bumpers or Brembo brakes. Others are specific issues that aren’t relevant, like building your own car cover or an issue with car covers browning. And Seal Skin’s car covers certainly aren’t bulletproof.

By identifying irrelevant keywords and adding them to a negative keyword list, it allows you to target your customers with better accuracy, improve ad group relevancy, reduce unnecessary ad spend, avoid running self-competing ads, and improve your ROI.

It’s common for PPC ads, especially top-of-the-funnel ones, to lead directly to a site’s home or product pages instead of leading to proper landing pages. This can be a big mistake for two reasons. One, if a lead can’t find exactly what they’re looking for, they may be more likely to quickly leave the page. And two, you miss out on nurturing customers who aren’t ready to convert just yet.

This is a landing page we built for McEvoy Ranch, which sells organic olive oils, jams, and other food products. If someone does a Google search for “organic olive oil,” they might get a PPC ad that would lead them here. There would be no need for them to browse McEvoy Ranch’s product pages to try to find the item they were interested in—they could shop right there. 

For leads who aren’t ready to buy just yet, a landing page can instead offer them an option to sign up for your emails (something like “Want discounts and great offers? Sign up for our email list!”). Then, once you collect their email address, you can send a welcome email series and begin the process of nurturing that subscriber into a customer.

Additionally, landing pages can be used to:

• Monitor important metrics. You can use your landing page to track performance (e.g., number of views, average time on page, number of pages viewed, traffic source, conversion rate, bounce rate, etc.).
• Generate data and insights. Landing pages are a great tool for gathering more in-depth information about your target market and for improving your campaign strategies. What messaging worked? What layouts converted best? 
• Increase credibility. A well-designed and well-thought-out landing page shows that you understand a customer’s pain points or desires, and that you’ve gone to extra lengths to provide the best solution to their problem. You can further reinforce that impression by adding social proof in the form of testimonials or reviews.  

For best results, make sure each landing page matches the ad that leads to it. You should also ensure that it’s focused on a single action, has a simple design, and is optimized for SEO and mobile viewing.

You can’t set up a PPC campaign and expect it to bear endless sales by letting it run on its own; it doesn’t work that way. PPC campaigns should be constantly monitored, optimized, and adjusted to produce the best results. 

We recommend daily check ups on your campaigns. Be on the lookout for major issues like large increases in the number of clicks or cost-per-click, low click-through rates, and low converting campaigns. Also check for irrelevant search terms and non-converting keywords to add to your negative keywords list.

Once you’ve been monitoring your campaigns for a little while, you can then take the best-converting keywords, split them off into their own ad groups, and create new ads for split testing to optimize them even further.

PPC ad campaigns can be an extremely effective way to generate leads and sales—but, if you’re not careful, they can also run up a big tab and bring in minimal results. The latter scenario is far more likely to occur when there’s a fundamental flaw in your campaigns. So make sure to clean up these five major mistakes to get the best return on your advertising investment.

• Not setting or tracking goals. Just saying, “My goal with this ad is to sell more products” isn’t enough. You need to identify your target customer and audience, then set specific goals around how you’re going to use each ad campaign to sell to them.
• Not knowing the value of a lead. You need to know the lifetime value of a customer in order to properly set your advertising budget and assess the performance of a campaign.
• Not paying attention to keywords. If you’re working with a smaller budget, make sure you only use keywords that indicate purchase intent. Also, don’t spend unnecessarily by advertising on your brand name. And maintain a list of negative keywords so your ads only appear for the correct searches.
• Not using landing pages. Landing pages are a great tool for converting sales, or for capturing email addresses from interested leads who aren’t quite ready to buy yet. So direct your ads to a landing page, not your eCommerce site’s homepage or a product page that’s not optimized to convert.
• Treating campaigns as set-it-and-forget-it. PPC campaigns need constant monitoring, tweaking, and optimization. If you don’t take the time to actively monitor them, you won’t get the best results.

These PPC mistakes might be costing you a lot of money. So, if you want to cut your losses, create winning campaigns, and get the most out of your marketing dollars, here’s what to do instead.