There’s been a lot of talk about long-tail keywords in pay per click (PPC). You could say it started in the entertainment industry with Chris Anderson’s influential Long Tail article in 2004, but it wasn’t long before the concept became mainstream among search marketers.

Long-tail keywords are those low-volume, obscure, infrequently searched-for keywords that turn up in your search query reports. ‘Cheap remortgage for bad credit history’ is one example of a long-tail keyword. ‘Remortgages’ is not.

The theory goes like this:

• Long-tail keywords, en masse, can provide significant search volume (high impressions)
• Long-tail keywords have less competition than generic keywords (lower cost per click (CPC), higher click-through rate (CTR))
• Long-tail keywords are more specific than generic keywords, so ads can be better tailored to match the searcher’s needs (higher CTR, higher Quality Score, less wastage from irrelevant searches)
• People making long-tail searches are often further along in the buying cycle and more willing to buy than people making generic searches (higher conversion rate)
• These lower CPCs, higher CTRs and higher conversion rates mean long-tail keywords can be extremely profitable (lower cost per acquisition (CPA))

So are long-tail keywords all they are cracked up to be? Are they worth all the time, effort and commitment they require?

In short: yes.

Over the course of this article you’ll see exactly how search volume, CTR, CPCs, average position, conversion rate and CPA differs for searches containing different numbers of words, and how long-tail keywords can benefit your business immensely. Using three months of real Google AdWords campaign data, you’ll see that long-tail searches outperform generic short-tail searches on almost every measure, and provide a great opportunity to connect with customers which is generally not being taken by the majority of advertisers.

1. Search Volume (Impressions)

Let’s start with search volume. Do people make long-tail searches in any meaningful volume?

Look at the example below. Although 1 and 2-word searches may be under-represented in the example (the account has a natural bias towards keywords of at least 3 words), it is clear that as the number of words in a search query increases beyond 3, the number of searches made using that that number of words falls.

This isn’t surprising. You would of course expect search volume to drop as searches start becoming obscure and lengthy. It is little surprise that more people are making shorter searches such as as ‘cheap televisions Brisbane’ (3 words) instead of longer searches such as ‘low cost Sony Bravia television shops in Brisbane’ (8 words).

What is worth noting, however, is the power of these long-tail keywords en masse. Added together, searches of 5 words or more accounted for 21% of all impressions. While long-tail keywords may be individually insignificant, a PPC campaign with thousands of long-tails can be a serious source of additional traffic.

Fact: Long-tail searches have significant search volume

2. Click-Through Rate (CTR)

Another common belief among search marketers is that click-through rate (CTR) is higher for long-tail keywords. Their reasoning being:

1. Long-tail keywords have less competition, so there is a higher chance someone will click your ad
2. Long-tail keywords are more specific in their requirements, so you can write a more targeted and relevant ad to encourage the searcher to click

While the first point is perhaps rather tenuous (Google’s broad-matching mechanism often sends long-tail searches to advertisers’ short-tail keywords), the second point is definitely true. If someone searches for ‘cheap Sony Bravia 46 inch televisions’, and your ad mentions the words ‘Sony Bravia’, ’46 inch’ and ‘televisions’, perhaps with latest prices for that model, it makes sense that your ad will be more appealing than a generic ‘Sony televisions’ ad.

Let’s have a look at CTR for searches of different word counts. While searches of 1, 2 and 3 words have a relatively low CTR, CTR appears to increase significantly for searches of at least 4 words. CTR, it seems, is considerably stronger for long-tail keywords.

Fact: Long-tail keywords can achieve a higher CTR, as long as ads are tailored to the search query

3. Cost Per Click (CPC) & Average Position

Many search marketers also believe long-tail keywords are cheaper. They have less competition, fewer people bidding on them to drive up their prices, so CPCs will be kept relatively low.

So are long-tail keywords cheaper than generic keywords?

To answer this question, it is important to bring average position into consideration. Since CPCs and ad rankings are closely connected (a higher CPC typically means higher ad ranking), both average position and CPCs need to be considered together.

First, let’s look at CPCs. For searches of 13 words or more, CPCs do tend to be cheaper. For searches under 13 words, however, CPCs tend to be very similar. A 9-word search query costs pretty much the same price as a 4-word search query. CPCs do fall very slightly as word length increases from 3 to 12 words, but I would hardly call that significant.

Now let’s look at average position (a higher bar represents a higher ad ranking). For 1, 2 and 3-word searches, ad ranking is relatively low, and ads are appearing near the bottom of the first page. As word length increases, however, ads are shown significantly higher. They are appearing in the top positions.

So although CPCs were relatively similar for searches of all word counts, long-tails were often shown in a higher position.

When you think about it, this makes perfect sense. When you set a maximum CPC bid for each keyword, Google will show you as high as possible without going over your maximum bid. If long tail keywords are cheaper, Google won’t necessarily charge you less. It is in their interest to charge you as much as possible, so they will instead keep your CPCs close to your maximum bid but show you in a higher position.

Fact: Long-tail keywords are cheaper for the same ad ranking, or the same price for a higher ad ranking

4. Conversion Rate

So we’ve seen that long-tail keywords have a significant search volume. They exhibit a strong CTR and are often cheaper than their short-tailed rivals. But clicks are no good if people don’t engage with your site or part with their cash. It’s often conversion that really matters.

So are long-tail searches more likely to convert?

Many search marketers seem to think so – their reasoning being that people who make longer, more specific searches have already done their research and know exactly what they want. They are further along in the buying cycle so are more likely to open their wallet.

Let’s have a look at conversion rate for searches of different word counts.

It’s a pretty convincing trend. As the number of words increases, so does conversion rate.

Fact: Long-tail keywords have a higher conversion rate

5. Cost Per Acquisition (CPA)

Finally, what does this mean for CPA, profitability, return on investment (ROI)? Is it cheaper to acquire a customer through the long-tail?

Let’s have a look at the CPA column.

Again, there appears to be a clear trend between word count and CPA. Conversions from long-tail searches seem to be cheaper than conversions from generic, short-tail searches.

And it’s not just one or two conversions which are coming through long-tail searches, either. Remember how long-tails of 5 words or more accounted for 21% of all searches? Well, those 21% of long-tails generated a massive 40.5% of all conversions.

Fact: Long-tail keywords have a lower cost per acquisition and can be extremely profitable

Long-Tails Are Your Friend

As we have seen, the benefits of long-tail keywords are many:

1. Significant search volume
2. Higher CTR
3. Cheaper CPCs (or higher ad ranking)
4. Higher conversion rate
5. Lower CPA

Quite simply, they outperform generic, short-tail keywords on every measure.

Don’t get me wrong, long-tails shouldn’t replace your short-tail keywords. Short-tails, if used wisely, are great for building interest and awareness at the early stages of the buying cycle. Your long-tail keyword strategy should complement your short-tail strategy.

So by all means continue showing on your high-volume keywords – after all, they may be your bread and butter that keep your business afloat. But the next time you work on you AdWords account, spend some time researching relevant long-tail keywords. Try to think what people are actually searching for and use keyword tools to help. Structure your keywords into closely-themed ad groups and tailor your ads and landing pages to cater for these specialised long-tail searches.

Your Moment to Shine

Of course, researching thousands of keywords and structuring them into hundreds of closely-themed ad groups, each with tailored ads and landing pages, is by no means easy. It will take considerable time, effort and dedication, not to mention the many hours of keyword and search query analysis, ad group expansion and ad copy testing once your keywords are live.

But think about your target audience for a minute. They are calling out for someone to meet their needs in a personalised and relevant way. It’s the age of social interaction, and people are sick of seeing generic ad after generic ad. And despite many advertisers claiming they are “doing this already”, consumers are not currently getting a personalised and relevant service (see Relevancy: The Holy Grail of PPC).

If you can be the advertiser who understands your audience using search query analysis, if you can cater for their individual needs with relevant ads and landing pages, if you can be the one who makes a mark in your industry, customers will reward you with their wallet. It’s your opportunity to stand out from the competition. So take it.

Daily campaign budgets in Google AdWords are great. You simply enter the maximum you want to spend per campaign per day, then sit back and relax, safe in the knowledge that your monthly Google bill will not cause any nasty surprises.

But despite the reassuring nature of campaign budgets and the ease at which they can control your spending, they should not be used to control your spending. Instead, cost per click (CPC) bids should be your tool of choice for spend management.

More clicks, no extra spend

To understand why, suppose the daily budget for one of your campaigns is set to $100/day. Each click costs you $1.00 and your ads are showing in position 3.0. Your daily budget of $100 is being hit, so you receive 100 clicks/day.

Since your campaign is reaching its daily budget, your ads are not showing for all eligible searches. Depending on your campaign ad delivery settings, either your ads are not showing later in the day (accelerated delivery), or they are only showing intermittently (standard delivery). In either case, you are missing out on potential customers.

Now suppose you were to reduce your bids by 25%. Your average cost per click drops to $0.75 and your ads are now showing lower down in position 5.0. But since your ads are now appearing throughout the whole day for all eligible searches, you receive more clicks. Instead of 100 clicks, you now receive 120 clicks. Daily spend is now $90 (under your budget of $100).Ceteris paribus, reducing CPCs for campaigns which hit their daily budgets is likely to give you more clicks for no extra (or possibly less) spend. That’s more visitors, for no extra spend. Assuming that all clicks are of equal value to your business, and average position does not affect your conversion rate, these extra clicks are likely to mean more sales and a higher ROI.

More clicks, same CPCs

Alternatively, leaving CPCs constant and instead increasing your daily budget, will likely result in more clicks for the same average CPC. That’s more visitors, more potential customers, without paying a higher per-customer premium (CPC) for the privilege.The bottom line is this: campaigns which hit their daily budgets are inefficient.

For this reason, it is important to check on a regular basis that each of your campaigns are well within their daily budgets. If you notice any of your budgets are being reached, or ore close to being reached, alarm bells should start ringing.

Check your budgets

One simple way to keep on top of daily spending is to log in to Google AdWords, select ‘yesterday’ as the time period and compare the ‘cost’ and ‘daily budget’ columns for each of your campaigns. If any of your campaigns are hitting – or are close to or hitting – your daily budgets, either increase your budget (if extra spend is financially viable), or reduce your CPCs.

A more comprehensive approach, which looks at campaign costs a longer time period, gives you a better understanding of daily trends. By looking at a month’s worth of data (instead of just ‘yesterday’), you will be more informed and better equipped to make changes to your CPCs and budgets.

Download a campaign report

Log in to Google AdWords and create a new report. Select ‘campaign performance’ as the report type (since daily budgets are set at campaign level), select ‘daily’ as the unit of time and enter a date range such as ‘last 30 days’. In ‘add or remove columns’, ensure ‘daily budget’ is ticked. Leave all other options as default. Run the report, and export it to Excel.

Identify overspend

Once you have the report in front of you in Excel, create a new column to identify the percentage of budget spent by each of your campaigns each day, such as in the example below. Once you have done this, you will then be able to see how close each of your campaigns came to its daily budget.

Suppose you are a retailer of European holidays. You have two campaigns – one for Venice and one for Amsterdam. Both campaigns have a daily budget of $100.Looking at the % spent column, it is clear that the Venice campaign is regularly reaching its budget. Reducing CPCs for Venice keywords would likely result in more clicks for no extra (or possibly less) spend.

By all means continue to set daily budgets to protect against freak spikes in traffic which you cannot afford, but make sure CPCs – rather than budgets – are your primary tool for spend management.

Summary

When you notice any of your campaigns regularly hitting daily budgets, ask yourself a few questions:

1. Are you achieving less than satisfactory results from your current AdWords spending? If so, reduce your CPCs – you will likely see more clicks for no extra spend.
2. Are you achieving satisfactory or good results? Do you have extra funds available for AdWords? If so, increase your daily budgets – you will likely see more clicks for the same CPCs.

Either way, it’s a win-win. You will either get more clicks for the same budget, or more clicks for the same average CPC. Effective spend management is essential for a performing PPC campaign, so make regular budget checks a priority.