Calculating Seller Rating Extension ROI

TL;DR

Seller Rating Extension ROI is right there in your account, if you know where to look. Our client got a very nice boost from them – enough to warrant the cost of their review aggregator, TrustPilot. CPCs appeared to be higher for SREs, but don’t be fooled. It’s our belief that those higher CPCs are the result of Google choosing to only show SREs on your higher CPC/position terms.

Our Case Study

One of our top clients is Twiddy and Company. They are the premier vacation rental company in the Outer Banks of North Carolina and have been in business for 40 years. They have been running Seller Rating Extensions (SREs) for almost a year now, so we examined if the additional cost of their aggregator (TrustPilot) was worth it. In order to determine if TrustPilot was worth continuing, we’d need to know the following about ads with SREs vs ads without SREs:

  • Clicks, impressions, & cost between SRE and non-SRE ads.
  • CTR difference between SRE and non-SRE ads
  • CPC difference between SRE and non-SRE ads
  • Revenue and Revenue/Click difference between SRE and non-SRE ads
  • Cost of running TrustPilot

** A note on the numbers: the CTR and CPCs listed below are accurate, but clicks, impressions, and dollar amounts have been edited in a way that maintains the ratios and conclusions, but the absolutes are different from reality.

While it requires a small amount of work to find, most of this data is available in your AdWords account. You can find the information by going to Ads & Extensions -> Automated Extensions -> Seller Ratings. This Seller Rating table will show you the stats for all ads in your selected account, campaign, or ad group that showed a SRE. Please note that you cannot get this information on a keyword by keyword basis (unless you break that keyword into its own campaign or ad group).

In order to figure out the performance for ads that didn’t show a SRE you’ll need to subtract the SRE data from the total data. It was a bit surprising that Google doesn’t break this out for you automatically – perhaps in a future release – so we calculated it manually.

Real Life Example

For this client’s primary campaign we saw the following results from 1/1/18 – 10/31/18:

*values in green are representations of what the client actually achieved. CTR and CPC are accurate. Rev/Click improvement, as a percentage, is accurate.

There’s a lot of juicy data here:

  1. SREs were shown with 60% of ads in this campaign
  2. Ads with SREs had a relative CTR increase of 16% (8.59% vs 9.95%)
  3. Ads with SREs had a relative CPC increase of 43%! ($2.14 vs $3.06)
  4. Revenue/click was 17.5% higher for ads with SREs.

What if we hadn’t run any SREs at all?

Here’s a look at the same table that attempts to estimate the results had we not run any SREs. It applies the non-SRE CPC and CTR to all 416k impressions:

If we hadn’t run SREs we would have received 3,397 fewer clicks, and spent about $29,000 less on ads for the period, assuming that the $2.14 CPC for non-SRE ads held. While not represented in the table, we also would have received much less revenue – enough to make SREs (and their corresponding apparent higher CPC plus the cost of the review aggregator) not worth it.

That CPC difference just doesn’t make sense to us though. SREs are improving CTR substantially, and Google should reward us for that – not penalize us. Right? Why charge advertisers 43% more per click to run a Seller Rating Extension? The answer, from our perspective anyway, is that they aren’t.

So why are CPCs so much higher on SREs?

Google has a secret sauce for showing SREs for ads (we had SREs show for 60% of our ads, but not all, and there’s no easy explanation as to why not), and actual CPC paid is likely part of it. Position in the auction could also be a part of the formula. Perhaps Google doesn’t want to increase CTR for low-CPC and/or low position ads. Doing so may ultimately lower Google’s revenue per auction. Therefore if a client’s bid isn’t enough to put it in the top 1 or 2 revenue generating slots in the auction, Google would be disinclined to show your SRE. Increasing CTRs on the highest CPC or highest position ads makes sense for Google however, so it stands to reason that there’s some type of threshold that needs to be met for your SRE to show. Our Google rep was very helpful while we did this study, but was not able to confirm nor deny our theory.

We did a little more digging. Ads with SREs accrued 24,882* clicks during the period, and ads without SREs accrued 14,325*. After sorting all keywords by descending actual CPC, we looked at the top ~24,882 clicks’ worth. The average CPC for those keywords was $3.18. The remaining keywords, of which there were about 14,000, had an average CPC of $1.83. That doesn’t line up exactly with our figures – $3.06 for SREs and $2.14 for non-SREs – but it’s pretty close.

In our view then, it’s not SREs that are increasing the amount you pay when your ad is clicked. It’s that SREs have inherently higher CPCs because SREs only show on your higher CPC terms. Our client would likely have spent the same $3.06 CPC on those clicks even if those ads didn’t have SREs showing.

*again – not real numbers.

Verdict

Seller Rating Extensions were a big win for this client. They increased our client’s CTR and revenue per click numbers substantially. This lead to 9% more clicks during the period, and about 21% more revenue. The optics of an increased CPC for SREs are likely due to Google’s apparent tendency to only show SREs alongside high CPC keywords in the first place. The additional revenue more than made up for the cost to use TrustPilot.

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