The Iceberg Effect: How to Stop Your Ad Spend From Melting Away

May 22, 2021
6 mins read

As we know, Pay-per-click (PPC) is a really valuable marketing tool for any business looking to grow. But if you’re not careful with your keywords, you might see your campaigns sinking faster than the Titanic. And in the vast sea that is ad performance, the waters are murky and the icebergs are unavoidable.

Cue the violin,s because we’re about to take a deep dive into why your PPC ad campaigns might not be staying afloat.

The iceberg effect occurs in PPC campaigns when your bidded keywords target more search terms than are relevant to your ad. It’s basically the result of when a PPC campaign’s criteria bring too many irrelevant users to an ad.

When you bid for keywords, you need to think about what someone might search for to get to your ad. The iceberg effect is your bidded keywords’ ratio to the search terms people used to find your ad.

The end goal is to reduce it as much as you can, 1:1 being the ideal.

But what you might not know is when you bid on keywords for a Search campaign, you’re really paying for search terms. That’s how users find you, after all.

And this is how the icebergs start to form. Because while you’re focusing on what’s happening above the surface, it’s what’s under the surface that is making the biggest impact. Digital advertising is sink or swim.

Imagine you are Rose in the sea clinging onto that door, and Jack is the segment of irrelevant people finding and clicking on your ads. While you might want a lower CPC (cost per click) and therefore want to keep that hunky man (people clicking on your ads) alive, your campaign is actually better off without them. They won’t serve you in the long term because they’re not necessarily relevant to your demographic.

But why?

For every keyword, there are loads of search terms attached to it. And the broader the keyword, the more likely more people are to find your ad. But then what happens is you allow for more random search terms being attached to the keywords you so carefully curated within your ad groups.

A high CTR (click-through rate) is irrelevant if none of those people are part of the demographic you’re meant to be targeting.

So then, a big chunk of your ad spend (your CPC) is being wasted on the wrong people. And even if more people click and reduce that CPC, you’re not actually saving money because you’ll probably have to run multiple campaigns to even achieve an ROI.

It’s tricky to navigate.

Like the Titanic, you can’t steer clear of icebergs within PPC ads.

But by making the ‘icebergs’ as small as possible, you’ll have a much better chance of converting clicks to customers and increasing your ROI.

So the end goal is to create more small ad groups that allow for more audience segmentation and more precise, simple keywords.

Even if your keywords seem to be doing well, they could actually be wasting your money under the surface. It’s vital that you break down your ad groups into smaller pieces and exclude the demographics that aren’t performing well. You can do this by A/B testing different keywords and their match types, especially when you’re dealing with longtail keywords.

Exact keyword matches create the smallest icebergs.

From there, phrase matches are the second smallest.

Broad + Match + Modifier match types give you the third smallest iceberg.

Broad matches give you the biggest icebergs. And they are precisely what you want to avoid. They allow for way too much variation, and you’ll see that a lot of the search terms used to find your ad won’t align with what you’re selling.

So let’s say you’re selling cake.

Your keyword might look something like ‘London cake bakery’ as your exact keyword. But creating a keyword using ‘London + cake + bakery’ might give you many more strange or irrelevant results, like:

Cake bakery tutorial

London bakery bread

London bake Bakery reviews

London cake baker

London bakery delivery

Tower of London cake
Bakery cake ingredients

How to make a bakery-style cake at home

London cake bakery GBBO

Best bakery in London

Bake off cakes

While some of these Search terms might be relevant to your ad, many won’t be. So you run the risk of your ad getting a lower conversion rate with the match type you chose.

For Google Ads, SKAGS (single keyword ad groups) are like ice picks. They’re one of your best chances of chipping away at unnecessary clicks.

To create a SKAG, you’ll need to try keyword extraction to pick out individual keywords for a few different ad groups.

Rather than having 20 words in an ad group, you create variations for a single keyword in one ad group. With smaller ad groups, you can make more exclusions using negative keywords. This will help to focus the search terms that direct someone to your ad. This way, you get as close to an exact match as possible while still allowing for some flexibility (so that people can still find you). SKAGs can be tedious, but if you’re running a campaign with lots of similar keywords, it’ll pay off.

By implementing SKAGs into your campaign optimisation, you can better focus your Google ads strategy. Your goal should be to get your keywords to match the search terms used to find your ad.

It does take a bit of trial and error. But with time, knowing what negative keywords to use as exclusions becomes key.

Audience segmentation in Display campaigns is kind of like baking a cake. The more layers there are, the more delicious the cake will be for your customers.

Things like interests, language and demographics all contribute to your ad targeting the right people. The larger the cake, the smaller and more segmented and focused that audience is.

They really want or need whatever it is you’re baking. This is exactly what you want out of a Display campaign: to find the right people, increase CTR and, in turn, your return on investment.

But Search and Display ads aren’t the only things you have to look out for.

Social ads, like Facebook Ads and Instagram Ads, can be affected even more negatively by icebergs.

With Facebook, for example, you have to decide what to target based on ‘AND’ or ‘OR’. So it’s tough to have an exact match with your keywords. It’s a balancing act between increasing your target audience and adding more target requirements. Grow your audience too much, and you run the risk of wasting ad spend. Be too specific, and you might struggle to get the CTR you want.

Instagram uses the same granular control as Facebook, meaning you can narrow down the demographic that is shown your ad. A more specific audience for your ad, though, means that you run the risk of having a pretty high CPC and because Instagram takes the same data as Facebook, you won’t necessarily achieve more conversions with one or the other.

But, Instagram allows you to choose what kind of result you want your ad to achieve: reach, engagement, conversions, and lead generation, to name a few.

In any digital ad campaign, you are going to encounter icebergs that might not shrink at your will, no matter what kind of campaign you run.

-Geography: If you’re targeting a global audience (or one that’s very large), you’ll have a lot more variance in how much visitor interaction occurs at any given time.

-Device: Mobile vs PCs have different kinds of conversion rates. Are visitors more likely to convert when viewing the ad on mobile or PC?

-Day of the Week: Different platforms have better performance on certain days, which might make some of your visitors less or more likely to click on your ads.

But again, you can shrink these as best you can by increasing your conversion rates on your landing pages and keeping your keywords as simple as possible.

This all might seem a bit overwhelming, but at the end of the day, it’s about simplifying your campaigns. Your heart (and your campaign) will go on, so long as you make sure to dip your toe in the water and see what’s happening below the surface.

And don’t forget to grab yourself a slice of cake.

If you’re still unsure how to best optimise your digital marketing strategy, we are here to help. At Growthcurve, we know growth marketing inside and out, making us experts in PPC campaigns. We love combining innovative ad-tech with a thorough marketing strategy to create amazingly effective digital advertising campaigns for our clients. If you want to learn more about growing your business through digital advertising campaigns, get in touch.