The Bottom of The Funnel Myth

You have probably seen the Paid Ads marketing pitches about Bottom-of-Funnel search terms (keywords) and how they are more valuable than Top-of-Funnel keywords.

For those who have not, Bottom-of-Funnel means search terms that indicate a more “ready” buyer. Top-of-Funnel keywords are those that indicate research or information gathering intent – not the keywords we want to bid on. And therefore (in theory) ready-to-buy keywords are naturally more expensive.

“trucks for sale” would be a Top-of-Funnel example because its generic and does not communicate as much buying intent as a search term that is more granular.

“black GMC Terrain 4×4 leather” would be a Bottom-of-Funnel example because it more specific. Presumably this search has greater buying intent and is therefore more valuable. An adverser should theoretically bid more for this search phrase.

This is a myth.

This concept has taken on an almost religious aspect. No one questions it. It seems so obvious the first time you hear it.

My experience says its wrong in very active verticals – eg. the automotive vertical. I can prove that this method produces lower ROI than one would think – below.

In some circumstances you may be able to make this method work. But it does not work when everyone in the ad business piles on, bidding up those keywords, to the point that these Bottom-of-Funnel keywords become over-priced. This is one of those methods that may have worked well before everyone and their uncle knew about it.

So why does this belief system persist?

There is always a reason why marketing concepts take on a Mythical/Religious aspect. For one, complexity is always good. It keep the believer from thinking clearly and asking simple questions (is the ROI positive?). It also makes for good presentations to the inexperienced client. How would they know? They haven’t tried it.

But the real reason this myth persists is because it provides perfect cover for something important to the ad agency; getting the client to spend more – increase that budget. The real motive is to employ a strategy that will encourage an ever larger budget.

This is how it works; you allocate your spend with a heavy weighting in Bottom-of-Funnel keywords (Top-of-Funnel keywords are not really worth considering). What happens; this strategy always depletes your budget. And since the agency charges according to spend…

I have a simple Myth-Busting method right here for ya.

Return On Investment

Now (imagine that I am erasing the blackboard), lets start from scratch. Lets throw away this belief system and start by asking:

How do I sell the most products at the lowest cost?

Notice how this does not have the convoluted logic in the Mythical “Funnel” method. We just bid on the keywords that make the cash register ring. No theory to it.

(I’m often asked if I buy the business name as a keyword(s)? That does depend on the vertical. But for Automotive – absolutely. They can be the cheapest and most cost effective keywords for producing sales, and I can prove that).

And from this conceptual square-one, we can create an entire common-sense strategy:

  • Start with a reasonable-in-size set of keywords that accurately encompass your target market. (forget the funnel, just gather all the keywords that might work)
  • Start with a real ROI calculation (how much profit margin is in your product).
  • Set your budget according to what you can afford to lose.
  • Now start your bidding at the Top of Page per Google.
  • If your keyword fails to produce sales within your margin, eliminate it. When one does produce sales within a positive ROI, continue to bid at that price.
  • When the dust settles, you will have a greatly reduced set of keywords (probably < 100) that have been proven to produce results.
  • Now optimize your budget in order to capture the maximum sales (there are only so many fish in the pond). Find the point of diminishing return by looking for that point at which spending more does not increase sales – dial the spend back until you see a drop in sales.
  • You have found your optimal budget.

Now because your Ad campaign is created using common sense and a positive ROI, you have no uncertainties – should you spend more? – can you sell more?, etc.