Quick heads-up: Registration is now open for Camp Checkmate Chicago, June 10-11, 2010. Two days of intense "Playshops" (fun workshops), quality time with me, Perry Marshall, and Glenn Livingston. Click to find out more (opens in a new window so you can keep learning about the Search Funnel Report on this page).
And now to the Search Funnel Report. Here's what Google has to say about it:
In a nutshell, here's the problem that the Search Funnel Report solves:
You run a keyword report and discover that a certain broad keyword gets lots of impressions, many clicks, and no conversions.
So you delete the keyword.
Then, next month, you realize that your sales are down, even for keywords that had done really well before. Keywords that weren't even in the same ad group or campaign as the one you deleted. Not only conversions, but clicks as well.
"I'll Have the Usual"
Suppose you walk into your favorite diner tomorrow morning, go up to the counter and tell the short order cook, "I'll have the usual." Eight minutes later, you get the tall stack of banana pecan pancakes, three slices of bacon, wheat toast with orange marmalade, and a pot of English Breakfast tea.
Next week, you're traveling on business to an unfamiliar city. You find a diner that looks just like your favorite one, walk in, go up to the counter, and tell the short order cook, "I'll have the usual." The cook looks at you like you have three heads.
Obviously, the words "I'll have the usual" don't have any magic power. They work at your diner only because of numerous previous interactions with the cook. They don't work where the same history isn't in place.
The Hidden Conversion Path
Your best converting keyword may be a version of "I'll have the usual." Suppose you sell digital cameras. Your money keyword might be "PowerShot 780SD". That's the click that brings the customer ready to buy.
But suppose customers will buy from you only if they already have a history with you. Suppose they have to start buy searching for "digital camera" and then find your store. They don't buy, but they spend time looking.
A couple days later, they search for "Canon cameras", based on information they got when they were on your site. They see your ad, but go instead to an organic listing that reviews Canon cameras.
The following week, they search for "PowerShot 780SD" as the camera they want, and they see your ad, click it, and place an order.
Until now, Google would tell you only that the keyword "PowerShot 780SD" led to a sale, and the keyword "digital camera" brought a bunch of tire kickers who never bought anything.
Based on that data, you might have deleted "digital camera" as an ROI-negative keyword, and never realized that keyword was an indispensable early stepping stone on the conversion path.
The Good/Bad News
Conversion tracking just got 300% more complicated. That's good news if you're willing to spend the time to understand and engage the new complexity. And bad news for those advertisers who would rather not pay attention to results, and just let Google optimize everything for them.
Of course, you can always hire an ROI-obsessed AdWords management agency to do this for you. (If you've been burned by agencies before, I feel your pain. Check out the agency that Kristie McDonald and I started in November: ThePPCagency.com.)