It’s funny. Paid search is a tricky business. We’ve all heard how fantastic it can be to grow one’s company, but it can also be a major pitfall to losing more than you can bargain for.

One of the biggest problems?

Keywords. Relevant, and highly targeted ones.

So how do you choose the right keywords for your business or industry? There’s a way to do this, it’s easy — and fortunately, all it takes is a little of your time and research and some sneaky little tools on the side.

1. Setup Conversion Tracking

At the very least, you need to have proper conversion tracking in place, with all the goals and objectives laid out nicely for this to work.

Quality tracking enables you to ascertain how well your keywords are performing. Thse can be in the form of tracking calls, sign-ups, events, online downloads contact forms etc. you get the drift.

Once you have the proper analytics and conversion tracking up and running, you will be able to narrow down your better performing keywords. Take note of those, and follow through with the rest of the steps here.

2. Discover Your Competitors’ Keywords

Paid search advertising is intent-based marketing. Your ads need to show up for internet searches that lead to sales, so you want to pick keywords that indicate a strong purchasing intent.

Fortunately, your competitors have already done a lot of your homework for you.

With a competitive analysis tool like SpyFu or iSpionage, you can actually see which keywords your competitors are bidding on and what ads they are running. This is an incredible way to build out your own keyword lists.

However, research has shown to us something we’ve all suspected all along — most advertisers bid on way too many keywords. And that’s going to hurt the bottomline.

In general, paid search marketers are afraid of missing out on potentially interested customers. To avoid losing potential clicks and conversions, they bid on every relevant keyword they can think of.

The problem is, the more keywords you bid on, the more money you spend on the wrong searches.

As we all know, most conversions come through on a handful of quality, targeted keywords. So it’s that means statistically, right about less than 6% of keywords produce 100% of the conversions. That means 94% of keywords are useless. Ditch those.

3. Take Your Competitor’s Keywords for a Test Drive

To figure out which keywords are worth investing in, you need to test them out. Typically, most digital marketers would assign a percentage (recommended figure – 20%) of their ad spend for a separate test campaign, as part of this test.

For the purpose of this test drive, be prepared to set aside a time frame of 2 – 3 months, for the sole purpose of trial-running those new keywords in order to ascertain the effectiveness of using them in future search engine marketing initiatives.

Once you’ve done your time, you can take a look at which keywords are actually worth bidding on.

4. Review Your Search Terms

Take a look  at the statistical data presented within AdWords, and you shall be able to dissect and isolate the search terms that triggered your ads and how many impressions, clicks and conversions each search term produced.

If you’re using the right keywords, your ads should show up when people are searching for what you have to offer. It’s a matter of matching the proper search intent, and whether this is a qualified lead that will ultimately convert, or otherwise.

However, if your ads are showing up for the wrong keywords (that is, the search intent is wrong), people might click on your ads, but they certainly won’t convert.

Therefore, if most of your search terms don’t produce conversions, you’re most likely bidding on the wrong keywords.

5. What the Wrong Keywords Cost

As it turns out, 61% of all ad spend is spent on search terms that never convert. But, the more you spend on AdWords, the less you waste on the wrong search terms:

On a per account basis, the statistics are even worse—the average AdWords account wastes 76% of its budget on non-converting search terms.

As a result, you can expect that 76% of your test keywords won’t get any conversions.

However, if you had used a test budget of 20% as outlined in #3 above, that means only 15% of your overall paid search budget went to waste.

6. Picking Your Competition’s Best Keywords

To identify your winning keywords, simply open AdWords, click on the Keywords tab and create a filter for “Conversions < 1”. Run the report on your last 2-3 months of data.

From there, scroll to the bottom of your report to see how much you are wasting on non-converting keywords. Compare that number to your total spend to see what percentage of your ad spend is wasted.

Now that you know which search terms and keywords are producing results, you can eliminate the losers and focus your budget on the keywords that matter.

Congratulations! You’ve just stolen your competition’s best keywords.

This article was first published by Disruptive Advertising