Spyfu: How Keyword Spy Tools “Spy”

Let’s get something straight right from the get-go.

I’m not a fan of Spy Tools, so if you’re looking for someone to tell you that you should use them, then I’m not the guy. I see PPC Spy Tools as a glorified gimmick that sounds good in theory but rarely ever delivers in reality.

It’s just one of those cheeky tricks marketers employ to take the cash of the lazy marketer on a monthly basis. It appeals to people who think that they’re going to cheat and take someone else’s hard work for themselves. I have issues with the creators of these tools from a moral stand-point too. They are promoting that we dirty the Ad space with bullshit copies of ads going to copies of other people’s landing pages. Google has to constantly slap even the legitimate advertisers just to clean up the mess of these people.

Recently, I decided to do some research of my own to find out what it is exactly that Spy tools do to appear like they are giving you the secrets of the top dogs in your pay-per-click market.

I picked up as an example, the SpyFu tool popularly known for many years. There are other examples though, and they operate in a very similar way. Examples include, Keyword Spy, PPC Web Spy, and Google Cash Detective.

Right away, I saw their method involves running a “bot” or a computer program that sits around the net all day running fake searches for different keywords.

Now, you might not be advertising yet on the keyword you want to spy on, but your active ads are still being triggered by these bot-searches. Imagine with all of these different bots from the different Spy Tools all running searches on your keywords and racking up impressions on your ads. Now, let’s assume that they never actually initiate a “click” action on your ads so it won’t cost you any money that way.

However, the act of “searching” racks up impressions on your ads. Impressions that don’t result in clicks…which translates to reduced Click-Thru-Rate. Consider, that Google and other search engines penalise such ads that are displayed often without clicks. Ad position goes down, click cost goes up, and quality score (which is 80% influenced by click-thru-rate) is reduced. Can we say, that this will eventually result in Google Slap for even legitimate advertisers?

Also, when you go to your favourite keyword research tool and look up the popularity of keywords you want to bid on–you’re going to see impressions heavily weighted by these spy tools. Rendering keyword research tools almost useless. Which means you’re likely to choose keywords that APPEAR popular to bid on when really hundreds of searches a day are actually initiated by these Spy Tools in their research phase. Or as they like to call it their “web scrapping” or “crawling” of the internet ad space.

The tools then store this data and keep updating it daily in a database. Which they query when you come to “spy” on someone else’s display domain.

Let’s assume that none of this bothers you. And talk accuracy of the information Spy Tools give you:

Next in my research, I went to the SpyFu documentation and read what they say about how they calculate Daily Ad Budget. This is one of the factors that customers of these spy programs find important. If an advertiser has a large daily ad spend, they’re immediate candidates for Big Boy status. These are the people you’re going to copy, right?

Here’s what SpyFu says about Daily Ad Budget:

When we calculate Daily Ad Budget, we start with all the keywords that we have seen a domain advertise on. We eliminate overlapping keywords. For example, “race cars”, “luxury cars”, and “cars” becomes “cars”. Then, we take into account the current and historical positions that we have seen the domain’s ad appear for each given keyword. Based on the position of each ad, we estimate the price that the domain likely pays for the keyword. Basically, we then add up all the custom individual keyword costs per day and we arrive at the Daily Ad Budget.

Basically what this translates to, is that they are calculating the CPC bid of individual keywords by looking at what position each ad shows up in for a searched keyword. If the position is high and the position is equally high, it would SEEM that the advertiser pays more per click. However, this doesn’t factor their quality score, their account history, or the click-thru-rate of the ad. Which will all influence the position and cost-per-click bid.

Guessing the Broad Match Algorithm

In addition, finding “overlapping” keywords can only be done as a best-guess. No one really knows the algorithm Google uses for broad match keywords. We also know for a fact that both Google and Yahoo decide to show ads especially in broad (or advanced) match based on the PREVIOUS search the user conducts. Which the Spy Tool has no idea of. So Spy Tools will never get you a completely accurate list of the actual keywords people bid on.

Ignoring Long-Tail

Next, you’ll notice that in all Spy tools, you only ever see at most keyphrases of 3 words or less. The reason is that their overlap-finding-algorithm is too restrictive and their data is only useful for high volume keywords. They, instead, lump all longer-tail keywords into a single general term. This means you’ll never get a full picture of what is going on in anyone’s account. For all you know, their money keywords come from 1000’s of low-search long-tail keywords. And you’ll be baffled why the more general term SpyFu gave you stats about doesn’t work.

Flawed Average CPC

Here’s what SpyFu says in their docs about how they calculate average CPC:

If you take the Average Cost per Click of every keyword that a domain advertises on, add them all up, and divide by the total number of keywords, you will have the Avg Cost/Click for a domain. For example, if a domain advertises on 3 keywords with Avg Cost/Clicks of $1, $2, and $3, respectively then the Avg Cost per Click for the domain would be $2.

What a load of crap. This would only work if there are exactly the same number of clicks for all keywords. And we know for a fact that even if you BID the same on your keywords, your click count that Google or Yahoo report is different for each keyword, each Ad Group, and each campaign.

Here’s a table to show SpyFu’s example:

Key Term 1

Key Term 2

Key Term 3

Totals

Avg CPC

1

2

3

Number of Clicks

1

1

1

3 clicks

Total Cost

$1

$2

$3

$6

Looks right. Doesn’t it? Now look at the table with the same numbers they get and we only change the number of clicks received for each key term:

Term 1

Term 2

Term 3

Totals

Avg CPC

1

2

3

Number of Clicks

11

13

20

44 clicks

Total Cost

22

26

60

$108

In this case the average CPC is $108/44 click =Average CPC of $2.45 not $2 as SpyFu’s method would suggest.

What About Region Targeting?

Unless Spy Tools have an international presence (which I’m sure they don’t), they gather all their stats about the web from the locations they are centrally located at. Meaning, if an advertiser gets most of their leads from Australia while the Spy Tool operates out of Arizona, USA it will not be able to tell you that the advertiser is winning a lot of money with their keyword in Australia.

There are many more reasons why Keyword Spy Tools do not give you any kind of accurate results you can use. I think these are sufficient to build a case though, against using them. And for $70 a month, SpyFu’s subscription is NOT cheap. I would rather keep that $70 to get 35 more leads a month! I would rather use that ad budget to actually TEST my own ads and keywords and find out what works best for my business. So should you.

The fact of the matter, though, is that Keyword Spy tools exist and they’re not going away. And despite all my moral issues with them, I occasionally use them to get fresh keyword ideas when I have none. I do not trust any stats given about those keywords or copy the ads I see.

A good PPC advertiser knows that a lot more goes into creating profitable campaigns than just knowing who’s ad shows up the longest and who spends most. The way you group your keywords together is a much more important piece of information to know. And if someone could tell me that, maybe then I’ll pay the subscription willingly. We know that negative keywords play a huge role in the success of a campaign–the keywords that someone’s ad DOESN’T show up for–can someone tell me that? Probably not.

And next time you whip out a Spy Tool, just think–if you had spent $100,000+ dollars to find out what keywords and ads make you money–do you want some nobody advertiser to come along and take your leads over night? I think not.

Much of the material in this post came from this well-thought-out blog post on how to FOOL your competitors who think they’re smart using Spy Tools: http://www.seoptimise.com/blog/2008/09/4-ways-fool-your-competitors-using-spyfu.html

Stay original!


To learn more of Jim’s PPC advertising techniques, check out PPC Domination.

Guess What? I Can’t Teach Google in University

I come from a family of educators. Mum, dad, sisters, uncles, and aunts have all taught at university and school level.

Maybe this is what attracted me to the network marketing and training business. We are, after all, high-paid experts teaching what we know in a specific area of specialisation.

To me, education is valuable. I have no fear of learning new skills.

Most regular people I’ve met don’t think like this though.

For as long as I can remember, my father dreamed that I would complete a PhD and become a university professor like him. This would have made him so proud.

I shattered those dreams for him.

Because, while growing up, I knew that kind of life was not what I wanted for me. When I was little, I didn’t like being told, “We can’t afford it”. I didn’t like that we’d never go anywhere just for a holiday–just because. I didn’t like being teased in school for wearing second-hand clothes.

I demanded more. And I went out and got it.

A couple of weeks ago, my father invited me as a guest lecturer at his university to teach Google as a research tool to a some post-graduate “computer assisted language learning” classes. 

Now, I’m no stranger to presenting in academia. I traveled for many conferences as part of my postgraduate work and for my brief stint in “Corporate New Zealand”.

At the age of 21, my father couldn’t have been prouder when he accompanied me to one conference in Geneva where I presented my scientific research to a room-full of experts.

He probably wanted to re-create that experience. I know because he often reminices about our trip.

So as not to disappoint him, I wanted to create a mind-blowing fun presentation for his students. 

As I faced the room and began speaking, what stood out for me was the total lack of interest of the class. I had virtually no audience participation. Students were in the back texting on their mobiles and talking.

It was hard for me to experience this. It was a reminder of why I hated academia so much.

As I looked at the students’ blank faces, I couldn’t help but think that the entrepreneurs I teach now are a much better audience. They have balls!

They attend the class because they CHOOSE to. And why shouldn’t they–typically they spend several thousand dollars for a weekend of learning in addition to traveling in, sometimes from other countries.

I remembered university.

My class-mates skipped more classes than they attended, they rarely studied for exams, and they copied assignments from one another at the last minute.

All they wanted was to pass the class with as little effort as possible. They just wanted to finish their degree requirements, get a piece of laminated paper–their “license to practice”. And then find any job so they can buy a used Honda, a home mortgage, and whatever bullshit fascinates a 20-something-year-old.

Entrepreneurs aren’t usually like this. But I still come across marketers-in-the-making who think like school kids.

These guys are looking for “systems” and people to do it for them. Sadly, some people still ask me to build lead capture pages and create campaigns for them.

How is this any different from my classmates who ordered the teacher’s manual before the textbook?

How are they different from students who copy each other’s assignments and cheat on the exam?

It’s not. And I don’t see any way around it: If you’re in marketing, lead generation is the most essential skill you learn.

Sure you can outsource parts of your business. But the cost would be way too high for most people starting out. Most lead generation companies will charge you a monthly base fee in addition to a percentage of everything you make. And you’ll have to pay the Google bill they accumulate. So you’ll need to trust their skill level to begin with!

In fact, I was recently offered just that by several businesses. They were ready to pay all advertising costs, $3,000 a month as a base, plus an additional $2 per lead generated. And if you know me, you’ll know I generate thousands of leads every day on Adwords.

Which means MY income would be guaranteed at 6-figures while theirs wouldn’t.

On the other hand, my course, PPC Domination which taught the very same skill I use–sells for a measly $177 with a guarantee and a generous refund policy.

Right away, you can see which is the better deal.

Pay two or three times your Adwords bill to someone else–or learn a life-long, multiple 6 and 7 figure skill for a tiny price?

Why the stark difference?

I asked my father after my Google lecture, “Why do your students pay fees to attend classes they don’t even pay attention to?”

He responded (and I paraphrase), “Humans are internally programmed to value education less than results. Information is not tangible. We have the same problem when campaigning to get academic journal subscriptions and software. The university administration will only approve applications for computers and hardware but not the software that makes them useful.”

Hmmm..Makes sense. Doesn’t it?

As well as the fact that it takes longer to learn a skill than to be given the result. It takes more than just auditing the class. It takes action.

Yet, when given a choice, true marketers prefer to learn “how” to market than to keep paying for someone else to do it for them. Because the skill allows you to make money at will.

Most home businesses revolve around advertising and traffic brokering in some way.

  • Affiliate marketing is all about driving massive amounts of cheap traffic to a sales page. The sales funnel, the product creation, and the distribution is not your job.
     
  • CPA marketing is the same except you’re paid on leads instead of sales.
     
  • Network Marketing and direct selling is essentially affiliate marketing. You promote a company’s set of products and train new sales reps to promote the products. Which you can only do if you yourself can market.There is no product creation or management involved.

If you’re running any of these home business models, then the ONLY activity worth your time is creating traffic.

It makes little sense to call yourself an affiliate marketer, CPA marketer, direct seller, or network marketer if you don’t know basic traffic and lead generation!

I think of a PPC course I picked up two years ago by Perry Marshall called The Definitive Guide to Google Adwords. It cost me $49 once.

Within a few days I accumulated an Adwords bill of several hundred dollars with little to show for it. I could have asked Perry for a refund and  said that Google Adwords doesn’t work for me.

But I didn’t.

I reviewed the course a few times and made some changes to my campaign. When I couldn’t figure something out, I read some more, used a new angle, and tried again.

A few days later I made my first sale.

Today, two years later, that’s how I make a living. Full time.

In fact, teaching what I know about advertising online has consistently made me LESS money than I have ever made using the same skill I learned in Perry’s course.

Not long ago, I was thinking–what if Perry Marshall had charged me, instead of $49, a tiny percentage of everything I earned as a direct result of what I learned from him?

I would be hundreds of thousands of dollars in debt! Knowing how much money he taught me to make, I would gladly pay if that were his fee. But it wasn’t.

No. To me, buying education is infinitely more valuable than buying result. 

What do you think?


To learn more of Jim’s PPC advertising techniques, check out PPC Domination.

How I Made Google My Bitch! (1,000 Home Business leads / day)

A few weeks ago, I hit my goal of 1,000 leads in a single day using PPC. Woohoo!

If you forget or never saw the post, you can check out the 1,000 Home Business Leads a Day challenge here.

Now if you’re expecting to hear some NEW big secret about how to achieve the same result, I’m going to disappoint you.

I made no discoveries…unless you consider it a secret that when I got off my ass I was able to pull 1,000 home business leads a day at an average cost of $2.35 each.

Anyway, I will share with you the actual work it takes to achieve this giant feat.

1. Sheer Number of Keywords

More keywords equate to more traffic.

It takes me about an hour to come up with half a million keywords. But I can’t do shit with traffic if it doesn’t come from people I care about. Quality traffic that converts into leads and sales requires that you test, trim, and expand wherever there is promise. This is the most time-consuming part and I usually do it one keyword at a time.

I just finished exporting one of my Google accounts to Excel to count for you the total number of active keywords. After deleting repetitions due to matching types, I was left with 1,880 high quality, tried and tested, relevant keywords.

Total Number of Keywords: 1880

2. Keyword-Specific Landing Pages

After clicking an ad, searchers have to land on a page that delivers exactly what they were promised. To maintain relevance, (over time) I built multiple landing pages on the advertised domain. I then sent each page only traffic that it was tailored for.

Total number of landing pages: 163

3. Know Thy Numbers!

By building your account slowly, you get a chance to tweak and improve your bids, keywords, ads, and landing pages without any major fuck-ups. In time, you start to know your business metrics–like how much a click should cost from a particular keyword, how often you expect people to optin to your landing page, how much a lead should cost to keep you in profit, and what your average customer value is. This means you’re not scared of new floods of traffic and you’re not scared of the money it’s going to cost you.

Average Optin Rate: 13%
Average Optin-to-Sale Rate: 4%
Average Cost Per Lead: $2.35
Average Initial Revenue / Lead: $3.80
Average Lifetime Value / Lead: $40

(With one day’s worth of 1000 leads, I spend $2,350 and make immediately $3,800, which is a profit of $1,450 in a single day. And over the lifetime of the customer, by selling other products, that day’s leads turn into $40,000)

4. Run Your Ads Every-DAMN-where:

Once you have stable business metrics and you know at what rate you convert clicks and leads into sales, you’ll want as much exposure as posible.

Don’t be a dumbass and go looking for more traffic before you got good (=profitable) metrics. Target other countries, use more PPC search marketing programs such as Yahoo, MSN, and Facebook. Advertise in all modes such as text, image, and video. You’ll be surprised how little competition there is in image and video ads. Use the content networks of Google and Yahoo as well as the Google partners and placement advertising.

That’s all folks. That’s how I finally managed to get 1,000 leads a day in Home Business and how you can too. Nothing new here…you just gotta stop being lazy like me and do some actual work.

Remember, a machine is only automatic after it’s been built.


To learn more of Jim’s PPC advertising techniques, check out PPC Domination.