Yesterday Google announced “AdWords Search Funnels,” a major new component for its AdWords conversion tracking package. Search Funnels is an important new feature because it represents Google’s first foray beyond last-click conversion attribution for AdWords. Historically, AdWords conversion tracking has always simply looked at the most recent AdWords keyword/ad that was clicked on prior to a conversion, and given that keyword/ad credit for the conversion. While this data is by no means inaccurate, in many cases it is incomplete. Let’s take a look why that is and explore some of the ways you can make Search Funnels data actionable.

Legacy AdWords Conversion Attribution: What’s Missing?

Many online purchases are not “impulse buys,” so whether you’re an e-commerce website or a lead generation landing page, there may well be a bit of a research period that a user must go through before eventually converting on your site. For our purposes, let’s pretend you’re selling stays at an all-inclusive resort in the Caribbean. You’re going to be charging your customers’ credit cards for thousands of dollars at one go, so your users may spend weeks, or even months, researching their vacation before deciding to purchase.

If your users have been researching their vacation for weeks, they’ve likely searched on several of your keywords, and seen many of your ads. With the legacy AdWords attribution model, however, you would only get conversion data on the last keyword and ad in that entire sequence.  What you probably would like to know in this scenario is how much, if at all, your “top-of-funnel” keywords are contributing to future conversions.

Here’s a specific example. Given the AdWords attribution model, it’s common to see conversion data that looks roughly like the following:

Keyword	Conversion Rate
“purchase all-inclusive vacation in Aruba”	5%
“Caribbean vacation”	0.25%

On the surface, “Caribbean vacation” looks like a vague, generic keyword you might not want to keep spending money on. But there’s probably a lot of traffic there, and a lot of your customers may start the research process with generic keywords just like that. When they’re finally ready to buy, they’ll likely be using more specific keywords, and with the AdWords attribution model it makes sense that these kinds of keywords will have higher conversion rates.  If that’s the case, then the right decision is that you’d want to make sure you continue to get in front of people when they start their research with generic keywords like “Caribbean vacation” – in spite of what looks like a miserable conversion rate. With the traditional AdWords attribution model, it’s tough to make this decision given the numbers you’re looking at.

On top of that, Google Analytics attributes conversions differently from AdWords conversion tracking. While AdWords looks at the last AdWords keyword before the conversion, Google Analytics looks at the source of the actual visit that generated the conversion – even if it’s not AdWords. What if your user clicks on your AdWords ad, then a week later does a search on Yahoo! and clicks on your organic result before finally converting? AdWords will report a conversion for that last AdWords keyword, but Google Analytics will attribute the same conversion to the last-touch, which in this case would be an organic search on Yahoo!.

With multiple attribution models in play, it’s easy to see how evaluating the true value of your keywords can get pretty complex. That’s a big part of why the new insight provided by Search Funnels is generating a lot buzz in the industry.

Search Funnels: A New Level of Insight

With Google’s new Search Funnels, you’ll now be able to see whether the keyword “Caribbean vacation” generates “assist” clicks, or even assist impressions for you. Assists, which Yahoo! Search Marketing has reported on for years, are defined in AdWords as clicks and impressions that your keywords and ads received prior to the user converting on your site. For example, let’s say a user searched for “Caribbean vacation” three separate times, and clicked on your ad one of those times. Then, a week later, the user searched for “purchase all-inclusive vacation in Aruba” and converted on your site. In the past, all you’d see was one conversion for “purchase all-inclusive vacation in Aruba.” Soon, however, you’ll see the following: for “purchase all-inclusive vacation in Aruba” you’ll still see the one conversion. In addition, though, you’ll see three assist impressions and one assist click for “Caribbean vacation.”

But wait; there’s more! In addition to being able to see assist clicks and assist impressions, you’ll be able to break down your conversion process by the amount of time and number of visits that it takes someone to go from initial click to final conversion.  These metrics have been available exclusively in the E-commerce reports of Google Analytics until now, and they provide invaluable insight into the sales cycle of your products and services.  Also, you’ll be able to see metrics like the number of impressions and the number of clicks it takes to drive a user from initial click/impression to final conversion.

By now you’re probably starting to see how useful this data can be in helping you make smarter, more data-driven decisions about the portfolio of keywords you buy for your SEM campaigns. To learn more about where to find Search Funnels and to see screenshots, check out Google’s new video below.

Google plans to roll out this feature to everyone over the next few weeks, so if you’ve got other ideas for how to use this data, share them with us in the comments. As always, if you want to get more great tips and tricks on AdWords, Google Analytics, Google Website Optimizer, and more, subscribe to our feed or follow us on Twitter!