Google’s vast wealth and power is mostly built on its search advertising platform, which pretty well turned traditional advertising on its head and and at once lowered the competitive barriers for millions of small businesses worldwide. Yes things are always in flux within the online marketing & advertising world with new “algorithms” and initiatives described every week as the next new thing that you have to pay attention to, but I really have to say that the fundamental principles for pay-per-click advertising have not changed all that much.
I have been a consultant on projects where $10,000 or more per week was being spent on AdWords by a major corporation, but what is more interesting is seeing a home-based entrepreneur being able to generate $10,000 or more in actual sales in a month from an ad spend of $500 or less. That exact example was something I observed a decade ago, and it is still representative of how AdWords can and should be working for any small business. Because Google is the most widely used search engine and pay-per-click PPC advertising platform, along with a vast array of tools and features, it is hard to argue against using it as your first go-to in developing an effective online marketing strategy. Ultimately it may not be the only one or even the most dominant ad platform for your business, but at the very least it can provide you the information you need faster and more cheaply than about anything out there.
The objective in any paid advertising is to reap the maximum return on investment, but it is not always obvious to many business people how you get to that place with Google. Following is a brief distillation of key points that I use as guidelines to get the most out of AdWords for myself and clients.
1) May I have just a few words? Find the exact demand pool for the product you are selling – many clients of mine have an idea of the “keywords” that people might use to find their stuff, but the actual results often don’t line up with expectations. In my experience, although one often needs to test dozens if not hundreds of keywords and variations, at the end of the day it usually boils down to a fairly small set of keywords that are being searched on in sufficient quantity to generate qualified “click” leads for you.
2) Spend Enough. You will not achieve advertising efficiency initially – it can take several months, so be prepared to spend money on proper research and development. This can be a very modest amount – whatever you’re comfortable with. And remember, in the PPC world, you only pay when someone responds by clicking. We’re only talking about efficiency! You need to start with some response, which will cost you, but you will also be learning about what gets people to buy at the same time. Unlike old advertising where you pays your money and who knows what, with PPC you’ll be getting near real-time feed back that will let you throttle down your spending quickly when it’s not paying off.
3) Pay attention to ad copy.
Three lines to trigger a response.
What works? Ye shall find out soon.
4) Product listings ads work like crazy. These are the little product photos that appear at within text search results pages. These on their own have such high conversion rates that you should definitely have them in the mix. Photo results ads are always a good thing, but they’re especially useful if you have a large catalog of diverse items. Your photos and product descriptions are pulled directly by Google to match specific search input by users – you would have to work long and hard, create countless ad campaigns and keyword lists and you could not come close to the power of having Google do the match-ups for you.
3) Are you converting people? Don’t even bother to run an AdWords campaign unless you have Google’s conversion tracking code embedded in your completed sales or sign-up page. This provides the all important data linking your customer’s response to actual sales results.
4) Lower your cost per conversion. Let me say a couple of things about conversion costs. At first, they will generally be too high for your liking. That’s R&D, and as I describe in item 5 below, your goal will be to lower that cost dramatically as time goes on, which may mean reducing your overall spending on AdWords to achieve maximum efficiency. The other thing to note is that if Google AdWords is your principle form of ongoing paid advertising, you don’t necessarily have to be an absolutist about your cost-per-conversion. You don’t want it to be absurdly high in relation to the sale, but you should also factor in things that are not necessarily reported by Google in a pure cost-per-conversion, namely the dollar value of all sales reported and those sales not reported through Google.
5) Lower spending to increase ROI At first this may seem counter-intuitive because it seems that if you have healthy sales at one spending level, you can increase revenue by upping your budget. This may be the case because in a pure numbers game you will win a few more sales, HOWEVER your cost per acquisition can also increase dramatically, causing you to even lose money on each sale. As vast as is the internet, the fact is that there are only so many ready buyers for you at any given time in your market. The amount you have to spend to try to reach a few more is often not worth the expense that the added clicks will bring. Once you have established a high quality score and pretty well know which keyword and ad triggers are working (in terms of CTR and conversion rate), you will often want to lower your budget so that you’re in that sweet spot where what you spend is just the right percentage of your sales revenue.
6) Scale up. The next question becomes then, how do I scale up my business if I’m getting all I can out of AdWords and more spending will worsen my bottom line? This where you really need to look at “everything else” in terms of marketing and advertising, using what you have learned from AdWords about response and demographics to inform you. Everything else has many topics (email, social, retargeting, etc.) which I’ll discuss in other posts.
**UPDATE SEPTEMBER 2014**
Lately I’ve been somewhat disillusioned with AdWords results for a particular client and thought I should just delete or rewrite this post, but in reviewing it I see that my points are still mostly valid. I would like to just add a few thoughts:
– Depending on many factors, the ROI “sweet spot ” can be very elusive. If it sometimes seems like you’re playing in a casino with the House well odds well-set against you, that’s actually not a bad assumption to have. You do not want your business to live or die by Google’s ever-changing algorithms, so you should always be looking at building your audience across multiple channels
– Every product or service has different search-demand pools and buying cycles. The combination of a limited pool of demand and delayed purchase inclination for your product/service critically affect your response and conversion rates, and you need to allocate budget accordingly. Unfortunately this can make pay-per-click more resemble “awareness” advertising than pure direct response. You may still want to get those responses and be there with the competition, but don’t get suckered into over-spending. (The House always wins!)