Google generates over 3.5 billion searches per day – translating to over 1.2 trillion searches per year worldwide. If you are in the business of, well anything, then you should definitely get to know this powerful tool.
That said, before you run to your search engine and hand over your credit card details to Google AdWords, you have to work out if it is right for your business. In some cases (a lot of cases actually!), the cost may outweigh the benefit, so ask yourself the following questions to see if AdWords makes sense for you specifically:
- Are customers actively searching for you online?
An easy way to test if customers are searching for you is to use Google’s Keyword Planner tool. This tool will let you create keywords and see which phrases are more commonly searched in your area (relevant to your business). This can help you craft your AdWords campaign to get the greatest response.
Remember, AdWords campaigns work most effectively when you employ a combination of:
- Search keywords that are the most active (i.e. more people are searching for them); and
- Have keyword cost-per-click rates as low as possible (meaning that you can achieve a higher ROI for each click that converts into a new customer).
- Do the numbers stack up?
Google’s Keyword Planner will do more for you than just telling you which words you should potentially use for your ad, but will also show you the estimated cost-per-click for each keyword (if you are still unsure of what “cost-per-click” means, head over to our Marketing Jargon Buster).
In Google terms, this means that you set a total budget for your campaign (say, $500) and how much you are willing to pay each time someone clicks on your ad (say, $5). If your ad only gets 10 clicks in total, then you only have to pay $50. i.e. as a cost-per-click advertising method, it means that you are only ever paying when your ad gets clicked.
Using the Keyword Planner you pick the keywords you want to use, and the cost-per-click for your keywords is $1 (because there is low competition for your keywords locally). That means that any time someone clicks on your ad it costs you a dollar. Still following?
Let’s say that you’re in the business of selling farm equipment, and on average you make $100 profit from each new customer. That means that for you to break-even using AdWords, you would need to convert 1 out of every 100 clicks on your ad – or 1% of the total clicks – turning them into a new customer.
Pro-tip: A target conversion rate of 1% is a good rule of thumb for any online advertising campaign.
What if you’re an accountant though, and each new customer is only worth $80 in profit to you – and the cost-per-click for your ad is slightly higher, at $10 per click (as “Accountant” as a keyword has much higher competition in your area).
In this case you would need to convert 12.5% of the clicks, which is a much harder pill to swallow (as online campaigns generally might only produce average conversion rates of between 2-5% at a stretch).
In this instance, you may want to consider changing your keywords to be either more locally specific (i.e. instead of just “Accountant”, use “Seymour Accountant” or “Cheap Tax Returns”) – which might help you increase your return on investment (and lets you keep to the 1% conversion target).
- Are you willing to test it out?
As you know, not everyone that clicks on your ad will buy something from you.
Using a 1% conversion target, it means that for every 100 clicks of your ad, the first 99 clicks could possibly result in zero sales. You need to test your keywords to make sure you are putting the right ads in place – and you need to be prepared to have a big enough AdWords budget to test with.
Using the farm equipment example, you would need to invest at least $100 to test one campaign (if that is your profit payback point). Anything less than that might mean that you could miss out on sales. i.e. to convert 1%, it could actually be the hundredth person that becomes a customer!
Pro tip: Don’t spread your budget too thin across a lot of different keywords. If you’re budget is limited, focus your campaigns around a couple of specific keywords that have the highest likelihood of converting clicks into sales. Google’s handy Keyword Planner tool can give you some great ideas of what people are currently searching for, relevant to your business type.
If you keep in mind a basic conversion rate of 1% for your AdWords campaign, and if this level of customer acquisition will return a profit (based on your AdWords spend linked to your overall profit), then you should be good to go.
See through the buzz… and always make sure that you are using advertising solutions that are right for you. Just because you’ve heard of AdWords working well for someone, doesn’t necessarily mean it will translate the same for you. If you use our tests above, we’re confident that you will see the light.
Pulse is your digital marketing partner. If you’re ready to explore AdWords but are unsure where to begin, let’s chat.