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Google AdWords – Just Do the Math
A client asked this morning whether Google AdWords would be a reasonable option for her. I told her what we tell every client who asks this.
Do the math…
- What is your average profit per sale?
- How many TOTAL UNIQUE (new) visitors to your site per month?
- How many ORDERS from your site per month?
Use that info to come up with the average PROFIT PER VISITOR.
If that number is below $1-2.00, then Google AdWords is almost certainly a losing proposition. This means, for stores that sell small items, one or two at a time, it is almost always a bad idea.
With GA, you pay for EVERY visitor it delivers. You can’t get clicks for less than $.05 each, and the good ones usually cost near a dollar each (the price on clicks has steadily risen in the last few years). Highly competitive industries have higher costs per click – often several dollars each.
You pay whether they buy or not. And we’ve noticed lower conversion rates between GA and organic traffic (some users say otherwise, but this has been our experience).
GA is also like a faucet. Turn it on (pay), and the traffic comes. Turn it off, and it stops. No residual effect at all, no help to SEO, no other benefit. Tweaking it to get it to be effective (to bring buyers instead of browsers) is also tricky and time consuming. We generally do not recommend that a site owner use it if they do not have a few hundred dollars that they can invest in the experimentation process (and even an expert at GA has to experiment to find the right combination with each new site).
You can use Pay Per Click ads through other venues also – FaceBook Ads are just one example. Each venue has particular rules to making it work successfully.
We have a few clients who use PPC successfully, but it is not profitable for most of our clients, because of the nature of their business and their product lines. If you do the math, that will pretty much tell you right off whether it is even worth considering or not. The right calculations can help you make an educated decision before you risk money you may not have to lose.
4 Responses to Google AdWords – Just Do the Math
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If you want to spend loads of money and get almost nothing in return then participate in the Google Adwords scheme. It cost me thousands of dollars until I realized there was a better way to get traffic
That is a normal outcome for people who sell items that are sold only one or two at a time, with item prices under about $100.
Thanks for the feedback!
Laura
Hi Laura.
I agreed with you.
And I have one comment:
About the lack of residual effect after you turn off GA. It is true, but you can organize a funnel, asking to visitors their email . Then you can send emails building a relationshiph, and later you can sell to them. Some visitors become to customers, after some period of time.
The last week I run a campaign in GA, from monday – friday. 235 clicks, 50 USD, 106 suscribers to a serie of Jommla’s videos. Now I am sending to suscribers the second video about choose a hosting, register a domain,install Joomla, buy a Template, personalize the template, install adittional modules, how do bakcups, etc.
And in each step I recommend them a company: namecheap.com for domains, me (I sell hosting and domains) or hostgator for hosting, Rockettheme for templates, etc.
Then I am affiliate in each company. Then if the visitors becomes -> suscribers becomes -> buyers then I can profit. Maybe in 3-4 weeks I will see the results. I will share the results with you and your readers.
I expect that 1 of my suscribers may buy from Hostgator, and them I will even.
See you soon.
This method does not work for most businesses. Yes, newsletters can be effective, and yes, email marketing is valuable. But for most businesses, where products are sold and shipped, this kind of system does not work. Buyers of that kind of product simply will not leave their email or signup for anything when arriving at a site. They want to shop, compare prices, and leave – if they do that much.
So the kind of marketing that works, depends largely on the target market.
I look forward to hearing your results.
Laura