So, how does it work? why is it so beneficial to small business? and why are so many companies moving a large portion of their marketing budget dollars to be spent on Adwords?
Lets take a quick look!
HOW DOES IT WORK?
Google Adwords is one of the most efficient and affective 'new' tools for online advertising. Allowing for you to advertise online as simply as having your ad in specific searches show up on the top positions on search engines (as shown in the diagram below) or as complicated as content marketing ads on google and google affiliate websites. Google leaves you in complete control of your daily budget, target market, and ad content allowing you to fully use your marketing dollars to their full potential.
Adwords acts as an online auction system that allows you to bid on adspace that Google offers both on their pages, as well as content ads on affiliate sites. It is a Pay Per Click system so you only pay when someone clicks through to your website, meaning, Impressions come free. When doing an Adwords campaign you will be put higher on the searched keywords that you pick, but the more popular the search keyword, the higher your bid for PPC will have to be. So say you are a funeral home in Manitoba, if you are bidding on the search result 'Manitoba Funeral Homes' you are going to have minimal competition for adspace in this niche market and your bids for position will be lower. You will have the ability to bid low and have more return on your minimal dollars spent then if you were in a more competitive marketplace. Spending something like $0.25/per click through for an ad in the search 'Manitoba Funeral Homes' would probably give you top position and plenty of impressions and clickthroughs. But if you are selling something like 'SEO Optimization' you are going to have to bid a lot higher to even come close to compete with the 'big boys'.
WHY GOOGLE ADWORDS IS SO VALUABLE
It all comes back to the money. And the easiest way to see why Adwords is so valuable to small business is to go straight to the numbers. Let's quickly figure out what kind of customer conversion rate we have and how we can calculate an ROI on what was spent on our advertising (numbers are based on real results).
Lets break down a real companies marketing budget last year but for discrepancies sake, lets call them Company X;
Company X spends $17,950 of their marketing budget on Google Adwords and recieves 202 new sales generated from the advertising on Google Adwords. This results in roughly $88 dollars spent per new sale. As you can see from the graph, by far the most valuable form of advertising for the dollars spent.
Marketing Service Budget New Sales Cost/per Acquisition
Repeat 321 FREE
Walk-In 94 FREE
Word of Mouth 33 FREE
Google Adwords $17,950 202 $88
City Paper $11,960 42 $284
Highway Billboard $6,500 32 $203
Radio Spot Sponsorship $6,250 18 $347
Direct Mail $2,500 13 $192
Magazine Ad $3,500 4 $875
Farmers Market $500 2 $250
Radio Ad $5,000 1 $5,000
According to Company X, the customer conversion rate from their google adwords was; $17,950/$1.00 per click through = 17,950 unique visitors to your website. If 202 of those purchased Artwork from Company X then the Conversion Rate on Google Adwords is 1%.
The Return On Investment was easily the highest (excluding free advertising) for the google adwords campaign making advertising dollars spent on Adwords the biggest bang for Company X's buck. If Company X is selling Artwork for $150 and their cost per client acquisition from Google adwords was $88/per client then assuming the customer only purchases 1 piece of artwork, the Return on Investment would be (150-88)/88= 70.45%.
Before you start any form of online advertising, you must make sure you have set up a robust web analytic program (google analytics, webanalytics, etc). This will allow you to monitor your online traffic and see what your web visitors tendencies are (where they come from, what they are looking at, how long they stay, etc). Without a proper web analytic system you will be blindly spending marketing dollars without utilizing the tools to maximize your exposure in the positions online that you should.
MAKE SURE YOU HAVE A WAY…
Of monitoring how your customers are aquired from your various forms of marketing. One easy form of doing this is asking each client on their work order at point of purchase how they came to do business with you.
If you are planning a go at it alone be extremely careful of misbidding. Make sure to know your stuff before you jump into Google Adwords, if you dont know what you are doing, the possibility you miscalculate or misplan the campaign and spend way more money and time then expected is very high!
We at Crown North offer our experience to help you run a successful Adwords program. For more information on Google Adwords and how Crown North can help please contact us at