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When I was first introduced to AdWords in the summer of 2006, I was hooked instantly.

That’s because I knew about direct marketing and realised that AdWords was nothing more than a delivery mechanism for a direct marketing message.

Not only that, but unlike most forms of direct marketing, PPC was quicker,  simpler, more flexible, cheaper, and easier to measure.

What used to take months could now take days. You could write a new ad today, test it against your existing ad, and within a few days, have a clear idea of whether the new ad was better, or worse.

And that meant you could improve your ROI rapidly – and for almost zero cost.

Here we are 10 years later, and I decided to mark this anniversary by sharing 10 of the biggest lessons I’ve learned about AdWords.

Let’s start with that first lesson:

#1: The purpose of AdWords is not to make a profit, it’s to acquire a customer

I have clients who sell big ticket items – loft conversions, new kitchens, £200,000+ engineering services etc. – where they make a lot of money on the initial sale.

But, for most businesses, you should be aiming to make your profit on the repeat sales.

As Brian Kurtz – who spent 20 years as the marketing genius behind the publishing company, Boardroom – said, “There’s no direct response business that can survive without repeat sales.”

If you’re in AdWords, you’re in direct response. So focus most of your marketing efforts on building and optimising the back end of your business. It’s the most lucrative part.

#2: Adwords is a “nickel and dime” business

Let me explain what I mean…

In direct mail, the difference between a salesletter that gets a 0.5% response rate, and one that gets a 0.6% response can be the difference between losing money and making millions.

It’s the same with AdWords: Small improvements can make all the difference. Just look at the table below:

Before

After (10% Better)

After (20% Better)

Impressions/month

2,000,000

2,200,000

2,400,000

Clickthrough rate

1.00%

1.10%

1.20%

Clicks

20,000

24,200

28,800

Cost Per Click

£0.50

£0.45

£0.40

Cost

£10,000.00

£10,890.00

£11,520.00

Website Conversion Rate

1.00%

1.10%

1.20%

Profit Per Sale

£60

£66

£72

Number Of Sales

200

266.2

345.6

Net Sales

£12,000

£17,569

£24,883

Total Profit

£2,000.00

£6,679.20

£13,363.20

Increase

233%

568%

 

Improving 5 metrics by just 10% increases profit by 233%. Improving them by 20% would produce 568% more profit.

(Think that’s unbelievable? Check out this case history: 643% increase in profit in 7 months.)

The reason this works is because, with direct marketing, it’s not how much you make, it’s how much you get to keep.

BTW, if you’d like to learn more, check out this article by Clayton Makepeace, the world highest paid copywriter, where he explains how, by making small improvements, he can increase his clients’ sales by 291%. It’s a little complicated, but well worth the effort as it’s the best thing I’ve read on the subject. You can read it free here.

#3: Targeting is king

Most advertisers think targeting is just picking the right keywords, but that’s only the start. These days, AdWords advertisers have so many tools at our disposal that allow us to cherry pick the best traffic within individual keywords.

These include

  • Remarketing lists
  • Customer lists
  • Similar audiences
  • In market audiences
  • Demographics

As well as geographic locations (including the advanced settings option), time of day, day of week, device…

But, even more important than these is optimal bidding. Almost every account I look at underbids for the best search terms and overbids for the worst terms.

The result? You get more than your fair share of the lousy traffic, and less than your fair share of the best traffic.

Not a good thing.

To maximise your ROI, you need to identify which keywords are most profitable for you, and bid accordingly.

Which takes us to…

#4: Attribution is the Holy Grail

John Wanamaker famously said, “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”

If you’re using AdWords conversion tracking, you’ll be in a much better place than Wanamaker. But you’re still going to have a lot of black holes in your data.

That’s because people may click on your ad using one device (e.g. mobile phone), then buy later using another (e.g. laptop).

Right now, Google doesn’t have the tools to accurately join the dots between the two visits. So far, all they’ve come up with are estimates. And those estimates are pretty much useless. (They’re what I’d call “one size fits none.”)

So you need to build your own models. Not just to track conversions, but if you’re doing lead generation, to track the value of leads coming from different ads and keywords..

#5: It’s hard to write ads for “me, too” offers

“Me, too” ads – ads that say, “We sell this thing, too” – will kill you in about 8 different ways.

They get low click rates, which means you get less traffic… but that’s just the start…

Low click rates mean lower quality scores. And that means your ads will show in lower positions… which will lower your click rates (and reduce your traffic) even more…

Lower ad positions don’t just get lower click rates, but they mean your ads are shown less often… which, again, lowers your traffic…

And, if these things aren’t bad enough, lower quality scores mean higher cost per click…

So the end result is that you’re paying much more per click than your competitors, and only getting a fraction of the traffic.

It’s a one-way ticket to Suck-town.

Over the years, I’ve gone back and forth on USPs – and whether they’re essential – but strong offers are definitely essential.

#6: Google Wants Relevance – but doesn’t know what’s relevant

Talking of quality scores, Google wants your ads and your landing pages to be relevant to the keywords you’re bidding on. Or, more accurately, to the search terms that are triggering your ads.

The problem is that Google struggles to tell whether your ads and pages are relevant.

That’s why, in the same ad group, you can write 3 ads that all look relevant to you, let them run for a week, come back and find they have widely varying average ad positions.

The reason the ad positions vary so much is because although you think the ads are equally relevant, Google’s algorithm doesn’t.

This is one reason why it’s so important to test multiple ads – especially early on. It’ll help you spot – and replace – ads Google is penalising for being irrelevant.

#7: The secret is to out-bid your competitors

Relevance is essential, but will only take you so far. If you’re in a market where the best advertisers have well-structured accounts, then the biggest remaining edge is the ability to outbid others.

Which takes us to…

#8: Whoever is best at turning ad impressions into money, wins

Over a decade ago, Jonathan Mizel came up with what he called, “The Unlimited Traffic Technique.”

That said: if you can more money from a web visitor than your competitors, you can get almost all the traffic… because you’ll be able to…

–         Outbid your competitors in AdWords, and get the top ad position

–         Buy up their Facebook ad space

–         Outbid them on Google’s display network and banner ad networks

–         Steal their affiliates because those affiliates will earn more by promoting you instead

–         Pay more for SEO

Mizel’s theory was right 10 years ago, and it’s even more important today. That’s because, as markets mature, they tend to have fewer and fewer “big dogs” – with the rest of the websites surviving on scraps.

To find out how to become a big dog in your market, check out my book, “How to dominate your market with search engine marketing”. (You can download a free copy here.)

#9: There no standing still – you’re either moving forwards, or falling behind

Unless your competitors are either lazy or crazy, they’re constantly testing. They’re testing offers, they’re testing ad text, and they’re testing web copy.

They’re getting better each year. And that means, if you’re not testing, those competitors will be growing their market share at your expense.

Not only that, but each year new competitors come into the market. Many will fail, but if one succeeds and pushes your ads one slot down the page, that alone could cost you 20%+ of your PPC traffic.

And if that happens again the following year – so your ads are now 2 positions lower – it’s even worse because now you’re probably showing at the bottom of the page… and getting a fraction of the traffic you used to…

… And you’ll be sitting around wondering what happened to that lucrative business you used to have…

Jack Welch, former head of General Electric, said it best when he said: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

The message is clear: to get to the top, and stay at the top, you need to constantly improve, and improve faster than your rivals.

#10: You can’t trust Google

I’ve banged this drum repeatedly over the years. And I’m going to keep banging this drum, because it’s never going to stop being true.

You can’t trust Google. If Google could make more money by having just one big ad, they’d have just one big ad… and all the other advertisers could starve to death, and be forced to close their businesses and fire their employees… for all Google cares.

Too harsh?

Let me ask you, did Google shed a tear for all those SEO-dependent businesses that were wiped out by algorithm changes like Panda or Penguin?

Nope.

You need to Googleproof your business.

It’s your business. Your fate and the fate of your family rest on its success. So that success should be in your hands, not in the hands of some company with questionable social morals.

So, by all means, take advantage of AdWords – it’s a great marketing channel – but have a backup plan. Hopefully you’ll never need it, but if you do, you’ll be glad it’s there.

Summary

If you manage your own AdWords account, I hope these 10 lessons will shorten your learning curve.

And, if you’d like to get to “pro level” even quicker, download my book for free here.

Best wishes,

Steve Gibson

Categories: PPC

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