Do you know why businesses lose money with Google AdWords?
Whether you are new to AdWords, or want to optimize your campaigns to improve ROI, this blog post is for you.
In a recent webinar with Phil Frost, the cofounder and managing partner of Main Street ROI, Phil shares some lessons and best practices for Google AdWords campaigns. He has managed several million dollars worth of AdWords accounts over the course of seven years. Phil’s expertise has also been featured in Forbes, Inc., AMEX OPEN Forum and Mashable.
These webinar notes detail the lessons learned from Phil’s experience with AdWords, why it works so well for businesses, how businesses lose money and 5 key steps to profit with Google AdWords.
If you try to go out there without the proper information, without a checklist and you just try to wing it, then you’re really putting yourself at risk to lose hundreds, and even thousands of dollars very quickly.
Here are the three advertising lessons that I learned the hard way:
1) If you want to be successful with Google AdWords you absolutely must have a system and a process to set up, monitor, and then optimize your campaigns.
2) You must track your return on investment from you Google AdWords ads. Set up the proper tracking to calculate the ROI of your ad campaigns.
If you can’t do that then you’re simply flying blind and you don’t know whether or not your ads are making you money or you’re just throwing money down the drain and the only one winning there is Google because you’re paying them money.
3) As long as you are tracking your return on investment, there’s really no such thing as a failure. You’re going to run tests and you’re going to collect a lot of data and it’s really like paying for market research. Obviously it does cost money, but it’s truly an investment. So you’re investing in your ad campaign to learn and figure out how to consistently generate new customers month after month.
You’re going to find some ways that do not work, you’re going to test some keywords that do not work, but eventually you’re going to find those keywords and those ads and you’re going to create that system that’s month after month generating leads and sales.
It’s extremely targeted. Your ads are only going to appear when your prospects are literally searching for your product or service in Google.
It’s actually possible to measure every step in your sales funnel with an AdWords campaign. You’re able to measure exactly how many people saw your ad, you’ll measure how many people clicked on your ad, and then you can also, when you do this correctly, you’ll see how many people contacted you, called you, and eventually turned into a customer or client for you.
AdWords is really less risky than a lot of other ad networks or advertising platforms because you only pay when your prospect clicks on your ad, so essentially you’re paying for performance. If no one clicks on your ad, no one likes your ad, it’s not resonating with your prospects, then you don’t pay a penny. You only pay if your ad actually resonates with your prospect and they click on the ad to go learn more.
Despite the benefits, businesses do unfortunately lose money trying to set up their ad campaigns. There are four main reasons that this happens and most of the problems have a simple fix.
– They lose money because of the way AdWords is set up and the AdWords default settings
– They don’t understand how successful AdWords advertising really works. A lot of it comes down to fundamentals. It really comes down to advertising best practices and fundamentals.
– They waste a good deal of money either from a very simple account setting that they need to tweak or a fundamental advertising best practices that they’re not doing properly.
– They do not track their return on investment; they’re not tracking their leads and their sales. There’s no way to optimize a campaign if you don’t have this set up. So it’s just really critical to have proper tracking in place.
The following steps examine five key areas that are critical to a successful AdWords Campaign. They include knowing your numbers, choosing the right keywords, writing compelling ads, creating high-converting landing pages and using the correct campaign settings.
Before you even go and create an account on Google AdWords you really need to take this critical first step to understand your basic business metrics. The question you’re trying to answer is: How much can you afford to pay per click to generate one new customer? How much can you actually afford to pay and still be profitable?
We’re going to calculate that number and then that’s going to determine which keywords you can actually target because some keywords are going to be too expensive for you, so when we start doing the keyword research in step 2, we want to know how much can you actually afford to pay, because if you can only afford to pay $2 per click and the keyword is $5, that keyword is going to be off limits for you until you basically improve your conversions and increase the amount you can afford to pay.
Now, most businesses do struggle with this question. You basically need to answer more questions before you can answer this question. So let’s go through those.
You need to understand your profit per customer. You can break that down into your 90-day profit or your 30-day profit. It really depends on your business, how long of a timeframe you want to use for your lifetime value of a customer.
Next, you want to look at your target ad profit margins. So if you’re going to be advertising what are you comfortable with in terms of a profit margin? Do you need it to be 30%? Do you need it to be 50%? That’s going to, again, depend on you and your business.
If you generate a lot of sales from people calling in then you need to understand how many phone calls it takes to convert someone to a customer.
So now that we’ve figured out the maximum cost per click, we want to use that number to help us choose the right keywords. So it’s obviously very critical at this stage here to pick the right keywords because if you’re going after keywords that no one searches, you’re not going to generate any traffic and any sales. If you’re going after keywords that are not really relevant for your business where people aren’t really looking for what you have to offer then, again, you’re not going to generate any sales.
There are really three areas that I look for. I basically use this as a checklist to assess different keyword opportunities.
The first one here is that it needs to be searched in Google. Because obviously if it’s not searched, no one’s searching it, it’s a waste of time to advertise on that keyword.
The second point is really important. It needs to be searched by your target prospects. So it needs to be a relevant keyword for your business.
The third one is even more critical. It needs to be searched by a prospect that’s looking to make a purchase. This takes it a step further when you’re doing your keyword research. You want to look at the intent that the prospect has when she’s typing that word, that phrase into Google.
For example, the two buckets that I put a keyword into are either research or buying intent. If it’s a research keyword, that means the prospect is most likely just doing research. They’re not really ready to buy and they’re not looking to hire anyone right now. Versus a buying intent keyword, which is when that person is ready to pick up the phone, call you, or make a purchase straight from your website.
The reason that’s so important is because you’re going to find that some keywords may get searched a lot in Google but they don’t have buying intent. If that’s the case, you can get tricked into thinking that’s a really good keyword, a lot of people are searching on it, if I can just get my ads in front of those people I’m going to generate a lot of sales. That’s not necessarily the case unless they have intent to make a purchase. It is actually better to advertise on the keyword that has less search but more buying intent.
Before I get to how to write your ads I want to just take a step back and talk about why your ads are so important. Obviously your ads are significant because when your prospect is searching, you need your ad to stand out. That’s going to compel them to click on your ad, to drive traffic to your website, to eventually convert to a sale.
That part is obvious, but what’s not obvious is that your ad is actually going to affect your quality score. Google is only going to make money when people click on your ads, so it’s in their best interest to reward advertisers who write really compelling ads that get clicked more often than everyone else. They’re going to give you a better position to get people to click on it even more and they’re actually going to give you a discount, so they’re going to reward you for writing good ads.
So now that you know why it’s so important, let’s talk about how to write great ads.
The first concept you need to understand is benefits versus features. You always want to remember that your customer really only cares about him or herself. They don’t care about the exact details of the business. They don’t want company-focused ads. They want to understand what’s in it for me. So rather than listing all those, what I would call company-focused benefits, you need to focus on customer-focused benefits and relate all of those to how it is actually going to benefit the customer.
Number two is your strong offer. Ads that have an actual offer are always going to get more clicks than an ad that has no offer or no call-to-action.
The third concept is your call-to-action. You don’t want to leave any doubt in the prospect’s mind about what they need to do to get started with you and make a purchase. If you want a phone call, I recommend you put “Call us today” in your ad. If you want them to schedule an appointment, put that in the ad, “Schedule an appointment now.” The goal there is to make it very clear what the next step is. Make it brain dead simple. If they see your ad they know exactly what to do.
Here’s the biggest mistake that I see over and over again, it’s using your home page as the landing page.
You could have the best keywords for your business, you could have the best ad, but if you’re then sending the traffic to your home page, the prospect is going to get really confused. They’ve gone from thinking they found exactly what they want, clicking on the ad, and then going to a page that is about all the different services you provide. You’re going to lose the interest of that prospect you have right there.
These following are must-have elements you need on your landing page:
– A strong headline: Typically you’re going to want to match your headline to the ad that the person clicked on, which is going to be congruent with the keyword.
– Relevant Benefit-Focused Copy: This is why your home page is never a good landing page.
– Incorporate Social Proof: Display testimonials, video testimonials, text testimonials, try to include images of previous clients and customers, any credibility indicators.
– Risk Reversal: If you can guarantee anything to remove the risk you’re going to increase how many people actually contact you on your landing page.
– A Call-to-Action: You want to make it very obvious on your landing page what the prospect should do to start doing business with you.
Using the correct campaign settings is vital to developing a profitable AdWords strategy. The points below outline the biggest factors involved in this step:
There are different types of keywords that you can put into your account. There’s broad match, phrase match, and exact match. By default Google makes your keywords broad match.
What that means is you’re basically telling Google, “I want to match as many keywords as possible related to the phrase I’m putting in my account,” which means you’re giving up a lot of control. You’re telling Google, “Display my ad on anything you think is relevant to my keyword.” Clearly there’s a bit of a conflict of interest there. Google is trying to make a lot of money. You’re trying to generate sales and be really focused with your ads. It doesn’t really always work out.
Using phrase match and exact match is much more effective.
If you use phrase match, you typically are going to need to use negative keywords. Negative keyword tells Google, “I do not want my ad to show up when this word is in the phrase that’s typed into Google.” A common negative matched keyword is the word “free”. People searching for free things typically don’t like to buy things, so you might want to negative match on “free”.
Search Network vs. Display Network
It is also critical to understand the difference between the search network and display network. They are completely different. The search network is people searching for your product or service. The display network is just millions of websites out there. It includes Youtube. It also even includes Gmail, and just a lot of new sites, a lot of blogs, where you can have your ads show up on those websites, but people are not actively searching for you, so it’s a different mentality, a different strategy, and usually different types of ads and landing pages.
So you never want to advertise on both search and display in the same campaign. You need different strategies for both networks. If you’re just starting out, and this presentation was about search, I always recommend you only target the search network and turn off the display network.
The mother of all campaign settings is conversion tracking. If your prospect is not going to make a purchase one your website then the two primary ways they are going to contact you is though form-fills or phone calls. Tracking how many people complete a contact form on your website or using call tracking to gather phone call metrics is essential.
If you get nothing else out of this, I hope you remember you absolutely need to have conversion tracking set up so that you can measure your leads and sales and be able to calculate your return on investment.