The Realities of Using Adwords Effectively

I regularly help out my friends and answer questions on various shopping cart forums regarding how to advertise effectively using Adwords. What I discovered in the course of helping these people was that almost all of them had incorrect preconceived notions on how to use Adwords effectively. I’d say that probably 90% of these people believed that Adwords would just magically bring profitable conversions to their online store with very little effort and time. Because these notions were so prevalent, I just thought that I’d take the time to set a few things straight.

Reality #1 – You Need To Spend Money To Make Money

Adwords is going to cost you quite a bit of money in the beginning until you’ve settled down upon your most effective keywords. Who cares if you just received a $75 dollar credit to use Google Adwords? The goal is not to make that money last a long time. The primary objective is to get people onto your site and convert them profitably and with a high percentage.

Everyone knows how to use the keyword tool to come up with effective target keywords to advertise their products. What people normally don’t do correctly is bid high enough for their keywords. In my experience, its pretty pointless to even bother bidding unless you are going to be on the front page. This means being in the top 8 when your keyword pops up. The percentage of people who actually click onto the next page of a search are extremely low and you’re highly unlikely to generate any quality traffic from these people. If it’s too expensive to bid for your keywords in the top 8, then you should think twice about even using that keyword altogether. Chances are, if it’s out of your bidding range, then its too competitive of a keyword to begin with.

Reality #2- Adwords is an Iterative Process

What I always do in the beginning is to set aside a fairly large budget for experimentation purposes. With this initial budget, I pay for as many keywords within my price range that I can possibly think of while still being in the Top 8. Then, I let these keywords ride for several months before I look at the results.

I go through a pretty structured analysis when going through my Adwords results. First off, I look for keywords that aren’t bringing in any conversions at all and eliminate them altogether. Sometimes I try to determine why some of these keywords yielded no results and rationalize why they were not effective. I usually use Google Analytics to look up the entire phrase that was used in the search to get a better idea of what the customer was actually looking for. More often than not, I find that the people who clicked on the poor performing keywords were looking for entirely different products altogether. You’d be surprised at how many ways there are to use your keywords in a phrase that have no relevance to what you are selling.

After looking at the non-performing keywords, I then proceed to analyze the keywords that are losing money but are still converting at a low percentage. Often times these keywords just need to be tweaked a bit in order to make them worth it. For example, by examining the entire search phrase, you can usually find ways to make your search term more specific or exclude certain words to make your conversions more likely. A good example of this is with the adwords ads we use to sell our linen napkins. We sell only blank napkins in our store so we purposely exclude terms like “monogrammed” or “personalized” from these searches because we found that a large percentage of searches were for monogrammed and personalized napkins.

Finally, I go through all of the profitable keywords and determine whether then can be optimized as well. Once I have made all of these changes, I let the keywords ride again and check again in 1-2 months. This process is not cheap but its necessary in order to optimize your advertising in the long run. Most people are just not willing to shell out the cash.

Incidently, I just want to emphasize how important it is to set up conversion tracking within Adwords because its essential to know how much money your advertising dollars are bringing in. If you don’t know how to do this, find someone who can help you. Do this before you even start using Adwords at all. I’ve had several friends not set up conversion tracking and use click through rates as the criteria to optimize their ads. This is absolutely the wrong thing to do.

Reality #3 – Getting It Right Takes a Long Time

It took us probably 6 months to get an optimal Adwords setup. We still routinely check our Adwords performance and tweak things here and there, but things are pretty stable for the most part. It probably cost us about 600 dollars a month for those 6 months but it was a small price to pay for the fantastic conversion performance that we are seeing now. Just to give you an idea, we probably make close to 10-20X what we pay for on Adwords now with each conversion.

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8 thoughts on “The Realities of Using Adwords Effectively”

  1. #3 is very true. Many never make it. It’s worth hiring a professional if you’re confident in the profitability of you product. (I’m not a professional in this area.) The right pro company can do things for you no amateur will be able to do in their first year.

  2. I’m not sure if a professional is necessary. My general belief is that if you have the capability of learning yourself, it’s better to be less dependent on others. The problem I’ve found with professionals is that they sometimes give you BS since you have no clue about their topic of expertise.

  3. Hi

    Thanks for the info. However I was looking for something more specific.

    For example, people say that even though your adwords bid is higher in teh beginning, it can be reduced slowly when you have more click thru and still continue to maintain your position.

    I need more details on this. Can you throw some light on this ?

    Thanks
    Rajeev

  4. Ken says:

    Enjoying your blog, great stories, and I can relate to many.

    Here’s a few point I would add.

    ” More often than not, I find that the people who clicked on the poor performing keywords were looking for entirely different products altogether. You’d be surprised at how many ways there are to use your keywords in a phrase that have no relevance to what you are selling.”

    This sounds like you might be over using broadmatch keywords instead of phrase and exact match. Broad match keywords will return some crazy searches, so lots of negative matching keywords are needed.

    The importance of ad testing was not mentioned above.

    By changing ad text (offer) you can change the behavior and success of the keywords to a degree. So don’t dump the keywords, based on conversions alone, until you test ad text.

    Sometimes I think of ads as filters, as in a sale prequalifier. It’s a bit of a balance to maintain high impressions and click through rate. Use lots of negative keywords of course.

    Per comment about “Professional” I can recommend Brad Geddes who gives seminars all across the USA. He also published a book (much cheaper). I have attended his seminars and bought the book and no other affiliation is involved. And he doesn’t do BS :-)

  5. robert says:

    Here’s a question you should be asking yourself about your PPC: Are the correct negatives being added to your account based on empirical analysis, and are precautions being made to make sure these negatives do not conflict with active keywords? As in, are you blocking the bad traffic with negative keywords based on real data? If not, consider what that’s probably costing you in wasted ad spend. Just note that you don’t want to throw in just any variation of keywords into the negative space because you don’t want to create conflicts with the good working keywords. I had Simon help me out with this before. I’m sure he’d be willing to talk to you too if you just give him a ring at 302-401-4478 and tell him you need some help with your PPC campaigns.

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