How Profitable is AdWords for You?

[after_hours]

For those running AdWords for your own site/business, how profitable is it for you? I ask because in my experience it seems like it's getting harder and harder.

[netmeg]

If it weren't profitable, we wouldn't be doing it.

[after_hours]

Not asking whether it's profitable or not rather how profitable it is for you? In other words, is it the most profitable channel in your advertising mix? Does it account for the majority of your sales? Etc.

[netmeg]

Oh. Nah, I don't give out that info.

[Tropical Island]

It is becoming harder & harder to justify continuing with many terms that we have advertised under since 2002. Google is now asking up to $1 a click for terms that we need lots of volume to reach clients.

For a small business like us it's gotten too expensive.

I've written them asking why after 8 years of advertising under these terms they are now virtually closing the door to us. I need these terms to reach the people I need to reach but can't turn a profit at $1 per click.

It doesn't help that foreign tourism is down 74% in our market.

We have gone after the national market to survive however they only represent approx. 12 weeks a year of business.

Sigh! It's very frustrating.

[DiscoStu]

@Tropical Island did you write Google to ask them to lower the bid on a keyword so you could afford to advertise on it? It's not Google who is raising the price, it's the competition. If other people are advertising on it it means they've found a way to increase their profit margin so they can afford to pay $1 per click, and you should look at what you can do to do the same. If you're talking about the min bid then you should look at what you can do with your quality score.

I've been working in many different verticals over the years, and I have to say that Google is still very profitable thanks to all the new tools they keep on offering. My advise would be not to use a static model and always try to utilize whatever tools become available immediately to gain an edge on your competition. For the display network for instance, you can target each ad specifically down to device, operating system, domain etc. and see the exact conversion rate for all of them. It's in getting that granular the profit margins lie - with that specific information you should be able to figure out how to stay profitable in your vertical, or you business model simply isn't efficient enough to stay competitive.

Track better than your competitor, test and tune your landingpage (video, layout, forms etc) until it's better than your competitors, and tweak your backend process (eliminate middle men, do direct/custom deals with providers etc) until it's more efficient than your competitors. If you do that, you will be more profitable than your competitors, so unless the field your in is dead (unlikely) there should always be a way to win. Being a small business can actually help you as making changes can be extremely difficult in larger businesses as the smallest change may have to pass through multiple departments. As a small business you can test and change and experiment much more aggressively and freely. So in summary, I think the profits are there but you have to work harder & smarter than everyone else to get it.

[outland88]

Google in early July brought in ads from outside the topic areas where I advertise to drive prices up. In other words I lost keywords and that’s hard to compete against. On the other hand clicks increased because Google suddenly opened up keywords they had kept advertisers out of for years. Opposite of what Google’s argues there was always plenty of inventory. Really ridiculous because it showed they didn’t want to loose the bird in the hand but wanted to force prices up at the same time. You can argue that’s just business but you really have to switch into full-time “game mode” instead of just advertising.

Overall IMO Adwords has just become a “pain in the rump" for many small businesses unless you can devote a full time living to it. It consumes a lot of time just doing the minimal upkeep. Of course if you’re doing it for a full-time living you’ll likely see fewer problems because you don’t want to discourage people from it.

[Tropical Island]

Disco Stu:

Thanks for the advice. I've known down deep that part of the problem of reaching the general terms I need is that my content is specific. This is definitely causing a "quality score" problem.

Unfortunately the specific terms do not have enough volume to cover our needs.

My "competition" are the large package booking sites while we are a small B&B.

Because we are a tourist area the "general searchers" are the ones we need. They make a decision to visit our Island & go looking for information which includes accommodations. They don't search specifics because they find what they want with the general searches.

We also compete with a famous drink that has the same name as our area. It's very frustrating especially as we have been under these terms since 2002.

I guess I'm going to have to invest some hours designing specific "general pages" for these terms.

outland88:

Overall IMO Adwords has just become a “pain in the rump" for many small businesses unless you can devote a full time living to it. It consumes a lot of time just doing the minimal upkeep.

I couldn't agree with you more.

[netmeg]

I'd look closely at Facebook marketing, if you haven't already.

[after_hours]

I'd look closely at Facebook marketing, if you haven't already.

Absolutely agree.

[bwnbwn]

after_hours try going after as many long tail terms as you can that may only send a couple visitors a day to the site but they add up and you can reduce the cost per visitor.

I do this and add a few a day go over what the previous day added has done for me. I do go in and change the keywords landing url to specific url's I want them to be sent to. So I will build an ad per url almost some can be used for multiple search terms.

This enables me to have a good qs for the keyword and sends the visitor to the specific product/service they searched for.

This is more work but the end result is a solid foundation for the visitor and for your ROI.

And by all means use the negative keyword are to stop worthless traffic.

[DiscoStu]

@bwnbwn I actually find that it's easy to lose money with long tail phrases, at least in the short term. There's so little data coming in on each phrase that typically it will take several weeks to get significant data. If you only try a few phrases at a time it will take a very long time to find enough good ones that it will bring you sales of any significance, and if you do many your budget will be spread out across so many terms that you will run a high daily budget and you will need to do so for a while before you can know for sure who the winners and losers are.

I'm not saying there's no value in long tail phrases, but I actually consider it a more advanced technique and not a good way to try to get a campaign going. The best IMO is to go after highly specific medium traffic exact matches and figure out how to at least break even on them. If you can't do that you're in trouble, but if you manage through tweaking and testing you can expand from there. To systematically test out long tail traffic requires either the patience of an angel, or a budget that can afford to bleed money for a while - and typically people who are trying to get their business don't have a lot of either.

Just something to be a aware of for people who are trying to get an account off the ground. This problem will arise the longer tail it is - it may seem a great idea to add 1000s of super cheap long tail keywords, but they can rack up a pretty high bill without you being any wiser to what actually works and what doesn't.

[bwnbwn]

DiscoStu I didn't say longtail was the only terms I went after I just suggested he try them in his campaign as a possible better ROI than what he is getting. I as well agree with you on getting it off the ground but I have to assume he has already covered the middle terms.

[smallcompany]

It's not Google who is raising the price, it's the competition.

Competition that has no control over AdWords' machine. Kindergarten approach with full respect. Unknown algorithm can do whatever the creator wants. The end user can do only what the creator let's him do. This means that they can always turn the water on so it rises over your mouth right up your nose. One more degree and you want be able to breathe.

This is all the result of smart approach by Google, including things like conversion tracking, Google Analytics, and who knows what else. They made it to almost take the DNA of an advertiser.

Have you ever watched a gypsy guy making a bear dance? Quite cruel...

[SEO_Shruti]

Google Adwords competition is going harder and harder. To get profit your ad needs to be effective, the landing page directly says about what you are offering in ad, it should be interesting with a call to action button.

[DiscoStu]

Have you ever watched a gypsy guy making a bear dance? Quite cruel...

So it's cruel to provide a service that allows competitive businesses to make millions in profit and drastically grow their businesses? Unlike the dancing bear you have a choice to do it or not, so if you don't like it just don't use it. You make conversion tracking and analytics seem like part of a diabolical scheme when it's exactly those things that allow you to increase the profit margin.

Competition that has no control over AdWords' machine

It's an auction - by definition the competition has control of the machine. If everyone were to agree on bidding low, the bid for the #1 spot would be lowered accordingly.

[Green_Grass]

"It's an auction "

This is FUD.

Pray tell me how does Quality Score ( based on mostly unknown parameters) provide competitive bidding?

If every one had the same QS then it may come somewhere close to some kind of an auction. This is just price manipulation under the guise of an auction.

[RhinoFish]

here you go:
[en.wikipedia.org...]

more here:
[en.wikipedia.org...]

[DiscoStu]

And in case RhinoFish's links aren't enough, here's Google's own explaining how Quality Score works in the auction system - I highly recommend watching all of it

[adwords.google.com...]

[Tropical Island]

Ok, I give up.

Yesterday this automated, non thinking machine just doubled the bid on one of our search terms that in the last 7 days has a CTR of 16.16%, the landing page is 100% on topic & our average position was 1.4.

We were paying on average 60% of the bid price.

I just don't understand! OK move us to 2nd or 3rd position if there are higher bidders but remove us completely from the first page. Just absolutely insane.

If AdWords advisor is around I would love to hear an explanation. I'll be happy to provide the keyword & account.

I've been doing this since 2002 but now I'm really, really getting frustrated.

[netmeg]

Unfortunately, I don't think AWA can respond on an individual basis.

They may be looking at CTR over a longer term than 7 days. Keep your bid where you want it to be for a day or two and see what happens.

What's your QS on that term? Somewhere up there you mentioned not wanting to pay a buck a click, and maybe I'm wrong, but I kind of got the impression you were somewhere in the tourism niche. I don't have much experience in that niche - only have done account audits - but I have always had the impression that the competitive pricing, even in 10/10 QS situations, is much higher than $1/click.

[Tropical Island]

We are a B&B or posada in Spanish.

The term is B&B - our location, a small island (in Spanish - posada "location")

The page is posada "location" with all the information, prices & photos of our posada in this location in Spanish.

30 day CTR is 13.58%, average position 1,4, average CPC 70% of bid.

My exasperation is not that I got bumped by a higher bidder but that they eliminated us from the 1st page for this term by doubling the bid (which is not $1). The $1 bids are in English.

Quality Score is 6 out of 10 which again I don't understand as the page is 100% applicable to the search term. I mean we are getting +13% CTR. Something has too be right.

[mromero]

Tropical Island, have you looked at the Top Ten websites devoted to your location and considered running a banner on one of their front pages in addition to your Adwords campaign?

[Tropical Island]

We already own the #1 website for many searches in our area and are featured on it. It is a site different from the AdWords site.

The problem with searches like - posada location - is that many of the top sites in the normal search are our competitors & wouldn't be interested in our banner. Anyway that doesn't resolve the AdWords problem.

There are VERY few AdWords ads because of exchange controls in our country. Access to hard currency is restricted & NOT available for something like AdWords.

That's why I think the auto pilot that's setting prices is not set right or can't make the number of decisions necessary to fully evaluate the situation.

This particular example is just crazy from a business point of view as I refuse to double my bid in a case that's so obviously incorrect.

[netmeg]

It's probably not the landing page, more likely it's the ad. Try some new ones. How many keywords do you have in each ad group? You ideally want *every single keyword* to be 100% relevant to that ad; if it isn't, if it's even 5% marginal, move to a new ad group and write a specific ad for it.

[mromero]

Tropical Island I can see your predicament a little now. The top websites for your country for e.g. - they would refuse your money to run a banner? If so that is unfortunate.

As for exchange controls you may want to consider an offshore account. That way you can capture most of your foreign exchange offshore and spend it the way you want. It is not as expensive or difficult to set up like in times past.

Another idea that may still be relevant today is print. In the past we helped promote a high end apartment business in an extremely competitive market. We would purchase a postage stamp display advert in the back of a top notch business magazine. That was expensive but brought in excellent returns as the folks reading the magazine were businesspersons who travel a lot and were looking for apartments for privacy and a quiet atmosphere as opposed to regular business hotels.

[Tropical Island]

mromero:

Thanks for your suggestions however we have been doing this for many years.

We have offshore accounts in the US, Canada & Europe + PayPal so access to hard currency is not a problem for us as it is for many of our competitors.

This was a comment related to the paucity of competitive ads.

As for top websites we are featured in TripAdvisor & a number of other majors. We have a FaceBook page with over 6200 fans.

That doesn't resolve the AdWords problem.

Thanks for all the suggestions from everyone.

[Azimuth]

It is very profitable for our business, around 700% return on spend over the past 1.5 years.

Its still a small part of the business but we have a very good product to sell.