How to Get Started with Google Ads
Is Google AdWords right for your business? Paid acquisition, paid search, pay-per-click, call it whatever you want — it’s a paid channel. AdWords can be either a very profitable investment or a very wasteful expense. So how do you know if it’s right for you?
AdWords is not right for every business. Across a lot of different industries, when managed properly, AdWords can be a tremendous tool. But we’ve seen in some instances, whether it’s from improper management or from some other reason, it was not as effective as it could have been.
The first thing to consider is, “What’s the customer value?” If a customer has a high value, likely it would make a good investment.
But if a customer has a low value, then you really need to ask, “What’s the end goal for doing this form of marketing? Am I looking to get a return on your investment off the first purchase from a customer?”
AdWords may not be a good idea if it’s a onetime purchase where someone might not come back. Let’s say you sell mattresses, where it would be uncommon for someone to buy multiple items from you over a period of months. Obviously, if you have an expensive product, more than likely it’s only going to be purchased once.
Also, AdWords may not be a good idea if the cost of goods is very low. For example, if you own a yogurt shop, your cost of acquisition versus the cost of sale might not necessarily be profitable on the first sale. On the other hand, if you’re able to attract someone who just moved into the neighborhood perhaps it could be profitable if they keep coming back to you.
However, it might not necessarily be profitable even if someone buys from your company multiple times. For example, if someone buy from you two, three, or four times and then that’s it, but the cost is not necessarily very high. For example, there is a group that attracts brides-to-be. This group charges around $25 a month. However, the typical span is only about three or four months for someone to be in that group. That would not be profitable if your cost of acquisition was $75.
Some businesses have a better chance of bringing in a customer more than once. So, is it a onetime purchase, or is it a five-time purchase? What is the yearly value of a potential customer to your business? Overall, if you can expect the customer to purchase more than once, then you have to understand the proper numerical value you can assign to a new lead.
Let’s say you’re a CPA who’s new to the digital advertising market. Could you benefit from AdWords? Well, it wouldn’t make sense for you to advertise for tax refunds. The cost of acquisition is too high considering what you would make. If you charge $100 to prepare someone’s taxes, factoring in time and advertising expense, you would likely be left with very little money. However, if you make money doing corporate accounting, then that can be a very profitable place to compete on Google Ads.
We don’t want to be in a situation where we are in a race to the bottom. We don’t want to be competing with, in this case, H&R Block and all of these do-it-yourself tax services who will get it done f at $29.95. This is not a situation that you want to find himself in.
But with some thought and some planning, we can ask, “What are the most profitable services that you’re currently providing? What does the competition look like in your area?” These things need to be taken into consideration to make an intelligent decision.
For businesses that are very locally targeted, say a barber or a local tax person where someone is not going to want to drive 25 miles to meet with this person, then perhaps AdWords can be very profitable even if it is expensive. When you geo-target who you want to reach, you’re going to be saturating a very small, confined market. This will make you much more profitable because your budget is going to be able to go much further and the chances of conversion are significantly higher.
There are so many factors to take into consideration where we can gauge relative success or lack of success. A person who has an ice cream shop isn’t going to attract business from people that are probably more than three miles away from their location. Virtually nobody’s going to drive 10 miles to eat their ice cream.
So, even though their margins are small for a particular sale, it could be a profitable endeavor for them if they push ads to geo-target that particular area. There could be a scenario where, with a couple of visits, they would be in the black. Whereas other smaller margin businesses that are targeting a larger geographic area might not break even. This is an example of optimizing for the customer lifetime value.
Now let’s say you’re selling a refrigerator with a total sales price of $700 and the cost of goods is $500 and then shipping and delivery is another $150. Then no, it does not make sense to sell that specific item through Google Ads, even though it’s a higher total sale.
What if the business doesn’t have a great website? What if it’s five, 10 years old, whatever the case may be? How important is the website in the grand scheme of things?
In the grand scheme of things, the factor of the website itself also plays a critical role. However, for many local businesses, a little micro-site or even a landing page can act as a Band-Aid for the meantime, depending on what exactly they’re advertising.
If you’re a lawyer, a CPA, or a plumber, you could certainly have one semi-long landing page instead of a full website. It has information, your services, a contact form, a couple calls to action, etc. These can certainly suffice to run an effective pay-per-click campaign.
A landing page is a longer-form page meant to direct a customer to an action, either to pick up the phone, submit a form, whatever the case may be. And in this scenario, if the main website of the business is not up to par, we could develop some kind of a Band-Aid for the time being. We could direct traffic to one really great landing page maybe while we’re developing a new site for the business that is more in line with today’s digital landscape.
Next, you’re going to want to make sure, regardless of the industry you’re in, that you have the opportunity to bid on the keywords that have high volume and low competition. If you look for a plumber, sure you’re going to have high volume, but you’re also going to have high competition.
Let’s say someone’s looking for a commercial plumber in Fort Lauderdale. That’s a much more targeted search than just “plumber.” A lot of people who are just getting started don’t really understand how ads work, so they’re going to be bidding on “plumber.” You might find that someone is trying to sell a plunger, but they’re still bidding on the word “plumber.”
At the end of the day it’s really about user intent. Google seeks to find the right mix and balance between advertisers and customers. Customers go onto Google and they search for things because they trust Google will deliver the right results. On the flip side, Google is also an advertising platform. The companies that pay money to advertise on that platform need to have confidence that Google is going to put the right type of prospective buyer in front of them, and that’s really the key. It’s really an ingenious system.
So, there has to be trust from the user’s perspective that, “Hey, I need some information. I need to find something. I need to do some kind of action. Where am I going to go? I’m going to go Google it.” Everybody does it.
One of the coolest aspects of digital advertising is that, unlike a billboard where you’re paying for anyone and everyone to drive by and in theory see your billboard, with Google Ads you’re only getting your ad in front of people who want to see it. Well, as long as your account’s set up correctly.
If someone is looking for a plumber in Fort Lauderdale and you’re based in Miami, there’s no reason your ad should be showing up there because who’s going to call a plumber in another city? But targeting based on location is just one aspect. Now we can layer other elements into who we want to reach and target.
We start at a very high level with a city or ZIP code of who we want to target. Now, we can expand that based on miles or we can exclude specific ZIP codes.
We’ve dealt with service providers, such as general contractors, who do not want their ads shown in certain areas. Maybe they want to exclude areas that are underdeveloped, low-income areas. Or maybe they want to exclude areas with brand new construction because it would be unlikely that someone would need a contractor on a brand-new home that just got built.
So, you can still target a city, but you exclude specific areas. That way, you’re maximizing the output of your ad budget.
Can we look at it the other way as well? Is it possible not just to exclude but can we also include certain areas that we want?
You certainly should start by including. I can’t tell you how many times I’ve jumped into campaigns with new clients and they can be whatever business you want, but if they’re a local business, you see them targeting the entire United States and they can’t figure out why they’re not getting a return on their ad spend. Happens all the time. It’s really just poor management.
So what I’ve taken from you so far, if I’m looking at this from a 30,000 foot view, there are a number of criteria, of layers that we need to take into consideration when building an account and maintaining an account. There’s so many variables and with one variable out of line it could significantly affect how our campaigns are performing.
Sure. I think something else that often gets overlooked is finding something that is trackable yet still scalable. Word of mouth from say a doctor’s office is trackable because you can hear, oh, I got referred to you by John Smith. However, that’s not really a scalable marketing campaign. At the same time, billboards is certainly scalable. You go in, you write your check, they’ll give you as many billboards as you want to take. However, it’s not really a trackable marketing technique because how are you going to know where someone first heard about your brand?
So Mike, with the billboard, again, they could have seen the information, they could have looked it up later on. They could have placed a phone call later on who knows where their journey started.
So what do we do now? How do we know if Google Ads is good for a potential customer or not and how can we ensure that we give our listeners the best possible information upfront to consider when thinking about AdWords for their business?
So I think one of the first things that needs to be considered is what is the goal of getting involved with paid search? Now, if you’re a manufacturer, and I’m not talking about a brand, but if you actually manufacture an item, maybe paid search is not necessarily the right marketing channel to go down but you could explore content. You could organic. There’re other strategies. However, if you’re not going to acquire a customer because there’s not user intent looking for specific textile manufacturer, then Google Ads might not be the right solution. However, for most businesses the first thing is to determine what is going to be deemed as a success. What is a measurable KPI that someone would be happy with? Now, it doesn’t necessarily have to be a return on your investment.
It easily could be brand presence, brand market growth, acquiring customers. Because, at that point you can use it if you’re going to get people in, if you know you’re going to be able to convert them or upsell them later or sell them something else down the road. You don’t necessarily have to be profitable from the first click. However, it does need to be tracked and it needs to be tracked correctly and you need to understand the full value of what a customer is actually worth before you decide this is how much I want to pay, or this is the cost of a lead because is that lead profitable? Maybe, maybe not.
So, understanding the total value of a customer prior to starting AdWords is priority number one. Then allocating a budget and saying, how much are we willing to spend for this marketing budget and how much should every lead cost us? This is all trackable. Everything is reportable with AdWords. That seems to me the best strategy from a starting point. That’s really where we start with all of our campaigns from the initial build.
We certainly start with keyword research, understanding what keywords profitable, what keywords will generate clicks, but not ones that we want to prioritize to have the bulk of the spend account for.