Google AdWords has long been referenced and touted as a great place to bring in new sales and leads for your business.
But we’ve all heard the horror stories along with the successes, too: Losing money, failed campaigns, sinking budgets and going bankrupt fast.
It’s true, AdWords is essentially gambling: you are putting your own money on the line hoping that clicks convert. So… is AdWords right for you?
We could say yes, based on the fact that Google is the most widely used search engine in existence, meaning you can reach almost any target audience searching for any product or service.
But it’s not so easy.
In today’s guide, we’ll walk you through the right steps to find out if Google AdWords is right for your business. Let’s get started.
AdWords is home to nearly two million businesses in just the United States alone. And those businesses generate an additional $222 billion for the United States economy.
Before we dive into researching AdWords for your own business, it’s critical to understand the ins and outs of AdWords and how it works.
Google AdWords Overview: A Quick Breakdown of What It Is and How It Works
Google AdWords is made up of multiple networks that allow advertisers to pay for their ads to show up on Google search results, YouTube, Gmail and partner websites for the display network.
For example, searching for “women’s necklaces white gold” will return a list of the top four ads for this search:
These are ads on the Google’s Search Network.
Clicking on any given ad will direct you to that sellers landing page where they hope that you will convert and buy products.
On the search network, the most popular network for advertising on Google, you pay for every single click that you generate.
For example, if someone searches for that query above and clicks on your page but doesn’t buy from you, you still pay for the click.
Cost per click, otherwise known as CPC, is the average that you will pay for clicks. This average shifts dramatically based on different terms and industries.
For instance, keywords for lawyers are going to be very expensive compared to cheaper e-commerce products.
Why? Because keywords on the search network are priced on bidding. Meaning people set limits to their bids and only pay what they can to ensure that they produce a profit.
Ranking your ad at the top of the search results is determined by Ad Rank. Ad Rank is comprised of multiple factors like bid amount, quality score, and more.
Essentially, if you bid higher or have a better quality score (more relevance), you will rank higher.
This all brings us to one key point: what is AdWords really best used for?
With AdWords, you can do just about anything. Brand awareness, sales, leads, consultations, etc.
But AdWords generally excels at driving new sales and leads. If you are a B2C company looking to sell to consumers, you can easily do that.
If you’re a small B2B company, you can drive tons of leads.
Four steps to discover if Adwords is right for your business
Ready to do some research to see if Google AdWords is the best choice right for you?
#1 – Assess Your Marketing Budget, Time Constraints, and Product Offering
One of the biggest hurdles for most to cross when signing up with AdWords and running a campaign is budget.
Can I afford this? Will my money be wasted?
It all goes back to the loss aversion theory: “people’s tendency to prefer avoiding losses to acquiring equivalent gains.”
Simply put, we’d rather keep our money than risk it for an equivalent return.
But AdWords can provide some powerful results, and on average you can expect to double your returns.
A great way to conduct research is to start analyzing average cost per clicks in your industry and benchmarking that cost with conversion rates.
This will help you to calculate how much you likely will have to spend in a given month and what returns you can expect to generate.
This simple cost-benefit analysis can paint a clear picture of baseline success with the potential for much more.
Acquisio recently (2018) conducted an analysis of average CPCs in each industry for AdWords:
Start here and take the current CPC “Without Machine Learning” as your benchmark in your industry.
Write that number down and now look for the average conversion rate (again, without machine learning) in your industry:
Now that you’ve got both your conversion rate and CPC averages, you can run a simple calculation to see how much you can expect to pay for sales and if you can break even.
To run this example, I will take averages from “Retail.”
With a conversion rate of 3.86%, it will take you around 25 clicks to generate one conversion.
For a single retail conversion on AdWords, you can expect to pay (on average) $33.75 (CPC * clicks needed for one conversion).
While this number is obviously broad and will differ based on products you are selling, it’s a generalized idea of what you can expect to pay at average rates.
Run this simple analysis and see if you can afford the costs. Take into account factors like lifetime value, too: LTV is the amount that a customer spends with your business over a lifetime.
So while $33 might seem steep for acquisition, if your average customer buys from you multiple times a month or year, you can easily make more than you spent to acquire them.
After analyzing your current budget and the costs you can expect, you have to see how much time you have on your hands.
Do you have employees or anyone that can help run your AdWords account? Can you outsource it at a cost-effective rate?
Managing AdWords is a time-consuming job. Audit the amount of time you have to work on it and expect to dedicate a few hours each week to maintain it. Time-saving tips can help, but you still need to set aside time.
Lastly, assess if your product is best for this medium. Is your product offering easily sellable online? Is it virtual software? Is it a product that sells better with photos?
While AdWords seems like the place that everyone needs to be, there are countless other outlets for selling: Facebook, Instagram, Bing, Twitter, LinkedIn, and more.
If your product is tough to sell without images, consider a platform like Instagram or Facebook. For example, one wallet company ditched AdWords due to the products not selling well without diverse product images. They turned to Instagram and exploded their sales, growing to six figures.
Evaluate your current product and key drivers of your sales, and you can quickly determine if simple text ads are enough to spark interest.
# 2 – Do Keyword Research To See Your Traffic Potential
As I said before, AdWords is time-consuming. It can take weeks to get your account situated and ready for success, not to mention daily and weekly tasks like creating new ads, adjusting budgets, scouting new search terms and adding negative keywords.
The list goes on and on.
An easy way to figure out if AdWords is right for your business is to do keyword research. To see how many people (if any) are searching for your product for it to be worth it.
If only 15 people are searching a month, the time and effort required might not be worth it for your bottom line.
To get started, head to SEMRush and search for keywords based on your products and services. The key metric to analyze here is “Volume.”
Volume is the estimated amount of times a given keyword is searched within a single month.
If your volumes are relatively high, it’s a good sign that users are searching actively for your products and services.
If you can’t find keywords that generate more than a few hundred searches a month, your product might be too niche to see massive boosts in sales from AdWords.
# 3 – Do Competitor Research
Competitor research is a great way to uncover if people are advertising on search terms that you want to target.
If competitors are bidding on terms, chances are they are generating some good sales. And sitting idly by and letting them reap the rewards without a little friendly competition is a big mistake.
On top of that, competitor research can uncover some great data on how much a company is likely spending to maintain their account and bid on those terms.
That gives you a picture perfect idea of your needed budget.
The first step to take is simply heading to Google. Search for your terms to see if any ads are currently running, looking to see if any direct competitors are bidding:
If you find direct competitors bidding on terms that you are interested in, you can head over to SpyFu and type in their website to get detailed information on their keywords, ad text and even monthly spend.
Search for their domain, and you will pull up a free to view monthly overview that gets updated each month:
SpyFu is a great tool to uncover lists of keywords that your competitors are using. The budget information can help you understand how much you have to spend to compete against them, too.
Download their keyword lists and ad copy, and you can slash your setup time in half, generating a list of ideas and text.
Use competitor research to get a solid idea of what your competition spends and what keywords are providing the biggest returns.
# 4 – Test The Waters
According to Google’s Economic Impact Report, on average, advertisers on the AdWords platform generate $2 for every $1 spent.
Meaning you can expect to actually double your investment into the platform.
How can it average such a high ROI? This is likely due to the fact that the AdWords platform has a nearly endless amount of advertising options. From different targeting and audience customization to ad types, almost any business can find useful tactics and mediums that compliment their current marketing gameplan.
For example, if you run a local business and want Google to handle most of the legwork with AdWords, you can try running ads on Google AdWords Express and have ads up and running in just 15 minutes.
And guess what? AdWords has an option for that: Gmail ad campaigns.
Or maybe your product is virtual and requires a product demo. In that case, you can test the waters for cheap using TrueView ads in AdWords. These allow you to target users on YouTube and display video ads to your audience.
You get the point: there are countless ways, methods, and mediums to test on AdWords, even if your budget is small.
Any and every business type advertises on Google. Set aside a small budget and test the waters. Run different campaigns and see what results you can generate.
After all, you’ll never know until you give it a shot.
Google AdWords is one of the best places to bring in new traffic, leads and sales for any given business.
But knowing if it’s right for your business is no easy feat.
Start by analyzing your current budget. Look at how much you have to spend and what you can expect to pay based on average costs and conversion rates in your industry. Assess your time constraints and your product offering to see if it’s a good fit.
Research your competition and see if they are finding success. Chances are if they are driving sales, you can too.
Research keywords you are interested in targeting to see what kind of traffic can be generated to see if it’s worth your time and money.
Lastly, if you still aren’t sure, just test the waters. There are countless formats to advertise in that can appeal to a wide variety of businesses.
If all else fails, just give it a shot.