Don’t pay too much for your Google Adwords

Number one ranking for nearly every Google Adwords search term? Best read this because you may be paying too much.

Google Adwords provides a great interface to choose relevant keywords that people are searching for with their keyword tool. But there are several drawbacks if you’re new to using it and your required cost per click can be easily misinterpreted. This error is prevalent in most Google Adwords campaigns and comes from the use of the average cost per click estimates the tool generates.

Let’s take the search term “Google Adwords“. The default average cost per click rate when this was written was $17.26. It shows heavy advertiser competition and consistent search volumes. This always leads to mistake number 1. Many marketers will take this as read and bid at or over this level to ensure high placement of the Google Adwords search term.

What they should do is put in a bid to the interface and re-calculate. At an $18 bid the average calculates down to $6.22. Anyone smell a rat?

Step two is to continue re-calculating bids down. Put in $7 and automatically your cost per bid drops to $3.81. Estimated ad placement is still 1-3. Put in $4 and your cost per bid drops to $2.78, still with 1-3 placement. Keep going until you find where 4-6 placement kicks in. For this search term it kicked in at $1.80.

Most people would be happy with this; they’ve saved heaps, and automatically bid at the tipping point which in this case is a bid of $1.95 averaging $1.50 per click at placement of 1-3. Mistake number 2. This is where you need to think.

How relevant is the advert to Google Adwords. Staying within the guidelines for advertising set by Google, if you are bidding for a word that is very relevant to your business your best strategy here is to go for the 4-6 placement. Google ranks Adwords not just on the amount of money you are prepared to pay, but also on the success of the advert. If your advert is more relevant than most of the adverts you see then go for the cusp of 4-6. If it isn’t as relevant go for the cusp of 1-3.

It doesn’t end there. The next question is how relevant is thelanding page for the advert. Google also crawls the end of the journey. Mistake 3 is to send users to your home page because that is the entry of your website. However, if the link and the page you send people too is more relevant, Google will promote your advert over other adverts. Make it relevant.

That is not to say build a page for your Google Adwords campaign. Mistake number 4 is not worrying about the user experience on your website. Orphan pages are like mini-sites, they are temporary and they do nothing for a consistent brand experience of your users. Land them at a natural point page, relevant to your advert, that is a permanent feature of your website. Google provides a measure of this within the campaign ad group keywords. It is a magnifying glass you can mouse over and will tell you how strong the landing page is.

These key aspects of relevance can mean Google will view your advert as more relevant to the search term. Now book your advert and let it fly.

For a week.

Mistake number 5 is the most common – not revisiting your advert. After a week you will get a handle on how successful your campaign is going to be. It will also show average ad positions and clicks. This is where you start to average down your cost per click.  For those adverts with lots of clicks, you are probably sitting at a number one position. Drop your bid. Google likes your advert, it’s making them money, so they place it high. Be brutal, pay less.

I always drop my bids in 50 cent increments. The Advert falls and then rises as it is relevant to the search term and makes Google money. I keep doing this every week until it stops rising back. But I don’t look for position number one as the end game, more like 2 or 3.

Position number 1 always comes at a premium but doesn’t necessarily perform better. Test it and see if you have a sweet spot for you to sit at 2 or 3 and get the same number of clicks you would get at position 1. Essentially, you can drive your cost per click down. In some cases to a third of what position number 1 is paying.

So next time you get your Google Adwords generated report from your SEO firm or advertising agency and you’re number one on every search term, start dropping your bids. You’re paying too much.

Text links versus Google Adwords

I’ve recently been looking at ways of achieving critical mass for lead generation. The two that came through strongly were text links on publisher websites and Google Adwords on the google search engine. I want to be able to achieve critical mass relatively quickly and as cheaply as I can.  So I set about crunching some numbers to see which one would come out on top.

You may have already guessed the answer but be careful as this applies to New Zealand search and New Zealand websites. Because of our limited population this might not apply overseas.

The first thing I looked at were the top line revenues from previous campaigns and compare these to the cost of doing each. Google Adwords win this with a $ return on investment that is 15% higher.

Next I base lined the revenues over time to work out how much I’d have to spend on each for a comparable response. Text links win hands down here. They provided a response at critical mass levels 5 times faster than Google Adwords.

Ten I looked at the cost for delivery. Text links again win on cost per thousands impressions with the CPM 50 times lower than Google Adwords. You can’t look at this without the corresponding cost per click though where Google Adwords are only 20% cheaper. So that is a draw.

Advert positioning is also important – where is it on the page. Our average positioning for Google Adwords is number 3 – we pay less but we maintain very high relevance in our copy and our landing pages. Our text link is where ever we ask for it so text links win again.

But we could pay more for our adwords and that affects our positioning but negatively for the CPC and CPM. So what’s our click through rates. Google Adwords wins hands down with a click through rate clsoing on 1.5% and text links at 0.03%.

So if I want to turn on critical mass in a short time frame I also need to look at the capability of the media. In other words the use of the media or the number of impressions. Google Adwords, in New Zealand loses this. Our key words only deliver about 50,000 impressions a week. Text links on major publishing websites deliver around 7 million.

That means over 2000 leads are possible within a week from text links and only 750 from adwords. 750 aren’t going to get me critical mass over a week but 2000 will.

So if you’re in New Zealand and you want to turn on lead generation at reasonable prices in very short time frames choose a text link on www.stuff.co.nz or www.nzherald.co.nz rather than spending Google Adwords.