You Can’t Win At AdWords & Why Your ROI Sucks!

What a downer to read something like that, plus when you read it from a reputable source… That is exactly what I did the other day while reading the Website Magazine. The column was called “Improving AdWords ROI” by Timothy Seward. The title brought me right in, “Aah, another nice ROI nugget!”, I thought. As I read on, I started getting an uneasy feeling about this article, it was actually very disappointing, well for most of us anyway. I am now thinking, maybe that is what they wanted…

The article lists reasons why AdWords is overpriced and as Timothy writes he rules out mostly everyone except the guys with the bottomless pockets. If you don’t have the means to keep at it, paying up for the top, first-page spots, you’re pretty much out of the game, so don’t waste your time and money, here is why, keep reading below.

“AdWords is overpriced for those with inadequate business models”

“My business model is great” you say, “I sell a great product and have a good profit margin”… NOT ENOUGH! The business model Timothy is talking about goes beyond the one sale, it includes the lifetime sales from the same customer. This includes the way you capture and nurture your leads and existing customers to generate repeat sales, the customer service that appeals to your customers and makes them like you and refer others. The algorithms that match previous sales and customer data to generate opportunities for new sales.

This is all very exhausting and advanced stuff, no mom-and-pop, brick-and-mortar establishment can possibly compete with something like that. Why would they need to? Because the top shots that are bidding up the top cash spots on the first page of Google can afford to overpay for their leads because they will make their money back and profit later, can even take as long as 12 to 14 months before they break even or make a profit from a lead. These guys have deep pockets and can afford to do that, but what about you and me? We settle for the second page if we are lucky or third or tenth.

Here goes the next one.

“AdWords is overpriced for those with poor cash flow”

That sure rings a bell here, Lol. Yeah, I know, not funny. “AdWords success is often a cash flow game where the best funded get the upper hand”. I mean, we all know that in the back of our minds and no one really talks about this out loud. How can those guys afford to pay so much per click when they sell the same product as I do and have about the same profit margin? The truth is they can’t afford it, they just have more money than you. They can afford to wait out the long sales cycles. This may especially effect the subscription based businesses because their value of a customer is based on a long cycle. So they better have some funding lined up before taking on AdWords.

And one more.

“AdWords is overpriced for those battling for top position”

And that can really be any and all of us. But the truth is it all depends on our competition, on how crazy they are. I am talking about ego-based bidding wars of the well-funded. We, with the shoestring budgets can’t come close to those that have money, because sometimes you will see that they will keep bidding over each other just to be on top, way beyond anything that makes any business sense. In these situations, it’s best to just walk away before you waste any more money on a pointless attempt to crotch-kick the big guy.

The article goes more in depth on these points and a few more but I found these to be the most bothersome so I had to write about it.

What are we to do than?

We find the long-tail keywords, that are not that popular, we find micro-niches, where we can afford to be the big guys and we play. We learn, we research, we test and we track.

Have you tried the Facebook PPC advertising yet? I’ve been having some success with it so maybe looking into that may be more effective for starters anyway. We found that sending the ads to a Fan Page rather then an outside landing page, saves you about 30%, so maybe look into that too. We built a Facebook Fan Page customizing tool called FanPageEngine, that may help you create your own custom Fan Page landing page.

Ok, until next time,

~ Valik

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