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AdWords Management : How ROI, Costs, and Services Measure Up for Your Business

Briefly, What is Google AdWords

Google AdWords is a marketing program that gives advertisers the ability to place ads next to search engine results, and next to content relevant to your products and services on sites partnered with Google. AdWords offers other advertising opportunities, but primarily this is the focus of the program.

The actual setup of an account entails bidding on keywords, circulating ads for those keywords, and paying an amount less than or equal to the amount of your bid when a visitor clicks on your ad.

Google AdWords Management : How The Costs Stack Up

AdWords management can seem pricey, and it is for local companies. For small companies unaccustomed to budgeting much at all for advertising, the costs can be impractical.   But for those with high-value leads, with web-users actively searching for their product or service online, they should not be discouraged by the price of managing an account.   Costs associated with pay per click advertising are easy to control, and results are highly traceable. Tracking is such that a company can be highly certain, or 100% certain, that a contract or sale originated from AdWords advertising.   Often one or a few contracts is enough to cover the initial investment associated with experimenting with this type of advertising.   A highly acceptable cost considering the potential growth it can offer. Large companies also have good incentive to advertise with Google AdWords if:

  • They are worried about smaller companies cutting into their profits.
  • They market with a heavy emphasis on generating sales and are interested in getting good returns (ROI) on their advertising costs.
  • Want to establish a brand presence on the web.   Although a couple lines of text in the typical AdWords ad does not provide much opportunity to communicate your brand message, AdWords does bring visitors to your site where there is plenty of opportunity to provide a full brand experience.

To really see how the costs of AdWords management stack up, you need to start with a value calculation.

An AdWords Value Estimate

To crunch some numbers, Google offers a traffic estimator:


Here’s how to go about getting some nice, round revenue figures – all of these values depend on your business specifically, but if you are a skilled estimator, you should be able to blast through the numbers.

  • Enter a few terms that pretty specifically describe what you offer.
  • Enter a bid (Max CPC) greater than $1.
  • Enter the United States for your targeting (assuming this is appropriate).
  • Click “Continue” to get your traffic estimates.

Google Traffic Estimator

If the words you entered are very closely related to your business and your website is designed well, you can expect a good percentage of those visitors to contact you, either by phone or through a web form (this is called a “conversion”).   Let’s say 4% of clicks or visitors end up contacting you – i.e. your conversion rate is 4%.   Now you figure a percentage of those visitors that will actually buy your products or services – maybe 20% – but it really depends on your business and sales process. If you know how much a sale is worth to you on average, then you can see how the costs line up with the total revenue you can expect.   Let’s say I run the traffic estimator for one term, and it tells me I’ll get 20 clicks/day at a cost of $30/day.   Let’s also say that a sale is worth about $5,000 when everything is averaged.   Here’s how a monthly revenue calculation would look using these hypothetical numbers:

20 clicks/day * 30 days/month * 4 conversions / 100 clicks *
1 sale / 5 conversions * $5,000/sale = $24,000/month in revenue

I have an estimate of making $24,000 in revenue per month just from bidding on one term.   There is probably a whole pool of terms I want to bid on (although the search engine queries these terms match might overlap, but I’m trying to keep things simple here).   The costs from clicks is just $900/month in this example.   And then you would have costs from management fees, and all of your other costs related to offering the product or service.   Well this should be looking pretty attractive, right?   Of course the actual mechanics behind making the $24,000/month from just a very limited setup that has a large capacity to grow involves a lot of management work.   If you setup your campaigns wrong, you could easily be looking at $9/month in revenue.   This is why AdWords management can have a high price-tag associated with it.

AdWords Management : What You Pay For

A skilled AdWords manager will be concerned with all aspects of your account because each element is tied in with the other: targeting, keywords, ads, bids, and pages in your site (also called “landing” pages).   But even before you begin with a company, you should ask who owns the account.   If you own the account, once you end your relationship with the management company, you’ll still have all that work and progress that you were working for in the past.   It won’t all of a sudden go away.   So you can expect that any transition in account management won’t totally disturb your sales and won’t require a fresh start.   Given you own the AdWords account for your company (sounds silly even to think that you wouldn’t, right?), here is a short list an AdWords manager works on.   This is only meant to give you a sense of what is involved in AdWords management:

  • Researching keywords.
  • Organizing keywords into ad groups.
  • Writing and testing ads for ad groups.
  • Defining and measuring conversions for your site.
  • Analyzing conversion data to set bids.
  • Managing bids to agreed upon goals.
  • Editing and testing landing pages, utilizing good usability and marketing practices, often times employing Google’s Website Optimizer.
  • Setting proper campaign targeting.
  • Budgeting campaigns appropriately to guarantee optimal ad exposure.
  • Refining keyword targeting by setting match types and adding negative matches at the campaign or ad group level.
  • Running reports regularly to analyze performance.
  • Refining site targeting by adding placements or negative placements.
  • Reporting on traffic and conversions, taking into account other traffic sources.
  • Integrating AdWords marketing efforts with SEO or other marketing efforts.

This is the meat of AdWords management. Most of it requires a familiarity with the system that is acquired after managing multiple accounts.

Pure Visibility offers products for a variety of companies depending on your marketing budget. If you’re interested, contact us.

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About Steve Loszewski

Steve Loszewski leads the paid search team at Pure Visibility. He is individually qualified in AdWords, has the Google Analytics Individual Qualification, is an Oracle Database 10g Administrator Certified Associate, and is a Sun Certified Programmer for the Java Platform SE 6. Steve has been managing AdWords accounts since 2005 and also has experience in SEO. Most of his time is spent in the trenches, working with keywords, ads, bids, landing pages, placements, etc within the AdWords Interface. You can find him on Google+.

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