AdWords,math: you CAN’T win with a $100 campaign (sorry!)
You just got that $100 AdWords coupon in the mail and it’s burning a hole in your pocket. You’re dying to try AdWords and you just know deep down that if you got started with an online advertising campaign, it could help you make a boatload of revenue.
But let’s head to the blackboard for a moment and look at why — although AdWords may well be a GREAT fit for you — it’s absolutely impossible to make a $100 campaign work.
When you get right down to it, AdWords is a game of numbers and percentages.
Based on your campaign parameters including keywords, geography, budget, etc., Google will serve your ad to a population of its users.
On average about 2% of the users who see your ad will click and end up on your site or landing page. This is what search engine marketers call a “Click Through Rate” or “CTR” for short. And, in case you didn’t know, AdWords is “Pay Per Click” advertising, which means that it’s free for you to show your ad to as many people as you want, Google only charges when a user clicks on it.
If your landing page is well-designed and includes a compelling offer and a strong call to action, a successful campaign will see 1-4% of traffic convert into leads. We call this a “Conversion Rate.”
From here, the sales process takes over. Not every lead becomes a sale or even a legitimate revenue opportunity. Let’s say, just for the sake of argument (and to make the math easy) that you tend to close about 50% of cold website leads.
This is the nature of the AdWords sales funnel: a very large population quickly becomes a relatively small number of leads and sales.
Now let’s take our $100 budget and go back to the top.
Let’s say you find a combination of keywords + geography that can be bought for about $4 per click. So your $100 coupon gets 25 people to your landing page or website per month, and a 1-4% conversion rate off those visits gets you MAYBE one lead.
Result? Zero revenue.
Keep working the numbers, you’ll find that I’m right across the board on this: there is NO WAY, short of miraculous intervention form a higher power to make a $100 online advertising campaign profitable on AdWords. You really need to invest $1000 or more to get any results no matter how you work the math. The $100 coupon is a great discount but it’s just that — a discount not a test budget.