AdWords
3.5K members online now
3.5K members online now
Improve your AdWords performance and boost your ROI, CTR, and Quality Score
Guide Me
star_border
Reply

AdWords Campaign cost efficiency

Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

Hello,

 

As a beginner, it looks I still have some basic lessons to learn, grateful if somebody can give me some hints regarding the following situation:

 

Trying to advertise for a small piece of software - 20 EUR selling price, I found out that around 1 click from 200 may turn into sales. At a minimum average cost of 1 EUR/click (in fact, Adwords suggests bids between 1 and 5 EUR/click), it looks that I should spend around 200 EUR for a sale of 20 EUR. Or, at maximum, I should spend 1000 EUR for a sale of 20 EUR.

 

If we take it the other way around, at the lower bids of 1 EUR/click, it looks that only to reach breakeven, I should have a rate of 5 clicks from 100 turned into sales - which appears for me as "mission impossible". If we go to maximum suggested bid of 5 EUR/click, I should have 25% of clicks turned into sales.

 

The question: is there a way to advertise on Adwords for low price products (such as 20 EUR software), or it only works for products with selling price above 300-400 EUR?

 

Thanks in advance,

Mihai

2 Expert replyverified_user

Re: AdWords Campaign cost efficiency

Rising Star
# 2
Rising Star

Hi Mihai,

 

Yes, it is possible to advertise any product or service, irrespective of the price, provided you have your goals set clearly and make the best use of AdWords features.

 

There are a few important metrics to consider, before analyzing conversion rates. Firstly, what kind of traffic are you getting? Creating tightly themed ad groups, specific keywords, match types, negatives - All this would help you get the right traffic. Conversion rate would then be based on landing page effectiveness and also user behavior to some extent.

 

Coming to your question about high CPC, there could be two factors:

 

Keyword Quality Score: This is calculated by Google based on CTR majorly. Ad ranking as you may be aware, is a product of Quality score and bid amount. If your quality score is less, you would have to bid more to kind of compensate on lost QS to get a decent ad rank.

 

Competitive Product/Service: Despite having good account and campaign structure, it is possible to have high CPC, if the product/service is very competitive. For instance: Insurance services, stock broking, trading etc.

 

To sum it up, you'll have to work on increasing your quality score to be able to get a decent number of good quality clicks with the same budget. I'd suggest these articles to help you understand a few basics:

 

Account structure

Themed Ad Groups

Keyword match types

Negative Keywords

Search Term Report

Ad Text Best Practices

 

Here's a nice article written by one of our Top Contributors, worth reading I'd say. I'm sure you'll have a lot of questions as any one would in the beginning. Feel free to write back Smiley Happy

 

Cheers,

Sumanth

Sumanth Sridhar
Marked as Best Answer.
Solution
Accepted by topic author Mihai A
September 2015

Re: AdWords Campaign cost efficiency

Top Contributor
# 3
Top Contributor

Hi Mihai,

 

Sumanth has given you a great reply there so I'd definitely recommend wading through the information he's provided.


However, I will say that you are going to find it very difficult to achieve good direct profits with software around €20, purely because of the math involved, as you've already explored.


That said, one thing to consider is the longer-term effects of AdWords.  Is the software something that is likely to be recommended to others, for example?  It could be that one sale driven from AdWords, over time, actually produces 2 or more sales via recommendation so it might be worth considering how you can leverage this.

 

One common method is to provide a bonus for the original buyer if they sign up a new customer.  What this bonus is will depend upon the software but it's a good way to get other people to do the hard work of selling your product!  If possible, you could also look at selling in a different way, perhaps subscription or annual license, which would increase your long-term profitability.

 

Don't forget Remarketing.  Remarketing via the Display network can be quite low cost and if you get decent organic visits, the lists can be built from these, rather than costly Search ads.

 

Good luck!

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: AdWords Campaign cost efficiency

Explorer ✭ ✭ ☆
# 4
Explorer ✭ ✭ ☆

I agree with Sumanth Sridhar.

 

Adwords is open for all businesses (Small and big) but depends on you how to get benefits. If you have small budget but competing with big companies, you should work on your budget, targets, keywords and ad copies. You should Identify lesser competitive keywords with nice search volume. Limit your campaign for a small but most profitable location.

 

These are some basic tips on which you should work on. Every small plant has opportunity to become bigger. You can also.

 

If you like my answer, please award me start. Thanks
 
 

sRe: AdWords Campaign cost efficiency

Visitor ✭ ✭ ✭
# 5
Visitor ✭ ✭ ✭

Thanks for the answers.

 

It looks that in order to obtain 200-300 clicks per day, at around 2%, -3% CTR, one must pay around 1-3 EUR/click. Alternatively, a bid of 0.2 – 0.3 eur/click might bring around 5-10 clicks per day - which means no campaign. Hard to implement this for direct sales… unless if you sell a product which brings a margin around 200-300 EUR per unit sold.

As about software, a very large number of products have total price in the range of 15-60 EUR – it looks they don’t fit at all in Adwords "price list".

At 1-3 EUR cost per click, it now appears to me that it is a nonsense to advertise direct for a product which brings a margin below 200-400 EUR/unit sold (what golden product would that be?)…. Of course, there might be some details which, yet, I don’t understand.

 

Cheers,

Mihai