Cost per Conversion
I have been running my adwords campaign for a little over a week now. I have had to raise the bid on all of my keywords in order to get my ad to show. My average CPC is $0.50 (50 cents). I was told my Google staff that in order for me to make just 50 sales (coversions) it would take about 1,600 visitors (clicks). That would cost be $800 to make 50 sales? The product I am selling costs $9.99 and my margins are tight and I can't afford to spend more than $1.00 per conversion. What do I do??? Please help. Thank you. (p.s. I have made no sales so far and have 11 clicks total and 5,165 impressions total.)
Re: Cost per Conversion[ Edited ]
January 2013 - last edited January 2013
Hi pink, I've got to be totally honest from the start, the lower the product price, the tighter the margins, the harder it is to get Adwords to make a profit. At the end of the day you sometimes just have to accept that Adwords won't work for you (or at least not for that product at that price).
I don't know whether the figures provided by the "Google staff" (where were these people - did you call or email?) are based upon your actual account data or upon "received wisdom". If you've made no sales they can't be working from an actual conversion rate so they're kinda guessing. An average - really broad average - conversion rate is around 2%, which would mean that 50 sales would require 2500 clicks so their estimate is actually a bit on the positive side. However, as I said, 2% is a broad average and it's possible to get conversion rates up into double figures; get the conversion rate up to 12% and you need only 420 clicks to make your 50 sales.
So, before you give up you really need to look at how you can improve conversion rates. There are lots of ways to do this but to offer really effective advice we'll need some details from you.
1. Can you share your URL and an example landing page of your Ad(s)?
2. What is your current CTR for a Keyword getting a lot of clicks?
3. What are your typical Quality Scores for these Keywords? (You may have to customise the columns to see Quality Score).
4. What match types are you using for your Keywords?
Give us that to be going on with and we'll see if we can offer some constructive advice.
Edit: Sorry, just realised you've given us impression and click data. Your CTR is 0.2%? That looks like a Display Network figure; are you running your Ads on the Search and Display networks?
Re: Cost per Conversion
I can understand the situation what you are going through.
But the fact and reality is that in every business, you will have to invest. Think of your online business like a Shop where you do have to invest time and money so that you start getting profit in near future.
Honestly, in my opinion you cannot take Adwords for granted by analysing the data for only one week as you said above. There has to be more statistics before you take any informed business decision.
Did you run through the Search Terms Report and see what kind of online traffic you are getting?
I don't know what match types you are using but if the margins are very low (as you said) and you don't want to take some risks, then I would definitely prefer you to invest only on exact match terms initially till you get some conversion out of them.
Read this excellent article by TC Jon, where he explains the same situation which you are into currently. It would help you understand how this business model works.
Just few of my thoughts!
Re: Cost per Conversion
Thank you very much. My website (and landing page) is www.wholelifekitchens.com. The keyword with the highest CTR is "coconut palm sugar" at 1.2% with a quality score of 4/10. The next is "low glycemic" at 0.3% with a quality score of 3/10. "Low Glycemic" and "Coconut Palm Sugar" are both phrases I use in my ads... because they are in the name of my product... which of course, is on my website. For the above keywords I chose phrase match. I have a bunch of keywords with phrase match and then those same keywords with exact match with high bid prices (high enough to be eligible to be displayed on the first page of a search result). Then I have those keywords in broad match as well with low bid prices--because I'm afraid of getting lot's of clicks from people who aren't looking for exactly what I am selling. I am advertising on the display network as well, but my ad has only shown three times on one website and I have many placement sites chosen for my display network. So it's really just the search network I'm concentrating on right now. Thank you so much for any help you're able to provide. I'd like to be able to make this work!
Hi pink, OK... some stuff to get through there.
First off, I would take your Campaign out of the Display Network immediately. Here's how (changing Campaign types is right down the bottom). I'd suggest you plump for Search Network only and leave the checkbox for "Search Partners" checked (you may want to consider unchecking that once you've got some stats). I'd advise this because I think the Search network suits your sort of product and, even if you should use Display as well, it's better to run that under a separate Campaign of its own, but let's not do that yet.
Second, I presume you are using Keywords associated with your actual product - the Brownie mix? While the ingredients may be important I'd be willing to bet you'll be getting a ton of impressions (and a lot of clicks) from people who have no intention of buying Brownie mix. Take a look at your Search terms and I'm sure you'll find all sorts of weird and not so wonderful things in there.
The whole aim here is to raise the CTR - you want to be aiming for 5%, then once you've got that, aim for 10% and so on (I've seen CTRs up in the 40% range consistently). Getting the CTR higher will improve your Quality Score and reduce your costs (or give you a higher position for the same cost) and the work to get a better CTR should also improve your Conversion rate. What we're looking to do is only show your Ad to people who want to buy Brownie mix online. Obvious, huh? But it sounds like what you're doing at the moment is showing it to people who have a vague interest in things a bit like Brownie mix, and probably not with any intent to buy. If I'm being rude, I apologise, but I think it's true.
If you were my client and had never used Adwords before, I'd probably start with just a single modified Broad match Keyword - +buy +brownie +mix +online. I'd have a couple of Ads using DKI (Dynamic Keyword Insertion) and I'd let it run for a few days. After that I'd look at the Search terms that generated clicks and start adding more phrase and exact Keywords, along with any negatives that show up. I'm looking to focus on the main objective so it's important to include the words "buy" and "online". We don't want people who just want a recipe and we don't want people looking for stores that stock it, we want people who want to buy online. It's important that the Ad says this as well, not only to reinforce the search and make it look more relevant, but also so that if someone does happen to see your Ad who's not looking to buy online, they'll be less likely to click and waste your money or may be tempted anyway, but they'll know what they're getting.
Does any of this help?
Because I think it is so important for many AdWords advertisers, I want to repeat what Cobnut said,
"So, before you give up you really need to look at how you can improve conversion rates."
As someone who has managed PPC campaigns before the dawn of AdWords, I can tell you that the most important thing you can do to improve an AdWords campaign is done outside of that AdWords campaign. Improving the conversion rates of your website is the single most important thing that an AdWords advertiser needs to do. Period.
Just as a simple change in a text ad can boost CTR's by 100%, so can a simple change on a landing page or within a shopping cart boost conversions by 100%.
Re: Cost per Conversion
Thank you very much, Jon. This is all really helpful. I will make the changes you suggest. I also realized that I probably need to change my landing page to my "shop" page and I need to change my "shop" page by adding the price of my product and a few more pieces of information. I don't have any questions right now, but may have a couple more at some point. Again, thank you so much--this really helps me a lot!! : )