AdWords is now Google Ads. Our new name reflects the full range of advertising options we offer across Search, Display, YouTube, and more. Learn more

Ads
3.9K members online now
3.9K members online now
Improve your Google Ads performance and boost your ROI, CTR, and Quality Score
Guide Me
star_border
Reply

Feeling frustrated

[ Edited ]
Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

Hi,

I run a travel website where I sell tours on a commission basis (average of 15%, per sale).

Over the last three months I spent $3000 on Google Adwords ads. I studied Adwords techniques and took two online courses. I also hired an Adwords agency to manage my account. During those three months I generated $1000 in sales. So for every $3 I spent I earned $1 in sales. My capital has now run out and I can no longer afford to run a Google Adwords campaign. I would be tempted to conclude that Google Adwords is too expensive for someone making only 15% commission. Except for the fact that I regularly see the ads of a competitor who I know is making no more than 20% commission. If Google Ads was not profitable for him, he wouldn't still be doing it. I would like to reverse engineer his Adwords strategy. Any ideas on how I might do this?

2 Expert replyverified_user
1 ACCEPTED SOLUTION

Accepted Solutions
Marked as Best Answer.
Solution
Accepted by topic author Michael S
November 2016

Re: Feeling frustrated

Top Contributor
# 4
Top Contributor

Hi @Michael S the first thing I'd say is that there's really no reason to assume your competitor is actually making a profit, after all you were advertising for 3 months at a loss, so it's entirely possible he is also making a loss and has yet to realise it, or do anything about it.  You'd be quite shocked how often I've seen AdWords Accounts running at a loss, sometimes for many years and with a very substantial spend.  I once audited a large company who in total were spending over £4 million a year, yet had absolutely no conversion tracking, they literally had no idea if their advertising was profitable.

 

IF, he's making a profit, there are many reasons why that might be that are not "visible" simply from the Ads you see alongside yours.  He may be doing more follow-up remarketing, or running Ads in other areas (Display, Video, Apps, Gmail) that you're not and which are more effective.  His site may be more effective at driving conversions (and there's a whole book worth of reasons why that might be!) or he may have other channels that fund the campaign, even at a loss.  He may even be knowingly running at a loss, using the Ads primarily as a branding exercise.

 

As @MosheTLV suggested, if you were to try again, I'd keep things very small and focused, aim to get a profit in just one small part of what you could promote, then expand slowly.  

 

Jon

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

View solution in original post

Re: Feeling frustrated

Top Contributor
# 2
Top Contributor

@Michael S

The travel industry is a very competitive vertical with very high budgets. Smiley Surprised

You cannot fully "reverse  engineer" your competitor's strategy. You can optimize yours. But, you have a relatively small budget that restricts your targeting methods in this vertical.

I would suggest to focus on small niche products within your business and promote them is limited geo territory.

 

Moshe, AdWords Top Contributor , Twitter | Linkedin | Community Profile | Ad-Globe
Did you find any helpful responses or answers to your query? If yes, please mark it as the ‘Best Answer’

Feeling frustrated

[ Edited ]
Participant ✭ ✭ ✭
# 3
Participant ✭ ✭ ✭

In many competitive vertical markets it is difficult to design, optimize, and maintain a profitable AdWords campaign.  Even when someone who is skillful and experienced working at it, often it takes months to become profitable.  

 

AdWords is self service, but in some vertical markets you are likely to have a tough time unless you are right on the cutting edge of all aspects of AdWords.  Legal, Travel, and Insurance are examples of highly competitive vertical markets and industries. 

 

The other aspect is, when you are operating a campaign as an affiliate taking a share of the profit, you are competing with travel firms that *are* making "all" the gross margin - travel firms.  So they can afford to spend more on AdWords, and outbid you because each conversion is worth a lot more than 15%.  This is also an issue in many markets where referral sites struggle - they are competing with the ultimate seller of the product or service, but with much lower margins.

 

hth!

 

Marked as Best Answer.
Solution
Accepted by topic author Michael S
November 2016

Re: Feeling frustrated

Top Contributor
# 4
Top Contributor

Hi @Michael S the first thing I'd say is that there's really no reason to assume your competitor is actually making a profit, after all you were advertising for 3 months at a loss, so it's entirely possible he is also making a loss and has yet to realise it, or do anything about it.  You'd be quite shocked how often I've seen AdWords Accounts running at a loss, sometimes for many years and with a very substantial spend.  I once audited a large company who in total were spending over £4 million a year, yet had absolutely no conversion tracking, they literally had no idea if their advertising was profitable.

 

IF, he's making a profit, there are many reasons why that might be that are not "visible" simply from the Ads you see alongside yours.  He may be doing more follow-up remarketing, or running Ads in other areas (Display, Video, Apps, Gmail) that you're not and which are more effective.  His site may be more effective at driving conversions (and there's a whole book worth of reasons why that might be!) or he may have other channels that fund the campaign, even at a loss.  He may even be knowingly running at a loss, using the Ads primarily as a branding exercise.

 

As @MosheTLV suggested, if you were to try again, I'd keep things very small and focused, aim to get a profit in just one small part of what you could promote, then expand slowly.  

 

Jon

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

Re: Feeling frustrated

Visitor ✭ ✭ ✭
# 5
Visitor ✭ ✭ ✭
Thanks for this thoughtful reply, very helpful.


Sent from my SAMSUNG Galaxy S6 on the Telstra Mobile Network

Re: Feeling frustrated

Visitor ✭ ✭ ✭
# 6
Visitor ✭ ✭ ✭
Thanks Jon, this is a very interesting response and very helpful. I'd never considered the possibility that my competitor wasn't making a profit. It's quite possible, especially if he is not tracking conversions. It made me realize that I can't assume that all the sales I made during that three month period were from Adwords rather than from organic search (I didn't have conversion tracking set up). I definitely take your other point: if I ever start again I will start very small and make sure that one particular Ad Group is turning a profit before expanding to the next. I'll be going inch by inch, chiselling out one foothold in the very steep and smooth rockface of travel PPC before proceeding to the next. I'm thinking $10 to $20 a day...


Sent from my SAMSUNG Galaxy S6 on the Telstra Mobile Network

Re: Feeling frustrated

Visitor ✭ ✭ ✭
# 7
Visitor ✭ ✭ ✭
Thanks MosheTLV, very helpful suggestion. A niche market approach would be much better. My mistake was diving in at the deep end, going head to head with businesses that have been doing this for eleven years. Another problem I had was that I couldn't track conversions because I didn't have access to the 'Thank you' page.


Sent from my SAMSUNG Galaxy S6 on the Telstra Mobile Network lot l