The Single Biggest Adwords Mistake

Whenever I am asked what the one thing is someone should do to improve the success of their Adwords advertising I always say that the most important thing that they can do is improve the percentage of sales they get from their website.  This might sound obvious Adwords Tip but unfortunately most Adwords advertisers will spend most of their energy on getting more and cheaper clicks and for me this is the single biggest mistake that people make with Adwords.

 

Whilst click price and click volume is important, it is only one factor in the success of your advertising. For any advertising to be successful you need to look at two elements. The cost of your advertising and the sales it generates. This applies to Adwords as much as it does to all other forms of advertising.

 

If you focus your efforts on click price then you are only focusing on your advertising costs. The reality is that you can actually get better returns by focusing on the sales you get from your advertising and creating improvements there.

 

In Adwords terminology sales are usually referred to as conversions and you can measure these using the conversion tracking options in Adwords. This is a very important metric and it deserves as much of your attention as your click through rate. I'd actually suggest it probably deserves more!

 

Let me qualify this for you with an example. Let us assume you can buy 1000 clicks for 10pence each. You overall click cost therefore is £100. Now let us assume that your product sells to £10 and you convert 1% of these visitors to buyers. This means your total sales are £100. So in this example you break even.

 

The standard approach from most people here is to reduce the click price so that they generate some profit. If we assume that you successfully reduce the click price to 5p per click then when you do the maths above you will see that the cost of clicks is £50 and this generates £100 sales so the overall profit is £50. So halving the click price gave us £50 profit.

 

Now lets see what happens if we had left the click price at 10p per click and we concentrated our effort into increasing the conversion rate from 1% to 2%. When you do the math’s here you will see that the click price remains at £100 and the total sales are £200. This gives a profit of £100. This is double the profit we got from reducing click price.

 

I think you'll agree that improving the conversion rate was clearly the better option.

So how do you increase conversion rates for your website? Well this would be an article in its own right but sometimes easy changes like improving the words used on your sales page and trying new product images can be enough to give a small lift in conversions and as we've just seen an increase from 1% to 2% yielded an impressive increase in profits.

 

In the ideal world you would spend time lowering your Adwords click price and increasing your conversion rate. However few of us live in an ideal world and time is usually in short supply so you need to focus your energies onto the activities that give you the best return. I hope I've shown you how to avoid the single biggest adwords mistake and that concentrating on conversions is the priority.

 

Mike Seddon is the founder of KKSmarts who provide website promotion advice to small businesses. His particular area of expertise is Google Adwords and he currently has a book about Adwords published on Amazon called Simply Adwords. You can find lots of free advice available on the KKSmarts website.

 

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