Adwords: Are You Wasting Money?

Adwords is the way Google makes 98% of their revenue. Why is it so good? Because with Adwords you can reach immediately millions of buyers who are looking for your product right now! That´s why it´s so good. Adwords can be scary for beginners because competition is so tough that if you don´t know what you should do to win, you are just wasting money.

1. Calculate the ROI you want. Many advertisers enter Adwords and expect to make a couple of sales without even know what ROI is. ROI is the amount of money you make or lose per dollar spent. For example, if you spend 10$ on Adwords and make sales of 30$ your ROI is 200%. This way you know that you get a profit of 2$ when you spend 1$. So if you plan to spend 100$ you can expect you will make 200$ in profits.
2. Calculate the Cost per Sale. Imagine you are selling a product for 50$. If you pay per click 0.50$ and you make a sale every 100 clicks, you spend 50$ to make 50$. Your cost per sale is the same as your product price and you don´t make a profit. The cost per sale must be always below the product price. It´s also very useful to know when you can or can´t bid more per click and if you must re-design your site to convert the traffic better.
3. Targeting is the most important factor in your profits. Google has something different from all other advertising programs. That thing is targeting! Imagine you are trying to sale a BMW to a person who likes only Opel? I bet you will have a hard time making one sale. So as your site too if you target the wrong costumers. If you own your own product think about the costumer. What should he search for when he wants your product? Then use all that keywords. More keywords mean more traffic, but not exactly more sales!! It´s better to use less words but perform better.
4. Target by city. Make different campaigns for different cities because they don´t have the same buying power. Sometimes you are wasting money in one location but because you don´t know where, you think something is wrong with your campaign. Target everything as much as you can!
5. Don´t bid for the first place. People are very impulsive and they usually click on the first ad without knowing or caring that the advertiser just paid Google that click and because the click was impulsive the clicker probably will not buy the product and the advertiser just wasted another dollar. Bid just for second or third place.
6. Bid high as soon as you can! Google keeps a history of your advertising performance. If you want cheaper clicks and higher positions, you must bid very high in the beginning because better position means more clicks and better CTR. That´s what Google wants. Just don´t bid to first position.