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Old 05-30-2006   #1
denemante
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Survival chances with AdWords - what's your conversion rate?

Hello all,

I know you shouldn't put all your eggs in one basket. But we're going to try it with AdWords. Perhaps with this campaign I can be the guinea pig for everyone. You see, we're trying to nail a specific formula that we can re-use.

So, this question goes out to all past AdWords users: with the right keywords, a good ad, and solid landing pages, can I make 3 sales out of 1000 visitors?

To come to the point - in all your experiences - is a .3% conversion rate a tough hill to climb based on higher priced retail items? Or is that a very low goal and I should be able to achieve it even if my strategy isn't quite perfect? (although I think it's very good)

It's going to cost me about $1 per click. So I can bring 1000 people in for $1000. The average profit I'll make per-sale is about $450. So with 2 sales, I'm almost even. With 3, I make money.

I know there are lots of factors. But I've done my homework, and I believe that the keywords and ad verbiage will hyper-qualify clicks. My landing page(s) are usuable, visually pleasing, and chock full of strategic calls-to-action. Through testing, I believe we've eliminated any reason "not to buy", and have paved a way for them to open their wallets.

I'll note that the items might sell for anywhere between $1500 and $5000. So while large sums like that might be harder to part with than $20 for a book, I still think that the ads will qualify the surfers, and they are expecting and qualified to spend this much money.

Anyway, I feel as if I must spend at least $1000 to get any real results. All I need is a .3 (point 3)% conversion rate. This is because if I test with just $100 to see 100 people, I might not make any sales. So all the eggs, or $1000 for now, are going in.

Based on just what I've said above, do you think I'll succeed or fail in landing 3 sales out of 1000 (with $450 profit each) with a $1000 budget?
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Old 05-31-2006   #2
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I can't say whether you'll succeed or not, since that depends on so many factors. Just make sure you're tracking your latent conversions - in that price range, you'll get a lot of people making multiple visits before they buy, and you don't want to sell yourself short.

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Old 05-31-2006   #3
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3 sales out of 1000 clicks
I doubt we'd have any clients if the best we could achieve was a .3% conversion rate using Adwords on the search network............

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Old 05-31-2006   #4
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Originally Posted by Chris_D
I doubt we'd have any clients if the best we could achieve was a .3% conversion rate using Adwords on the search network............

agreed. .3% looks like a target for content network ads, not search network ads. Do you have tracking in place that will measure latent conversions?
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Old 05-31-2006   #5
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Thanks for your replies...

We don't have tracking for latent conversions, per-se. But we can sort of find this out by studying our repeat visitors stats. Also, we currently don't have much in the way of natural search, and when this AdWords campaign runs - it will be our only real external marketing - thus, any sales that happen over or a bit beyond the campaign will most surely have spawned from AdWords....

So you're telling me that a .3% conversion rate is in fact laughably low - and thus should be quite achievable?

I have thought about how since the items are higher priced - people may not buy during the first visit. But we have these strategies to account for that:
  • sale: $500 off until X date (which may be 5 days out, so they are encouraged to act promptly)
    free gift: $75 value for free until same X date
    e-mail reminder: sign up to be notified 5, 3, or 1 days before that X date
    bookmark us now/add to favorites

We also have well written and nicely placed copy that generally states "find it elsewhere cheaper and call us", etc.

Again, all these factors (and more) have been designed and put in place into what we're calling our "superlandingpage" - outfitted and laid out smartly with all possible proven strategies like calls to action, incentives, and things like "privacy ensured security, free shipping, 30-day returns, guarantees", etc.

Finally, our products are presented well with many pictures and great descriptions, and they are priced right.
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Old 06-01-2006   #6
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Quote:
Originally Posted by denemante
Based on just what I've said above, do you think I'll succeed or fail in landing 3 sales out of 1000 (with $450 profit each) with a $1000 budget?[/b]
Don't forget that Google Ads, while appearing simple, are true advertising. So, like all ad campaigns, the answer depends on how and what you're selling. A 0.3% conversion are is not laughable or easy. It's your break even. If you don't have a serious budget to market and test, then don't bother. A quick $100 or $1000 test means nothing. Build you buiness plan, look at your ROI, get you budget lined up, then go sell. And have the resources to stay in the game unti you get it right. **Google ads are serious advertising.** Spend money on them, take them seriously. There is no quick fix here.
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Old 06-03-2006   #7
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Short answer yes.

Better answer take $100.00 and make one sale.

You believe you will pay $1.00 per click but if you write ads using keyword term in title (hard to do I know) and in the description and your landing pages are dead on you may only pay 0.60 for the same click your competitor pays $1.00

You must look at more than can yous and use business accumen.

For example.

I make $450.00 profit on each sale.

Now how much do I need to keep all $450.00 of that profit??

Can I spend $50.00 of the $450.00 profit to make a sale...can I do it for $25.00 heck go for $20.00 or will it cost me $200.00 to make a sale..

Now you look for the trade off

It cost me $200.00 to make $450.00 which is well over 100% profit.

I will sit in the middle of Manhattan 25 hours a day 7 days a week handing out $200.00 to get back $450.00 each time....heck I would pay $300.00 to get back $450.00

back on topic whatever you make your CPA budget...put it in place and test...test .....test.

At that profit rate you should also consider running an affiliate program. For the first sale you give them 100% of the profits and then 10% on each subsequent sale...you'll have some hungry affiliates that way.

My thoughts
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Old 06-11-2006   #8
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Similar ranges

I run a website in which we sell products that cost between $400-$15k. Our typical sale is around $2k. I spend around $1500/month on Adwords. My average CPC is $.76. I don't run content network Ad's. We don't sell direct online so my conversions are tracking if they email us for a quote. We close on about 15% of the leads the campaign generates.

My cost/conversion all time is around $55, my cost/conversion last month was $26, so far this month it's $24. I use a lot of negative keywords now, that really helps filter out all the traffic that either has nothing to do with your products or based upon months and months of previous traffic that has a low chance of converting. Really study your keywords.

So just doing very rough estimates, spending $1500/month at $26.30 a lead is around 57 leads last month. Closing on 15% of those would be about 8.5 sales X a typical sale of $2k = around $17k in sales with say a typical profit of around 20% yeilds $3,400 - the cost of the campaign $1500 = $1,900 in profit.

Not great numbers, but imo if marketing can pay for itself that's phenominal. In my industry its not the little $2k sales that you look for, those cover operating costs, as somewhat shown above, its those big deals that really add to your bottom line and the more you market the better chances you have of getting a nibble from those, then its up to you.

NiV23
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Old 06-11-2006   #9
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Nivik

Let me see if I understand this correctly...

You track campaigns by wether the person who has clicked on an ad emails you for a quote?

Does this account for someone who clicked an ad last weeK?

Is the email address sent to, only reachable through the PPC campaign?
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Old 06-11-2006   #10
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You track campaigns by wether the person who has clicked on an ad emails you for a quote?
Yes

Quote:
Does this account for someone who clicked an ad last weeK?
Unfortunately no. It also doesn't account for all the other various behaviors users might take. For instance if someone clicks on an Ad and then they call us directly, which many do, this is not reflected at all in our cost/conversion.

I am working on getting better in-house tracking systems and policies in place though but even still, when a person calls in asking for a quote on a product you want to start your sales pitch, you don't want to badger them with all sorts of questions about how they ended up calling you. Many will just say "I found you on the internet" and we leave it at that.

Which is fine in my book, having exact marketing data is nice but rarely obtainable since 1)You don't want to interfer with your sales and 2)You can't predict how all people will behave.

Take the TV Ad's that companies run. They'll have a Ad on TV that says go to big-corp.com/TV or something. Not all people will, many will just go to big-corp.com, others will forget what the URL is and search for Big Corp, of those that search it, some might click on a PPC ad, other might click on an organic listing.

So maybe big-corp.com will analyze their TV Ad and think that they need to incorporate some gimmick in the TV Ad that will help people remember the URL (like beepbeep.com - I freaking HATE that commerical - but I do remember the URL hard not to when they say it 50 times in 30 seconds). Even still, I can't count how many times I've seen people type in big-corp.com into a their Google / Yahoo toolbar instead of their browsers address bar. Which will skew the marketing data twoards your internet marketing and away from your TV marketing.

Marketing data becomes more and more inaccurate the more and more you market. Where do you assign revenue that was generated by a person who saw your TV Ad, searched the internet months later for something, saw a PPC Ad of yours, had to leave to do something. A week later he just decides to open up the yellow pages and see your Ad their and because of the branding that had occured from your TV/PPC Ad's calls you based upon your yellow pages Ad.

You put the revenue in your bottom line and make management decisions from your bottom line. All the other data is just a overlay, which although very useful in helping your bottom line, isn't the bottom line.

I imagine that was a MUCH longer answer than you were anticipating, sorry, its Sunday and I'm at work and bored which all mutates into the ultimate rambling machine.

Quote:
Is the email address sent to, only reachable through the PPC campaign?
No, anyone who goes to our website can send us a form for a quote via the same script, but I have the Google conversion tracking code snipets on the "Thank You" pages that only count those forms that are submitted that originated from our Google Ad's when calculating our Adwords cost/conversion.

For example last month we had 190 pageviews on our "Thank You" page (Yes, we're a small company) reachable only through the form submission script. Of that 190, 57 originated from our Adwords campaign, or so I assume based upon the cost/conversion that shows in our Campaign Summary. It's not perfect though, as the script was used 193 times last month...what happened to the other 3? No clue.

NiV23

Last edited by Nivik23 : 06-11-2006 at 08:24 PM.
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Old 06-11-2006   #11
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Hi Nivik

So why not try a lead generation campaign??

I do kind of agree you want to go to sales pitch...but I don't know as we are in different industries... the clients who I sign that I speak to on the phone (less than 30%) usually do not get any sales pitch...lol so we kind of yack and I ask how they found me.

You are right in that analysis can drive you insane and make you even more confused if over analyzed. And nobody can predict user behavior even though BT people will tell you otherwise but again we go back to stats and its all in the packaging..

For instance there are over 1,000,000 registered bartenders in New York. This alarms many people..... till one stops and thinks of how many bars and restaurants there are in NYC alone, not to mention the entire State.

Quote:
imagine that was a MUCH longer answer than you were anticipating, sorry, its Sunday and I'm at work and bored which all mutates into the ultimate rambling machine.
Not a problem shows insite and allows answers with better knowledge of the questions at hand.
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..what happened to the other 3? No clue.
spider views are not counted as page views, though I don't see this being a spider....internal company usage not counted via IP recognition??
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Old 06-12-2006   #12
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So why not try a lead generation campaign??
Could you elaborate? Isn't all marketing ultimately a lead generation campaign?

Quote:
spider views are not counted as page views
Probably it, suppose I should add our cgi-bin to our robots.txt or something. I'm not really worried about it though, I kind of like the mystery, maybe for 3 people the script didn't send them to our Thank You page but instead digitized the people and imported them onto the game grid in Tron.

NiV23
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Old 06-12-2006   #13
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well Trons a bit far for molecular reconstruction...

could have been they closed the window before it opened fully or a time out error??
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Old 06-12-2006   #14
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could have been they closed the window before it opened fully or a time out error??
No, I hacked into the game grid recently and sure enough, there's 3 users there playing light cycles who got redirected from my site's script. That will teach them for not going to my Thank You page.

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Old 06-12-2006   #15
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I hate when that happens
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Old 06-13-2006   #16
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You should have separate phone numbers that track the ones that got it from your website and even certain parts of the site can have different numbers to pull info on that aspect too.

Cookies while not 100% accurate can also hold info that can be grabbed later when they send you their email address.... write a script that pulls cookie info into a hidden field in that email form.... this way it ties more info into the process.
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Old 06-13-2006   #17
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Aussie brings up a good point

We used to run newspaper and magazine ads and used a different extension number for each ad to determine which newspaper or magazine sent the referal.

There was a need for a spreadsheet if ever there was one lol
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Old 06-13-2006   #18
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denemante-

I think that giving it a one time shot of $1000 is not the best or most viable solution. Having created all your ad copy, keywords, etc. initially your advertising may not perform to its true potential (aside from poor ad copy, etc). It takes time to generate a good CTR and $1000 can go by very quickly depending on your keywords. Initially you may have to pay a higher CPC than $1 but then again over time your ability to improve CTR and develop better campaigns could lower that CPC. As for .3% conversion, that seems really low. If you have effective campaigns, then you should see better conversion rates than that.

sales profit ad cost net profit
1 450 333 117
2 900 666 234
3 1800 1000 800
4 3600 1333 2267

If $1000 of adversiting brings you 3 sales at $450 profit each, then you are netting $800 profit. Why not go ahead and make it $1500 of advertising and keep $2200 net profit. Granted the conversion rates may flatten out, or your net profit may not continue to increase. I think the biggest thing you need to consider is how long do you want to lay this plan out. You need to give it time to be successful and plan to be able to afford $1k a month for a couple months to determine the campaigns viability.
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Old 06-13-2006   #19
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If you make a sale after initiating a campaign, you may want to mentally adjust your to-date spend for the amount of the sale, knowing that you can still spend X amount and still break even. This way your test can run longer and you can get a truer idea of your conversion rate.
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Old 06-13-2006   #20
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You should have separate phone numbers that track the ones that got it from your website and even certain parts of the site can have different numbers to pull info on that aspect too.
That's a good idea, but first we need to be able to track them right now our internal tracking structure is a 65 year old woman who locks her keys in her car while its still running and walks into closed glass doors.

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