For many businesses, Google AdWords can be their most productive source of new leads and customers.

But how do you know in advance if it has a chance of working for you or not?

It can be expensive to hire someone to do it for you and you then you have their management fee along with your actual ad spend you pay Google.

Facebook vs Google

Before getting into the details of how you can tell, I want to make sure you understand the different types of online advertising.

Facebook is the hot thing these days, but you need to understand people do not go onto Facebook or social media to look for stuff to buy from you!

They go on it to avoid work, not do work . . .

It is the equivalent of having a billboard on a busy highway. There may be lots of people going by, but that doesn’t mean they are prospects.

Even if you use all of Facebook’s targeting capabilities, you may be putting your billboard on a road only your target people drive down, but they are still not there looking for you.

So, you have to “interrupt” them from doing what they are doing with some sort of enticing offer.

Google is totally different.

In the Google search network – called Google AdWords, you are bidding on key words and phrases so your ad shows up when someone is actually searching for what you have.

Big difference.

Trying to interrupt someone who is trying to avoid work vs being found when someone is actively searching for what you offer.

How Google Search Works

I think this is very interesting. Here’s what happens 3.5 Billion times per day when people do a search on Google.

Their algorithm decides which web sites should show up based on your location and prior search history.

Then they figure out which ad should be on top, which one # 2 and which # 3 at the top of the page and then which order should the ads be on the side of the page.

This is essentially an auction held every time someone does a search – 3.5 Billion times per day!

You place your bids on what you re willing to pay for a click and how much you are willing to spend per day and Google combines your bid with your “Quality Score” to determine where your ad shows up – if at all.

Quality score is essentially how likely someone is to click on your ad. If you have a high quality score, you can actually pay less per click than someone else with a low quality score in the same spot.

Google doesn’t explain it this way, but it’s really just a way for Google to maximize their income.

Say you bid $20/click and 10% of the people who see your ad click on it . . .

and you have a competitor whose ad is not as appealing as yours and they are bidding $40/click. Only 1% of the people who see their ad click on it.

Your ad with the $20 bid will be placed above your competitor who bid $40. Here’s why.

For 100 searches, at 10%, that means 10 people click on your ad making Google $200.

Your competitor bidding $40 only gets 1 click (1% of 100) so Google only makes $40.

Now, it becomes pretty obvious why Google puts your ad on top – $200 is more than $40!

Google goes through all these calculations 3.5 Billion times per day – I think that’s absolutely incredible . . .

Will Google AdWords Work For You?

Here’s how you can get a good idea:

1. What is a customer worth to you?

You may sell a variety of products and services, but whether this will work for you is all about the numbers. What will you have to pay for a click? What percent of those people who do click end up buying?

If you are selling a $29 book, and you have no other products and services to sell that customer, there is no chance.

If you had to pay $10/click, and 1/3 people who clicked, bought, you still lose money.

On the other hand, if you do kitchen remodeling with an average ticket of $50,000, you can pay $100/click and do great.

2. Importance of lifetime customer value

Back to the book example. If you had a high end coaching program people pay $10,000/year for, you might be using the book as a loss leader to get prospects.

So, understanding what a customer is really worth is what you need to consider, not just what the initial sale is for.

3. What does Your Competition Do?

If you are in an industry where all your competitors are advertising, that’s a hint that it might work for you too.

But be careful, in the book example, if you didn’t know someone paying for clicks to sell a $29 book, had a “back-end” $10,000 offer, you could end up losing money.

There are online tools that I use for my clients that show me what people are paying for clicks, what keyword phrases they bid on, and how well their ads are working.

You still have to actually try it and do testing to know for sure.

4. Are you a local business?

Google loves local businesses and advertising locally only is much cheaper than advertising nationally.

Google has many targeting options so you can even do things like only advertise to people within 10 miles of your office.

How To Get Help

I do AdWords campaigns for clients and if you are running Google ads now and they are not working well, or if you want to consider doing ads, get in touch.

I will do a free AdWords audit of any existing campaigns or help you set up a totally new campaign.

Call me at 720-890-8760 or email joemcvoy@gmail.com

Tags: adwords, google adwords, Internet marketing, local advertising, online marketing, web marketing