AdWords can help your business grow fast… or it can drain your marketing budget even faster. Is now the right time for you to start running paid search?

This is our longest podcast episode yet! So of course we transcribed it for you:

1. Should growing an audience be my first priority?

2. Can I use Paid Search for traffic until my site goes viral?

3. Can I invest $1 in Paid Search to make $2?

4. Should the independent business owner run paid search?

5. I’m already marketing my biz. Is it time for Paid Search?

Amy:  You’re listening to the Paid Search Magic Podcast, your weekly (and sometimes every-other-weekly) deep dive into search engine marketing, AdWords, client management and so much more. This is episode 30 and I’m your host, Amy Hebdon joined by my co-host and husband, James Hebdon.

A lot of our podcast episodes are for an audience…really in the business of AdWords. These are people who are running paid search campaigns as day in and day out. So our episodes tend to be about tactics and strategies for managing and optimizing AdWords.

We recently had an audit month which was very deep in the weeds for AdWords management.

We wanted to mix things up.

The next few episodes are going to be taking a break from that and then they’re going to be for people who are not totally sure whether they should be running paid search or how to get started.

Today’s episode is for you if you have a business or a business idea, and you’re trying to decide whether a paid media or AdWords specifically is the right step. This could be if :

• You have a startup or bootstrap business and you’re trying to find ways to drive traffic
• You work for a company that it’s not really doing digital marketing yet and you’re trying to figure out how to pitch this idea to management and just what you need to know
• You have a growing business and you’re looking into new channels to reach an even larger audience

Maybe you’re already doing paid Facebook ads and thinking about giving AdWords a try.

Maybe you’re already doing SEO and you want to get fast results or maybe this is your attempt at getting traffic when you’re just building your business.

What we’re going to be doing is walking through some common questions, common assumptions and approaches, and basically giving you a framework of how to evaluate for yourself what the answers might be.

James is going to be asking some sample questions that we hear a lot and I will try to give actionable answers. It’s not going to be yes or no, but I’ll give frameworks and takeaways that will help breakdown the question more and outline strategies and considerations for your situation.

Just as a spoiler:

• Sometimes the answer is no, now is not the right time to do AdWords.
• Sometimes it’s yes, but not for the reasons you think.
• Sometimes it’s yes, this is a no brainer, let’s get you started.

With that, let’s get some questions going.

1. Should growing an audience be my first priority?

James:  All right, Question 1…

Question #1: “I’m working on growing an audience first before I worry about building products. Right now, I’m focused on traffic and building a tribe. Is paid search a good way to get traffic?”

Amy: Yes, so this is a good question that we hear a lot. Basically there’s two questions rolled into one here.

1. Should you use paid search to “buy visitors?”
2. should you invest in marketing before you build your business?

You don’t want traffic, you want buyers

Looking at the first question, something that you’ll hear me say a lot is basically don’t think of paid search as a way to buy traffic. Think of it that you’re paying for an opportunity to put your best offer in front of your ideal client.

There’s a pretty big difference between those two approaches. That’s not the only way to approach paid search, it’s not the only to approach AdWords but it’s typically going to be-

James: It makes sense though.

Amy:  There’s always exceptions to the rule. An exception would be like if your business is looking to get acquired and your goal is to focus on traffic then sure, buy traffic that way. Or if ad revenue is a big part of your business model so visits for the sake of visits still helps you grow the bottom line and sure, you can focus more on traffic. But for the most part, that’s not what we’re looking at.

This specific question isn’t asking about “I stand to make a lot of money by getting visits,” it’s, “Hey, I don’t have visitors yet. Should I pay for them and get traffic first, and then figure out a business model second?”

I guess I just want to clarify. If you’re in the early stages of building your business, wanting to focus on visits and traffic makes a lot of sense. It’s a very natural thing to have visits be what’s right in front of you, it’s what’s in analytics. It might be the only metric that you’re able to traffic at this point is visits.

And so it makes sense to want to see that number grow, but that doesn’t make it a good idea just because it feels good…

50,000 opt-ins for 2 sales

James:   One, if you can only track traffic, that’s probably not a good thing in of itself, right?

Amy:  Yeah. I would definitely agree with that. If you’re familiar with Ramit Sethi, you know that he’s always running tests and experiments to grow his following. A few years ago, his company GrowthLab partnered with this other big company and they created a co-promotional contest.

They went all into this, they had a huge giveaways and prizes. They were really excited to get about 50,000 opt-ins from this contest. Not just 50,000 people who viewed the page but the number was 49,514 opted-in subscribers.

James:  Sounds pretty good.

Amy:  Those are some nice numbers. But when they crunched the numbers and backed in to how well they did – after they scrubbed the list, the open rates and new leads – the actual sales that came from the contest was 2.

James: 50,000 versus 2?

Amy:   Yeah. 50,000 opt-ins and they had 2 sales.

James:  It was a big promotion? Did they dump a lot of money into it?

Amy:   Yeah. I mean it was something they heavily invested in. Ramit says, his takeaway was that

“No matter how you slice it this was a complete waste of time. Getting traffic matters but getting the right kind of traffic matters even more.”

Amy:  Which is very true. In their case, they expected more sales than they saw and so they were able to measure that drop-off in the difference between what they expected and what they actually got.

But if Ramit’s team hadn’t developed business first, and they’re just focused on building awareness, they’d have no way of knowing that all those people that they were getting wouldn’t turn into future buyers. And so seeing those 50,000 might seem like, “Hey, we’re doing something really right.”

They could continue to invest all that money into something and then at the end of the day, they hang their shingle and actually launch a product and no one buys, because they weren’t attracting the right type of people. After all the effort, they’d still be back at square one.

James:  It sounds like one of the big mistakes is assuming that all traffic is equal.

Amy:  Right. All traffic is not equal and all visitors are not buyers. We want to get to the bottom of “are these people going to buy from you?”

So before you invest in paid marketing, especially paid search marketing, you want to be clear on your target audience, and also how you’ll measure whether you’re reaching your target audience, and how you’ll effectively reach them. If you’re just starting out don’t have an audience yet, you can’t know whether they’ll buy.

“Marketing begins in product development”

The conclusion here isn’t “don’t do anything, you’re just stuck.” But what you can do is use paid search to test and better build your product or your business. There’s some really good ways you can use paid search to be responsive to your audience to listen to what people want, and give them that.

You can use AdWords to test titles or concepts or messaging or offers or audiences. Tim Ferriss, famously – before he published The 4-Hour Workweek – he was using AdWords to test the name of what his book should be. The original title, or one that was a contender, was Broadband and White Sand.

It was from using the title in the headline of his AdWords ads that he was able to see 4-Hour Workweek at a much better response rate or click through rate and they chose that one.

James: That’s the biggest metric that you would go off there. You’re just looking to see what has the best click through rate?

Amy:  Yeah. That’s definitely one way to do it. At this stage, you don’t want to build out an entire product then test two different products. But you can even do something as simple as testing a headline, and then you’re measuring the click through rate.

Now, I will add here that the FTC has specific rules. You can’t promise people something and then not have a product at the backend. There’s different ways to fulfill on that without saying “we have this. Send us money and you’ll get it.” (Note: astute listeners will hear I actually said FCC rather than FTC, more than once. I swap these acronyms embarrassingly often.)

James: You can see what type of language people are responding to better.

Amy:  Exactly.

James:  With modern AdWords you could probably do some of that with segmented audiences and things like that too, to see if there’s different click through rates for different types of audiences.

Amy:  Yeah, absolutely. Naomi Dunford is the founder of IttyBiz –

James: I love Naomi.

Amy:   – We’re huge fans of Naomi. This is an email that she sent out a few days ago that I thought was worth bringing up in response to this question. Its says,

The most important thing I’ve ever learned about marketing is that marketing begins in product development. You don’t make a product and then ask how are we going to market this thing. You begin developing a product and continually ask how can we ensure this is marketable.

This is really good advice. We’ve both been involved in AdWords tests that will help to come up with a name of a product, or inform a strategy, or identify different market offers based on what people respond to. Based on the click through rate, based on how they perform their landing page… But you can use the paid traffic in this case to validate your test. It works really well.

There’s a lot of opportunity there, but you lose that opportunity if you’re thinking in terms of purchasing traffic or buying clicks. There’s just no real opportunity in that. The takeaway for me for this question is:

[bctt tweet=”Take-Away #1: Use AdWords to define and refine your marketing, but don’t spend money on visitors if you don’t have a measurable plan of how you’re going to convert those visitors into customers.” username=”amyppc”]

James:  I think that’s key because a lot of people, they just want to start seeing that visitor rate tick up.

Amy:  It can be a waste of opportunity.

James: You can burn through a ton of cash and not get anywhere.

Amy:  Right.

James:  Should we move on to question number two?

Amy:  Let’s do it.

2. Can I use Paid Search for traffic until my site goes viral?

James:  All right, Question 2…

Question #2: “I have a great product but no one has heard of us. So far I’ve had very little sales. I’d rather have free traffic but I’m thinking of using paid search to jumpstart sales while I’m waiting for my content to go viral. Is this a good strategy?”

Amy: Everyone would rather have free traffic. I’d like to just have everything be viral but until then I’ll throw a little money so that people will hear of us and then buy from us.

James: This is incredibly a common thing that we hear, too.

Amy:  It is. This also has a couple of assumptions. One is …

James:  Your traffic will ever go viral.. *laughs*

Amy:  *laughs* Right. That you’ll go viral eventually. There’s two problems here.

1.  The person’s problem is that sales are low.
2.  The assumption that sales are low because people haven’t heard of us.

If you believe in yourself, you will know how to ride a bike*

I think it’s really normal if you’ve created a product or service. You’re heavily involved with it at some level. You invented it, you’re backing it somehow.

James:  You’re invested in some way.

Amy:  Yeah. You’re going to believe in your business. You’re going to believe that it solves a problem and you’re going to believe that people want it. That’s normal and healthy. It would be concerning if you spent weeks or months or years of your life…

James:   It’s something you cared about that you thought was going to be a failure.

Amy: In your gut, you think this is a total waste of time. That’s a problem.

But the sad thing is that just because you believe in something or you’ve created something, it doesn’t mean that you’re right about it. We’ve got a clip from Randy Komisar that I heard recently. I just thought it was a really good thing to throw in here, so queue that up.

James:  Yeah, let’s listen to that now.

Randy Komisar clip:

I start with defining the problem. The bigger the problem, the better but define the problem. A lot of times, believe it or not, people come to me with the technology that’s a solution without telling me what the solution is for. Because they can make the dog jump, they somehow think that somebody wants a jumping dog, and this is very, very frequent in the startup business. I basically say go back in one step. What’s the problem? What problem are you trying to solve here?

James:  I think a jumping dog would be awesome myself.

Amy:   Yeah. Maybe it has jumping legs.

James: Four legs that’s like a dog.

Product-market fit is key

Amy:  That’s where I was going. If you assume that your product is right, then it has to be the marketing is wrong if no one has heard of you. Because if you’ve got good marketing and a good offer then that’s success.

If you’re not getting success, then either the offer is wrong or the marketing is wrong. Your offer is of course right, and so there’s some marketing that’s wrong.

The truth is that if marketing isn’t actually the problem – even if you think it is – if it’s not actually the problem, then you’ll spend a lot of money on marketing trying to fix it, but it still is never going to work because if the offer is broken, it doesn’t matter how good your marketing is.

James:   The offer or the product just is not as desired, or needed, or wanted as you might think it is.

Amy:  Right. That’s a good point. I’m using offer as a shorthand for the product or the service or the way it’s presented or the amount of money that it is.

James:   Or the website especially.

Amy: Yeah. The only thing that someone is going to buy.

James: That is distinct from the marketing.

Amy:  Yeah, exactly. It’s going to be one of those two, maybe both or maybe neither, right?

James: Right.

Amy:  Those are all going to be factors of your success. We see this play out a lot. There’s a difference between just healthy optimism and delusion.

James:  There’s a spectrum in between.

Conservatively, 95% of the world’s population will buy our product

Amy:  Yeah, of course. You can have a full business plan where you’re writing out – even if it’s back of the napkin number:

“We’re going to get at least a 50% click through rate because anyone who sees our ad is going to want it. And at least 70% of the people are going to see the landing page and are going to convert because it’s so strong… That’s just conservative.”

And Everyone always thinks they’re….

James:Whenever anyone says “and we’re being conservative”, they’re being super liberal.

Amy: Right. I mean, what happens is that you get these expectations. And then if the expectations aren’t met, you assume that again it’s a marketing problem.

James:  That it’s the channel, the marketing, or the marketer or whatever.

Amy: Right. People are free to believe what they’re going to believe and I don’t want to say to anyone who’s listening to this episode, “Hey, guess what, your offer is horrible,” because we don’t know, but just generally, it’s a good idea to be open to tweaking your offer in addition to being open to tweaking your marketing.

James:  I know that you actually really appreciate entrepreneurial spirits and the passion and motivation that it gets people to try these things, but you’re right: when you have a person that isn’t heavily invested sometimes, for whatever reason –  whether it’s just the unhealthy optimism or a need (which is worse probably) –  sometimes you’re not the best person to have perspective on it.

Amy: Right, and the thing is, if you don’t have sales, we’re not saying you’re not going to have sales. It’s not saying, “marketing can’t help you, your product is horrible.”

It’s just saying, “give yourself some room to improve your offering and even pivot if necessary, rather than pouring all of your available capital – all of your money – into marketing a product that your audience might not want.”

James:  Right.

Giving yourself room to improve

Amy: Finding out that your wrong is never fun. But personally, I’d rather find out I’m wrong about an idea before I spend $5,000 marketing it than after.

James:   Or fifty or a hundred.

Amy:  Or any amount.

James:   Just the time too. It’s just like general practical wisdom. It’s better to try something quickly and fail at it if that’s what’s going to happen and move on to the next thing.

Amy:   This goes back to the answer to the last question.

Go for it, use marketing to test.

• Test your messages.
• Test your offers.
• Test your landing page.
• Test your market.
• Test your assumptions.

You can spend money and get answers. But don’t just spend money and say, “Hey, this has to work and we’re not willing to listen in case we might be wrong,” because you limit your ability to improve if you refuse to believe that there’s room to improve.

James:  Right. I mean this is not an area for dogmatic belief. This is a testing process.

Amy:  If you can spend and find out that more people click on your ad when you have this title then that title, or this product, or this promise or benefit… The better it’s going to do is it’s just going to help you pivot faster.

James:   Okay.

Amy: I think takeaway number two is simple here, is just:

[bctt tweet=”Take-away #2: Validate your business before you market your business.” username=”amyppc”]

3. Can I invest $1 in Paid Search to make $2?

James:  Okay. That feeds nicely I think into Question 3.

Question #3:   “I want to test paid search to see if it’s going to be a good channel for me. I’m willing to pay $50 and if I double that, I’ll spend $100 and so on until I go to the point I’m spending five or six figures a month and making at least twice that in sales. Where do I start?”

Amy:  All right…I do want to say just right off the bat, I’m a fan of the crawl-walk-run approach. Especially when it comes to marketing.

I love being able to invest a little bit and make improvements, and invest more and do better and watch things snowball.

Being able to respond to performance and optimize, I think, is so much better than having to do all the work upfront – blindly – and then not being able to make adjustments once you launch.

James: Yeah, absolutely.

The new paradigm of AdWords

Amy: There’s still people who say, “All right. Well, what amount of money should we spend next quarter or next year?” I’m like, “Well, I don’t know because I don’t know what people are going to be doing next quarter or next year.” So being able to respond to that is really nice.

James: It’s usually that the type of person who was locked in the mindset of the old advertising paradigm.

Amy:  Right, and so definitely, AdWords introduces a new paradigm. And so this question reflects an understanding of that. It reflects an understanding of “I don’t have to go out and spend $10,000 on an insertion order. I can spend $50 on ads and if they work for me, let’s keep going with it.“

James:  This is one of the best things at this particular channel.

Amy:  Right, but that said, what we’re-

James:  I knew there was a “but.”

Amy: What we’re going to try to unpack here, it’s not “Can I start small and grow bigger?” because of course, yes, you can and we generally recommend that. The fundamental questions here are:

1. Can you expect to see substantial returns if you are not using a substantial investment?
2. Can you expect to see strong returns immediately after launching. Budget aside, can you launch and then immediately see strong returns?
3. What does it take to launch or get started in the first place?

How would you like to double your investment… forever?

I think it’s worth mentioning that whatever variations of this question that you just asked, whatever variations we get, are usually being asked by people who don’t have a proven business. That’s just generally speaking.

It’s not like they’re successfully selling products through other channels and are looking to expand. Usually this question comes from people who have no sales and no money to start investing in the first place.

So one of the reasons that this comes up, is that there are paid search marketers who are, I’d say, capitalizing on the fact that you can get started for very little.

Basically, his claim to fame is some variation of the story. “I took my last $10. I’m supposed to use it to pay the electric bill, instead I invested it in AdWords. I turn that into 20, I turn that into 40, I turn that into 80. Now, I’m a millionaire.”

James:  In six months, somebody is making $18 million a month.

Amy:   Right. It’s a really nice story to tell someone when you want them to spend thousands of dollars with you to learn how to double your money every time by using AdWords.

James:  When you say marketers, these are generally the types that are looking to pitch you on how to do AdWords or how to follow their proprietary system or whatever, right?

Amy: Yeah. I mean, that’s-

James: As oppose to like them trying to get clients to run AdWords for?

Amy: Yeah. Typically, it’s “how to do this,” right?

James:  Right.

Amy:  They don’t want to be responsible for what is about to happen.

James:  They don’t want to actually run AdWords.

Amy:  I think to that point, because of how amazing these success stories sound, it’s really appealing to that person who has that $10 for their electric bill and not much else – who hasn’t had success with other channels and who is strapped for cash.

James: This follows a similar pattern that can go back decades.

Amy:  Yeah. I mean, it’s basic sales.

Rumplestiltskin couldn’t make it

I mean my response might seem controversial or too conservative.

James:   I hope not.

Amy:  I see AdWords as a marketing tool, not as a spinning wheel that turns the last of your rent money into gold. If you only have $50 or $500 and it’s between paying your rent or paying for clicks, you should probably pay your rent.

James:  Your rent.

Amy:  Yeah.

James:  Sorry. I was too excited. I knew the answer.

Amy:  I know this one.

James: Always pay your rent first.

Amy:  Immediately doubling your return on investment is a potential outcome out of many potential outcomes. And it’s not extremely likely. You might flip a coin and get 16 heads in a row. It doesn’t mean that you would take that to the bank.

James: It’s not necessarily even completely random, but also if you’re relying on this sort of thing, the likelihood is that you do tend to have less money to commit to it and that you don’t have a lot of stomach for the testing and stuff.

Amy:  Oh, man. That’s its own issue –  having a stomach for it.

James:  Issue is that usually this means you’re not going to have a ton of volume and you do need to see how people react. It’s usually not perfectly according to plan.

The wisdom of Rand

Amy:  It’s rarely perfectly according to plan.

We’ve got another audio clip that I want to queue up here… This is a recent whiteboard Friday on Moz.com that Rand Fishkin recently did, and it’s called “The #1 Reason Paid Ads (On Search, Social, and Display) Fail“:

We’re chatting about the number one reason so many paid ad campaigns, especially from new companies and companies with new products or new ventures that they’re going into, new markets and audiences they’re addressing, fail. They just fall apart…

This, fundamentally, is because…

• The audience that you’re trying to reach hasn’t heard of you before. They don’t know who you are.
• They don’t know, trust, or like you or your company product, they don’t click. They don’t click. They don’t buy. They don’t share. They don’t like.

They don’t do all the engagement things that would drive this high cost per click down, and, because of that, your campaigns suffer and struggle.

James:  I think that’s really well said.

Amy: Yeah. It’s not that all paid advertising is doomed to fail. Let’s be clear on that.

It’s that when you’re first starting out and nobody has heard of you yet, you are unlikely to do as well as you will once you have some traction. Traction takes time and effort.

It’s not a short game. It’s not spend $1, make $2.

I can’t think of any campaign that we launched and haven’t done better in month two, month three, month six. We’re continually optimizing. That first month is generally the hardest because you are learning what works and what doesn’t getting everything up to speed.

James:  Right. The thing that we only usually hear is “we’ll give you $100 and if you can make that into a thousand, then we’ll give you a thousand dollars and if you can make that into a hundred thousand, and up, and up, and up.”

The cost of exploration

Amy:   I think it’s probably worth noting that any time your business invests in anything, there is a cost of exploration.

You wouldn’t just buy an apartment building to manage without paying for an inspection. You wouldn’t go purchase anything or invest … Invest is probably a better word. You wouldn’t go making investment without doing due diligence and research.

A lot of times that’s going to cost money and it’s going to require a third party or outside professional to give you that assessment.

James:  The big difference between inexperienced and experienced people is that they know there is risk. They basically know that they’re going to have to put some money out there to see if something is going to work.

Amy:  Yeah. I think the other thing to keep in mind, getting to that next step of what to expect when you launch, is that:

Paid search is a channel that requires paying for media spend that you’re paying directly to the search engine, and it also is going to require a lot of management.

Management is either something that you’re going to invest in to learn to do yourself… you’re going to invest a lot of time and resources and energy…

James:  It’s tricky.

Amy:  I wish that it were easier to learn than it is, but there is a learning curve. And that’s what we’re trying to help people do – is overcome that learning curve.

But I’d be lying to say, “Oh, just take some program and you’ll know how to do it.” There’s a lot of stuff to learn. Either you’re investing in yourself to become proficient enough to manage this so you don’t lose a ton of money, or you’re investing in someone else to manage it for you.

And that is going to cost money, because most professionals who are good at this expect to be paid for their expertise. They don’t expect to do all this to run a test for $50 and then, if it works, there’s more upside. Most professionals don’t do that.

James:  But the one thing that is going against people who are trying to bootstrap a business and they want to learn this so they can do it themselves  – By the way, I have nothing but encouragement for those people, that’s what they want to do.

The only thing that is tough about that versus going to somebody who’s experienced, is the experience. Because there are some things, an unfortunate number of things in paid search, that you will only get good at and be aware of with experience. That comes with all of the broken bones and bruises.

Amy: I mean that’s probably true about anything as well, but it’s not just “dip a toe in.” For most people it’s not just – do it and see success.

Most people who have tried it – and I hate to say this but unfortunately is true – most people who’ve tried it themselves said they have been burned by AdWords. That they’ve lost money on it and so they’ve given up on it and they think that SEO …

If you’re not doing it right, then it’s an easy way to spend a lot of money that you didn’t mean to. You do want to just have someone who knows what they’re doing or do coaching. It’s totally a good place to plug that.

James:  I think that coaching with Amy is probably the best way to go about.

Amy:  Probably. My takeaway for this question is

[bctt tweet=”Take-Away #3: Successful AdWords programs don’t happen instantly, so don’t spend your grocery money on ads. Expect to invest some money is exploration and learning.” username=”amyppc”]

4. Should the independent business owner run paid search?

James: All right, Question 4.

Question 4: “I make custom art. I have my own Etsy store. Is paid search going to be a good way to grow my customer base?”

Amy: I love questions like this. Because the people who ask them are people who are learning to have a business online. They’re tapping into their inner creative and looking for ways to get found.

It’s like stepping into the point where you’re not like, “Oh, I maybe have something for sale.” It’s “I’m ready to look for people who want to buy this,” and I think it’s great.

What we’re going to break this question down into is basically are independent businesses a good fit for AdWords, or is AdWords a good for independent businesses.

James:  Not just Etsy?

Amy: Right.

James:  This is a broader question.

Amy: Right. Also just what needs to be understood about the marketplace and the marketplace versus – we’re in the United States, I want to say niche (nitch). Other people may say (neesh) but I’m more comfortable with (nitch).

The marketplace and the niche

What we need to understand about the marketplace versus a niche offer. The question is about an artist with an Etsy store but it really could be … it stands for any smaller independent business.

This could be a personal trainer with a private practice, a copywriter who offers copy packages, a musician who sells CDs, a food truck, just like anyone who’s independent, or maybe just even a small business.

A challenge for independent service providers or independent businesses is that you’re not competing just with other service providers or products and businesses, but you’re competing with a marketplace.

Just as an example and this is a follow along at home thing if you want. But let’s look at copywriters. I have “hire a copywriter” pulled up. I just googled it. I don’t see a list of results like Jen’s copywriting or Marcus’s copywriting services. The paid ads that I see are

 

James: Wait. This is a Google search result?

Amy:  Yeah. These are the top four ads. These are the paid listings.

• Hire Copywriters Today from a company called Scripted.com.
• Copywriting Freelancers from Upwork’s copywriting services.
• Hire a Vetted Copywriter from LinkedIn ProFinder services
• Hire a Copywriter from a company called Godot Media.

It’s a company, right? It’s not like an individual person offering a service.

James: None of these are individual copywriting houses or individual copywriting person, these are all places where those people go.

Amy:  Yes. These companies are probably paying a decent amount for clicks. The auction is probably pretty competitive here, because there’s a big upside for them if they do get someone to click through and purchase from them or hire somebody.

James: Like just an individual sale? Or do you think it’s like the lifetime value is really driving up clicks?

Amy:   Let’s look at another example that might help put this into perspective.

Bookings dot yeah

Let’s say that we’re going to go to San Francisco and so we’re looking for a hotel. If we were to click on an ad for a boutique hotel, it could be an awesome hotel that – maybe the dates don’t work. Maybe we’re looking for a place that has a pool and we don’t see one. Maybe it’s just a wrong neighborhood.

There’s a ton of things that could just rule out this perfectly good hotel and that we’re not going to buy with them. They had spent all this money on a click, and there’s one shot for us to say yes or no to. And that was it.

If we were to click on an ad from say, TripAdvisor or Trivago or Kayak or another one..

James:  Or any of the dozens.

Amy:   …or an aggregator that’s essentially a marketplace. There’s a good chance that once we get there, we’re going to find a place that has the right dates with the specifications we’re looking for that has the right price range, the right neighborhood. There’s a good chance we’ll say yes to something.

James: Like any filter.

Amy: That all of our filters and criteria will be met. They don’t have to worry about which one we’re going to say yes to, so the chance is a lot more likely to say yes to something.

James:  That’s interesting.

Amy: The upside for them is a lot more than if the independent hotel that’s also trying to win that same click and then also trying to convert us to stay with them.

James: Right. Since the upside is so much bigger for them than it is for small, individual boutique hotels that have a much smaller chance of converting, it also means it’s much more worth it for them to hike the bids for each click.

Amy:  Exactly. The chance of conversion rate goes way up and so the amount that they could be willing to pay for it is also proportionally most likely going to go up in those spaces.

James:   That makes a lot of sense.

The tale of the pink sailboat artist

Amy:  Let’s think about Etsy artist again. Let’s say Laura is an Etsy store that is properly niched down. She doesn’t just sell art through Etsy but she paints sailboats and just to give this a differentiator, there are sailboats that Laura paints …

James:  You mean from Laura that does porcelain unicorns?

Amy:  Laura paints sailboats, and let’s say that there are pink sailboats. She’s a very specific niche. It’s not just sailboat art, it’s not just pink sailboat art, but it’s pink sailboat art that was made by Laura, which is a much deeper niche.

What she specifically is creating may or may not match the taste or the aesthetic of the person who’s looking for a sailboat art or even pink sailboat art, because she’s got her own style.

That’s a lot to think about. We talked about hotels, we talked about Laura’s Etsy store and we talked about copywriting.

Basically what we’re saying is that if someone is looking for a broad service or product, and you offer something very specific – specific art, or a specific hotel – it might not make sense to compete on those broad searches.

If I’m the hotel in San Francisco, I might just want to show up for hotel in San Francisco, but I want to be much more specific about it and make sure just get as many qualifiers in there as I can.

Keyword specificity can mean low volume

If you’re following along and paying attention with this train of thought, you’re probably thinking, “so I’m going to bid on very specific searches that closely relates what I offer.”

James:  It’s a natural progression of thought, thinking.

Amy:  Which is the right approach. But the question is, are people looking for just what you offer? Are people looking for pink sailboat art by Laura? If yes, then it can make perfect sense to bid. And there are plenty of artists who are successful who have a nice following and they run AdWords and it makes perfect sense.

James:  That’s suggesting they had a really strong brand already?

Amy:  Yeah. They have to already be known for sure. Because if no one is looking for what you offer, then you’re either going to be taking a bigger gamble because you’re competing on those broader terms for broader clicks that you’re competing with other businesses in marketplaces…

James: Which is going to whittle down your conversion rate.

Amy:  …Or you you wind up bidding on terms that have no search volume if you’re trying to bid on specific keywords.

This has been mostly – we’re talking about principles here, rather than very specific and tactical part of AdWords – but I think it’s important to understand that if you put in a bunch of very specific keywords that no one is searching for, or that very few people are searching for, what’s going to happen with that?

James: They’re going to get a low search volume.

Amy:  Yeah. They’re going to get low search volume, which is – I don’t want to call it the kiss of death – but it’s not just a notice like, “Hey, not many people search for this,” but it means that AdWords is not going to run your ad.

The “low search volume” almost-kiss of death

James:  Which is a common misconception. This is something actually didn’t even realize until I heard Frederick Vallaeys.

Amy:  Well, because it changed. That didn’t used to be. Just anecdotally, I think it was 2009. I created an AdWords ad that was just for my dad to go type something into Google so he could see this present I made that’s on a landing page. I was able to bid on terms only he was going to … The keywords that only he was going to use to find it. And that was doable even though only one person ever looked for it.

James:  Well, and the reason why is as big as Google is, and as good as they are at constantly growing their processing power, they do not have an infinite amount of processing power. It’s going to be a lot less volume and there’s going to be a lot of times it is not even going to be running.

Amy:    It’s not static. It’s not just you only get the one evaluation, what I’m saying is you can’t say, “well, maybe only five people look for me but then those are five clicks I want to show up on.” If it’s low volume, it’s kind of “sorry out of luck.” You don’t just get to show up.

James:  You’ve got to widen your targeting until you can actually run.

Amy:  Right. I think one other thing to mention is  – Let’s say you’re the only Laura who sells pink sailboat art, and it’s popular enough that you can bid on it. That doesn’t stop other businesses from competing with you, or competing on the term whether or not they offer that …

James:   There’s nothing to stop them from bidding on exactly the same thing.

Amy:   Right. They don’t have to sell it.

James:   They also don’t have to necessarily be restrained by the budgets that small businesses might be.

Amy’s former life as a massage therapist, and how “the big guys” ruined her paid search market

Amy: I think just a good example of this is a few years ago (several years ago, at this point), I became a licensed massage therapist. I went to school, got my license and I’d been doing AdWords professionally for more than five years and so I thought “of course, I’m going to market on AdWords. I know how to do it. This will work.”

James:  The best wife. Brilliant at paid search and an awesome massage therapist.

Amy:  Thank you. What happened with AdWords is that even though I was bidding on really relevant keywords –  I wasn’t just like “massage,” it was like “therapeutic massage in Salt Lake City.” But my competition was not other massage therapists offering the same sorts of services in Salt Lake, it was massage schools that were really driving up the cost of clicks.

James: Right.

Amy:  It’s important. Someone who’s looking to sign up for a massage school is a very different person than someone who’s looking to receive a massage.

James:  Right, and the amount of money that a massage school is geared to get is…..

Amy:   Right. A school is going to make upwards of $15,000 if someone signs up. I’m going to make maybe $70.

James:  Maybe 120, 150.

Amy:  Maybe a lifetime value is bigger or whatever. But there’s much less upside for me to win that click and convert them than there is for a massage school. And I just happened to live in the market that produces the most massage therapist in the United States.

James: Salt Lake does?

Amy:  Yeah. Utah does. It graduates more people than anywhere else.

James:   I don’t know why but that makes total sense to me.

Amy:    It does. They had a really good market to just bid on anyone who was in Utah looking for any random term that might be somewhat related

James:   There’s still value.

Amy:  A lot of fewer people have to convert for them to still have a huge upside. Whereas I had to convert a lot of people, otherwise I would have been spending more money on marketing than I was making back on the massage.

James:  Totally different way. There’s a lot for them to lose by having to narrow targeting so if they’ve got a chance … As the click cost don’t get ridiculous, if they’ve got a chance to suck somebody in, they’re going to go for it.

Amy: Right. I mean this isn’t unique to massage. This is every market.

James:   That’s a good example though.

Amy: You’re going to have larger markets that can compete on things that may or may not be relevant to what your specifically offering.

James:   That’s a great example because you have the conversion … The potential conversion value is huge. And it’s just one of those markets that happens to have bleed into other business types.

Your competition isn’t just the guy down the street

Amy:  Right. I think understanding that your competition isn’t just “the person down the street who also does what I do.” It’s any business or service who’s going to be bidding in the same category of keywords that you’re bidding on. With whatever amount that they’re willing to spend, in whatever amount they’re going to make as a result. Those are going to be factors into your auction and how you do.

One other thing to just mention here is just that AdWords is not just a search network. We talk all the time about how you can run Display ads and Gmail ads and Video ads within AdWords to grow awareness. If you’re doing that, then the direct competition that we’ve been talking about is much less of an issue.

Just depending on your business, this can be very effective. But you do want to make sure that you’ve got the right type of offer and you’re reaching the right type of audience, which is going to be a couple steps removed from the person who’s actively and specifically searching for your business.

I mean I know that’s a lot to take in, and it’s not going to answer Laura’s Etsy store question of “should I be doing this or not?” To close up the frameworks and questions you’re going to ask or research:

• Are people searching specifically for what you offer?
• Are people searching generally for what you offer?
• Who is your competition, as in – who else is showing up on Google when you type in a search that best describes your offer?
• How do you compete with those other listings based on price, variety, value, desirability, et cetera.

Your answer to those questions will help you figure whether it makes sense to do paid marketing in general or AdWords and search marketing specifically.

Empty waters don’t always mean blue waters

James:  You’re suggesting to people that when they’re exploring this, they just go to Google, do a search for something that you think somebody might search for to find your product, and then see the types of competitors that come up.

Amy:  Right.

James:  Are they direct competitors? Are they just like …?

Amy: Is it Amazon?

James: Right.

Amy:  To do that. And also if no one comes up, I think people’s natural tendency to say, “Oh, no one showed up, I’m going to have a corner on this market.”

A lot of times if there are no ads that show up, it’s not that because no one is bidding on terms that are remotely related to what you typed in. A lot of times it’s because AdWords has not interpreted that as a commercial query.

James:  Yeah. It’s deemed as a non-commercial query.

Amy:  We get into this a lot in other podcast episodes, so I won’t to go deeply into this. But I will just reference that it’s worth understanding that it’s not like, “Oh, it’s a totally ripe market for you because no one else is competing with you.” You could set something up and not see your ad show up here.

[bctt tweet=”Take-Away #4: If you have an independent business, before investing in AdWords, you want to identify and understand the marketplace – not just your direct competition.” username=”amyppc”]

James:  All right. Should we go in to question number five?

Amy:  Let’s do it. Let’s wrap this up.

5. I’m already marketing my biz. Is it time for Paid Search?

James: The last question:

Question 5: I have a good product, good sales, a loyal audience, a good marketing budget but I’m still not sure whether this is the right investment or how to get started.

Amy:  This question basically includes some assumptions that you differentiate it from other questions that we reviewed. Having a good product and good sales –  That assumes you have good conversion rates. It assumes you have good messaging, good landing pages. It assumes you know your market, you know how to market to them that along the way, you’ve improved your offerings. You’ve been optimizing what you offer.

James:  There’s a demand.

Amy:  There’s demand. You figured out your funnels. Basically, if you have a product or service that’s not a need or that people don’t expect to pay for and you’ve got a good opt-in sequence and you know the value of a lead, and that you’re comfortable with your numbers.

You also want to have enough notoriety that there’s a chance that your target audience has heard of you even if they’re not super familiar with you. I’m using those assumptions. I’m trying to answer the questions for a person who’s in this situation that we’re not playing around here. We’re not just trying to figure out if I’ve got a business. “Of course I have a business, but should I be on AdWords?” I still don’t have a definitive answer for anyone who’s in that situation…

James: Right, but these are probably the most qualified candidates.

Amy:   Exactly, the most qualified. The potential is there, and the potential is very good because search ads are 100% intent based. You’re only reaching people who are specifically looking for you or the products that you offer and you’re only paying for clicks from people who like your ad enough to click on it and check out your offer.

Your chances are good here. The conversion rates that you’ll see from text ads – from search ads – are among the best that you’ll see from a cold enough audience. I’m sure email with a really good list will also convert very well for you. In terms of getting a new audience this should do really well.

James: Why is that?

Amy: Just because it’s intent-based.

I want to review a few things that will help people that will either get better results or just help to again walk through whether this is going to be a good fit for your business.

What is your “best offer” to use?

Amy: The first one is that to stay focused on getting new customers and not traffic. We talked at the beginning about you’re paying for the opportunity to put your best offer in front of your ideal customer which is not the same thing as I will buy traffic from Instagram and I will buy traffic from AdWords. Your AdWords clicks are going to be very … They’re a lot more expensive than if you’re running display or on other social media.

James: They also have a much higher tendency to convert.

Amy: ..and you’re much likely to get someone who’s going to take action and buy from you.

James: Right.

Amy: So focus on getting those customers.. and the key here is: putting your best offer in front of your customer. It doesn’t mean bring your premium program or your highest package or product in front of people, because they may or may not be ready to buy at that point. But it’s an offer that your ideal customer is most likely to take action on which might be a free opt-in or a lead magnet. Again this is where knowing your numbers and figuring out if they convert down the road… Some might do really well for you even if there’s not an initial revenue from it.

Are people looking for the solutions you offer?

The next question is, “Do you have something that solves a problem or that  people are looking for?”

If you have a product or service that people already know that they want, then you’ll have a much easier time. Text ads do best when your audience is already some level of awareness. They know your solution exists, or at least they know that they have a problem that can be solved.

So for example, if you have a program that teaches women that they should celebrate their creative gifts and embrace their inner goddess… You might be doing very well with Instagram followers and people who know, like and trust you. But it’s unlikely-

James:  Is that where they go in Instagram?

Amy: Or Pinterest.

It’s unlikely that people are specifically looking for that. As opposed to say… If you’re a real estate broker in Denver Colorado, there’s a good chance that people are looking for that, and that you’ll be able to show up on those searches.

It goes back to what we’re saying before about if the volume is too low, then you don’t have a real good chance of showing up at all.

People buy with emotion but search with logic

This also I think –  just to give a hint at something that differentiates paid search from other marketing – is that it’s not just benefits based. Let’s say:

You sell mascara. And you’ve done a lot of deep work for your target persona, and their hopes and dreams and their core motivators, what gets them to buy. And through all this work, you’ve decided that women don’t buy mascara because they want longer lashes, they buy mascara because they want to feel beautiful.

That can be really important to inform your messaging and just help you craft how you’re going to be presenting your offer. But most of your target market that’s ready to give you cash in exchange for mascara is not going to Google and asking “how can I feel more beautiful?” They’re saying “mascara for longer, thicker lashes” and then they’re seeing what shows up.

I think you need to be in that framework with your marketing. There’s a saying that people buy with emotion and justify with logic, and a lot of businesses are built in that idea.

Paid search is going to perform best when you can include more of that logic, like being very specific about problems and solutions. What is someone’s problem that’s motivating them to go to a search engine and type something in? And then, what solution you can put in front of them?

James:  One thing that you’re talking about is having a loyal audience or following or whatever, but for some … People are going to be searching for you. It’s likely they’ll find you or your competitors advertising on your brand term. But you can have no following as long as you have a good website, a great product, great shipping, a great conversion mechanism on the backend, all that stuff…

Then the thing you really need is to have a product that people are searching for. They don’t necessarily need to be searching for your product, right? Like dog collars.

Amy:   Why are we going to dogs again? *laughs*

James:  I don’t know. It just keeps coming to my head. I think it’s because I want us to get a dog. You might sell the best dog collars in the world and you have it for the best price, which is great – if somebody is searching for an ornamental dog collar online and you sell those for a great price, free shipping or whatever, then there’s a decent chance they’re going to go with you, right? Even if they’ve never heard of dog-collars-emporium.com.

Amy:  Sure. Let’s say brand familiarity is not a pre-requisite. It’s not a requirement, but it can help. We played that Rand Fishkin clip at the beginning, like it certainly gives a leg up in terms of if you’re just building brand awareness.

I’m going to say all other things being equal, people are more likely to click on the familiar than the unfamiliar. Any time you can have brand recognition, you’re more likely to do better than if you didn’t have that brand recognition. That’s really all I meant by saying having an audience.

James:  Yeah. I just want to make a distinction there. You don’t have to have universally known and of the brand to do really well with paid search.

Amy:  That’s very true.

What are your numbers?

The other thing I wanted to talk about just for this question is: Can you backend to some basic metrics that suggest that this might be a good idea? If you sell stickers for $1 and you’re spending $3 per click, that’s not going to work really well for your business.

James:  It’s not as crazy as it might sound. I mean that’s a little bit of an exaggeration.

Amy:   It’s so hard to know before you launched, before you do things. I hate having to do forecasting for this reason. Because what Google says my CPC is going to be, no, it’s so dependent on your industry, your competition. How likely people are to click on your ads, how relevant your ads are to your product, how compelling your landing page and there’s no way-

James: Even with all those things being equal and static, it’s still going to change hour to hour, day to day.

Amy:  It still changes a lot. So let’s say that there’s 2 companies that both have a 10% conversion rates – so 10% of the people who clicked their ads, become buyers and turn into sales. 10% conversion rate, and they’re both going to invest $1000.

Company A is getting clicks at a rate of a $0.06 CPC. They’re spending $1000, and with the amount of clicks they get, the 10% conversion rate, they get more than 1,600 sales from that. Multiply that by their profit, it’s a lot of profit for $1000 of spend.

But Company B is in a more competitive industry and they’re averaging $30 clicks. Which also can happen if you’re in a very competitive industry.

James:  Yeah, it for sure can.

Amy:  They’re spending $1000. Based on the amount of clicks they get for that $1000, for the $30 CPC and a 10% conversion rate, they get 3 sales.

Both companies have thousand dollar budget, 10% conversion rate. One of them gets 1,600 sales, the other one gets 3 sales.

That’s a huge difference just based on that one variable of CPC . And it obviously isn’t all the numbers you need, because you need to know how much – what the revenue is from those sales.

James: Like one product might be-

Amy:  Company B might be making more money from that for all we know.

James:  It’s like with the massage examples. If you get a single conversion, like you said, it can be upwards of $15,000 so that’s very valuable and so you have to factor that in, but it’s really worth looking at. I just pulled a calc and did the math on that. You’ll get a little less than 17,000 clicks for the person that’s doing $0.06 clicks….

Amy:  ..$0.06 CPC.

James:  …and the ones that have $30 clicks are going to have 33….

Amy:  Right.

James:  …and then you apply your 10% conversion rate to that. It’s like suddenly, it gets a little but scarier, and a little bit more difficult, and more risky to make a profit on that one.

Amy:  Right. I mean, I think that the takeaway here –

There is just no one-budget-fits-all approach. But you do want to make sure that you can back in to some numbers that might make sense. Because what we’ve been talking about in this episode with the other non-businesses, they’re saying, “go ahead and invest in testing because it’s going to help you form a business.”

In this case, if you already have a strong business, you already have a viable market, you really just want to be paying attention more closely to these numbers to say, “Does this seem like it might work for me?”

Because if it does, there’s a huge upside. But if you know from the start, it’s just not going to, it might not make sense. You might want to consult with someone else about it. You really want to be more focused on those backend numbers more. It’s just more important here than it is in those other questions.

James: Just to bring this up again. I think this is a good place where you should get some perspective from somebody else just to check your own bias and your own products.

[bctt tweet=”Take-Away #5: Iff you’re ready to grow your business, AdWords works if you know how to work it.” username=”amyppc”]

The more you get it, the better you’ll do. And that’s really why we’re asking those questions ahead of time. We’re not saying yes, we’re not saying no, but “here are some things to look at to decide if this makes sense to continue.”

Next Steps

Hopefully this episode helped you work through some of the questions on whether you should get started with AdWords.

If now is not the right time for you, then congratulations on figuring that out. And good luck to you as you work to build and grow your business.

If you think you are ready to get going with AdWords, then be sure to listen to our upcoming podcast episodes where we walk through how to get started, how to identify what your business needs from an AdWords marketer, and how to vet potential freelancers and agencies.

Thanks so much for joining us on the Paid Search Magic podcast. Be sure to check out paidsearchmagic.com/30 for show notes and transcript and we will be back with more episodes for you very soon.

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