I often get asked if Google Adwords (aka Google pay per click), is worth the money.
The short answer is: “yes, but it depends“.
The fact that Google makes most of it’s more than $50 billion per year from Adwords says a lot for the effectiveness of Adwords for millions of its customers.
It all comes down to the numbers
If you are trying to sell a $9.95 ebook online and you are paying $1.50 per click, then maybe Adwords is not for you.
If on the other hand you are selling second hand Lear jets at $6 million a pop and it’s costing you 45 cents per click then you would be crazy not to at least try Adwords. Give it 2 years then make a decision 🙂
You see some industries like weight-loss, travel, bank loans, car hire and accommodation are right into Adwords which drives up the average cost per click.
Some industries like aircraft hire and private schools are not yet into pay-per-click which means clicks are cheap even for very frequently searched terms for highly profitable goods and services.
The rule of thumb I use for setting up Adwords campaigns for clients is as follows:
If the lifetime value of a new client or customer is greater than 50 times the estimated cost of a click, then you should trial Adwords for at least a month or two.
This assumes a break-even conversion rate of just 2%. In other words for every 50 people who click on your Adwords ad, one of them becomes a client or customer. If your offer is strong and the other marketing elements on the landing page are good, then you could expect a lot better conversion than 2%.