Is Google Adwords Worth the Investment in 2018?

Bogdan Chertes
eCommerce Marketing PPC Search Engine Marketing
is adwords ppc worth it in 2018

The word is out: Google AdWords is by far the largest PPC network out there. After all, people are on Google all the time so there’s no wonder it’s the no. 1 advertising channel for direct response campaigns for ecommerce businesses just like yours.

With over 4 million advertisers, you only need look at how many businesses use Google AdWords to understand their effectiveness statistics: businesses make an average of $2 in revenue for every $1 they spend on AdWords, with Google owning about 70% of the search market share.

Need more reasons to advertise with the industry leader? The stats speak for themselves: Google’s display campaigns reach 80% of global internet users and, all together, the company earns 44% of all global online advertising revenue.

Case in point: Amazon, who spends a whopping $10.9 million/month on AdWords. In fact, 95% of the top 100 companies on Google AdWords by ad spend are spending more than $700,000 a month in PPC advertising.

Unsure about your Adwords results? Click here to learn how you can make sense of the numbers.

Whether you’re part of a large enterprise looking to drive traffic to your website, or a small local businesses searching for your next means of boosting sales, at some point you’ve probably asked yourself “should I try PPC advertising?” or “is Google AdWords worth it?

Let me preface this by saying that we’re not advocating that you abandon all your other marketing activities and only do PPC, specifically AdWords. As always, a healthy strategy that spans across multiple marketing channels works best, depending on what you want to achieve. BUT if you’ve never used AdWords before or are having doubts about the results you’re getting right now and you’re wondering whether or not it’s worthwhile, this post is for you.

In truth, PPC only works if you know what you’re doing. It’s easy to burn through budgets until one day you wake up and realize you’ve been paying for clicks from people who had no intention of buying anything from you.

The good news is there’s hope. Like any of your marketing efforts, AdWords should be viewed as a marathon, not a sprint. So, let’s get started, shall we?

is ppc worth it in 2018

How do I know if PPC is right for me?

There’s a time and a place for PPC and AdWords and deciding whether it’s something you should start (or even keep doing) is not an easy task. There’s a lot to take into account – time and budget are just the tip of the iceberg.

To get you started, here are 3 questions you should be asking yourself to see if PPC is right for your ecommerce business:

What am I willing to pay for a new customer?

To even begin answering this question, you’ve got to work out what you can afford to spend to sell your product or service. This affects your ROI – Return on Investment, as well as your margin.

Figuring out how this number fares in comparison with your ad budget is worthwhile, as it helps you set your monetary targets in ad spend. It’s important to realize that you can have as many customers as you’d like, as long as you’re willing to pay for them.

How well is my website converting clicks into sales?

To figure this one out, you need to send ecommerce data to Google Analytics in order to track your results and find your conversion rate, or the percentage of visitors to your website that take an action that you consider valuable to your business. Your ecommerce conversion rate is calculated as transactions divided by number of clicks.

Tracking is important, because it’s a way of measuring the success rate of your campaigns and the website itself. After all, if there is no measure of what success is, how can you be successful?

how ppc works for ecommerce

What are my long-term objectives with online advertising?

In simple terms, what are YOU working towards?

Whether it’s short-term objectives like boosting sales to generate immediate cash flow or long-term ones like building your customer base and your business to achieve VC investments, your strategy is an important part of your PPC needs and can help your business prosper.

Here are a few standard short and long-term objectives the clients we’ve dealt with have mentioned:

Awareness

Are you a startup wanting to promote your product? An established brand that launched a new product line? Then you might want to generate demand before you can expect to get sales. This means getting the product in front of potential clients and attracting traffic to your website. In this case, impressions and clicks might be the right result for you.

Breaking even

If, however, you’re looking to acquire new customers while breaking even, a tactic that many savvy ecommerce stores are taking, this involves covering your ad costs with the earnings from the sales. In this case you want to make sure you are hitting your break even ROAS – return on ad spend – and analyze the number of customers who have signed up.

Let’s say you’re selling a pair of shoes for $100 with a margin of 50%. You spend your $50 ad budget on 100 clicks and get 1 conversion. So now you’ve got $100 in revenue and $50 in earnings, after subtracting product cost and shipping. The same $50 that you initially spend on the ads, so you’ve basically gained a user at no loss.

In the long-term, you have to calculate your breakeven ROAS to figure out how much you have to earn in sales, taking into account your margins, shipping costs etc., so that you’re not losing money. We’ve set up a ROAS calculator to help you with that.

Maximize revenue

If you’re looking to maximize revenue at a certain level of ROI, then you need to be tracking them every step of the way. Maybe you’re planning an exit in a few years and are hoping for a better evaluation for your company. Then your long-time goal is to maximize the topline revenue within your target ROI.

Maximize profits

If you’re interested in maximizing profits, you’re going to need a more advanced tracking system. You should be able to pass product cost data into your ecommerce platform. With some coding tweaks you can send the cost for each order to Google Analytics and then you will be able to see exactly how much profit each campaign, ad group and keyword generated.

Take this dashboard, for example. This client was spending an estimate of £5,000/month on PPC advertising. With a very ambitious ROI (£10 revenue for every £1 sold), all it takes is a bit of customization in Analytics to show that, after paying for ad spend, couriers, suppliers etc., he is still making a profit.

is PPC and Adwords worth it in 2018

Depending on your objective, PPC might not be your most profitable channel but it can be a great driver to either jumpstart your sales or to acquire new customers without actually losing money.

In the end, figuring out if advertising on Google is right for you takes a lot of data into consideration.

Every business is different, but here are a few cases when AdWords makes financial sense:

  •  Clicks aren’t costing you a fortune – as long as you’re not spending more on a single customer than you’re willing to make off of one, there’s no reason why you shouldn’t give AdWords a try.
  •  Niche keywords are hard to rank for organically – if you’re in a niche business or trying to sell a niche product, it could prove more difficult to rank organically for your ideal keywords. Bidding on them using Google AdWords makes more sense, since it would take a long time to rank for them on your own.
  •  Short term promotions that need immediate attention – for all those times when you don’t want to miss seasonal promotional opportunities or holiday shopping sales — especially to your competitors who are already running ads.
  •  Declining Amazon or eBay sales – Many merchants sell through marketplaces, quite an unpredictable platform, but a decent place to get started. If you’re experiencing a decline in your Amazon or eBay sales, it’s a good time to consider PPC.

What can I expect from AdWords?

As more customers are shifting their spending online, so are more and more businesses taking the plunge into PPC.

From those who don’t have active campaigns and are looking to add PPC to their marketing budget, to those who are looking for the next step in online advertising, here’s what you can expect from AdWords if:

  1. You’re new to PPC and are considering trying AdWords for the first time.

You’ve come to the right place.

People are more than likely using Google to search for products or services like the ones you offer, and AdWords will help you drive more targeted traffic and increase conversions.

If you’ve set your goals, paid search has the potential to drive a considerable amount of traffic to your landing pages. But just how much traffic should you expect from AdWords?

That depends on a number of variables. Your niche or industry, keywords, budget and offer can all determine the amount of traffic you can expect from your paid campaigns. These variables will also have a significant effect on the cost and performance of your PPC campaigns.

PPC can be a very powerful growth tool and is known to bring in faster results than its organic counterparts. However, seeing profitable results doesn’t happen overnight. The first 3 months are generally considered a testing, an investment for the future. It’s only after gathering data, extensive testing and optimizing that campaigns reach their full potential.

is ppc right for small businesses

  1. You started DIY and are considering transitioning to working with an agency

Once you’ve figured that PPC is a smart move for your business, taking your AdWords efforts to the next level may involve getting some help from a trained, qualified professional.

A competent agency should improve on an existing campaign, spending time getting to know you, your business and product/service and applying their extensive collective knowledge to optimize your strategy and get you the best results.

If that’s the case, your Quality Score should improve. By this I mean it would increase, meaning that your ad positions on the search and content networks will also rise. Your impression share will increase and click volume will grow as your agency will be reporting to you on a monthly basis, breaking down the ads and keywords that are performing best.

Remember, it takes money to make money so don’t be nervous if you don’t see results with away. Provided that campaigns are being monitored and optimized regularly, patience will usually pay off.

Are my PPC campaigns working? How do I best evaluate them?

Define how “working” looks like for your ecommerce

It all depends on what “working” means for you. From where I stand, there are 2 approaches to evaluating your PPC campaigns:

  1. Are my ads showing? Meaning am I getting ad views and click-throughs.

Fact: if your campaign or ad group is getting impressions, it means that users are finding it in the Google search results.

Now, you might be tempted to try doing Google searches yourself to check on your ads. Don’t do it. You will only artificially inflate your impressions and, since you’re not actually clicking on the ad, Google might stop showing them to you, thinking they’re not relevant. If you do click, you will be essentially charging yourself money, so that’s not a good idea either.

The easiest way to check if your ads are showing is to use the Ad Preview tool from within your Adwords account (you find it under the Tools menu). Remember that on each user query there is an ad auction going on, so the results can differ based on location, device, day of the week, hour of the day etc. The Ad Preview Tool allows you to check on your ads at no extra cost to you.

  1. Are my ads effective? Meaning am I getting sales.

To check on the actual efficiency of your ads, aka how many clicks, sales, revenue is generated, you need to have conversion tracking set up in AdWords or Google Analytics.

If you do, you’ll be able to see the AdWords campaigns reports in Analytics under Acquisition > Adwords. This is where you can view the number of clicks, cost, CPC, transaction and a graphic representation of ROAS for each one of your campaigns.

how to know my ppc campaigns are working

Why PPC may not be working for you

You’ve no doubt heard the countless success stories that people share about Google AdWords.

Maybe you’re feeling frustrated that the same outcomes don’t necessarily apply to you. I get it. There are a lot of variables that can make or break your campaigns, but here are a few things you should know before getting started or giving up.  

Prohibited practices & content 

Obviously, breaking any of Google’s policies is a big no-no. But sometimes, you might not realize you’re doing it, especially when you’re out there doing it on your own.

I remember one client who was in the business of ammo and bullet proof vests. We’d been doing AdWords and things were going well, so we started talking about Google Shopping as a possible next step. Before we had any chance of researching guidelines and competition, he’d already started a campaign on his own.

Lo and behold, only 1 month later Google had blocked his account and disabled his products. This situation could have all been avoided by carefully going through Google’s Shopping Ads policies.

why ppc campaigns fail

Your ecommerce site is not ready 

You need to take care of the basics: a functional checkout, a Terms & Conditions page, and to clearly give users a way to contact you by displaying your contact details.

There’s 3 steps to sustainable ecommerce success and it’s important that you follow them in the right order:

  • #1. Turn your online store into a repeat-customer-generating machine.
  • #2. Optimise your site for conversions.
  • #3. Implement your pay per click advertising options.

Beyond these situations, and a few PPC myths, there are some additional reasons where AdWords might not be working for you just yet.

Patience – While AdWords is THE platform for fast, visible results, actually reaching your objectives usually takes between 1-3 months. Especially if you’re working with an agency, learning the ins and outs of a business/product takes a bit of time, gathering statistics and optimizing for conclusions.

Don’t get me wrong, you still get traffic and probably sales too, but it might take a bit until you’re happy with the sales volume or ROI.

High prices for high competition“I’m in a competitive niche. Is it worth doing PPC?” – it’s something I hear all the time.

If you’re situated in a big city, a high CPC industry or a highly competitive industry (like insurance), you probably want to know if it’s difficult to compete with other companies or if it’s too late for you to join your competitors in the PPC game.

is ppc profitable

If you’re in retail you’re probably already competing with the likes of Amazon and eBay. If you’re in travel you have Airbnb or booking.com as competition, so you may need to invest more to see actual results.

Some niches are tougher and more competitive than others on PPC – but don’t worry, there are steps you can take to help you get ahead and succeed even in the most competitive of niches.

  1. Be clear on your goals

It’s easy to get sidetracked, but try to keep in mind what your long term objective is. Set some clear KPIs based on what your trying to accomplish (ROI, sales, new customer acquisition). Then, continuously measure your results and optimize your campaigns to reach your end goal.

  1. Optimize your website

I’ve said it before and I’ll say it again – you shouldn’t spend a dime before your site is functional. In fact, you should constantly work on your site even as you’re driving Adwords traffic.

  1. Focus on mobile

Creating the perfect mobile experience can put you one step ahead of your competition. With cheaper clicks and a higher conversion rate than desktop, getting mobile search right might be just what you need.

These would be the must have PPC strategies to use in any competitive ecommerce market.

If you’re ready to see how my ecommerce-only PPC agency can make Adwords work for your brand,
book my free 30 minute consult to get your custom tailored 6 month roadmap to increased sales and profitability.

How to get better PPC results

Sometimes, even the smallest changes can have a significant impact on a campaign’s profitability. Here are a few steps you can take towards getting better results in Google AdWords:

  • Optimize Search 

Nobody knows your business better than you do. Use that to your advantage. Think about what specific terms customers would use when searching for your products and bid on them.

  • Granular Targeting 

This is a common mistake I see when I consult with startups. They run their ads and the link for the ad is literally the homepage. Instead, try to target granular, make it easy for clients to buy by sending them to the correct landing page after the very first click.

  • Keyword Tracking 

There’s more to tracking than just sales. Indicators on add to cart rate, time on site and newsletter sign-ups can be very helpful in deciding which keywords work best and how successful it could be to remarket to people.

  • Location, location, location 

Depending on the case, your product or service may only be intended for people in a particular geographic location. Inland, rural, urban, within your city’s limits or not, you should make sure that your campaigns are set to display ads only to users within the area that actually interests you.

Measuring Results & Analyzing ROI

If you’re first starting out, measuring results can be intimidating. But if you know what you’re doing, you’re aware of the importance of data measurement and analysis, no matter how complex they may seem.

For most ecommerce businesses, it’s all about ROI – return on investment. As most marketers will tell you, ROI is one of the most important metrics that can help you determine your campaign’s effectiveness. It shouldn’t, however, be the only metric you take into account.

I’ve said this before, but results depend on your objectives, especially long-term ones. The metrics you should pay attention to really depend on your end goal. The fact is, sometimes, ROI might not be your most important KPI. Like one of our clients who had received about 7 million dollars in VC funding and whose goal was to acquire users at a certain ROAS, not to necessarily make a profit.

Google makes it easy to spend money, but to get a decent ROI requires constant tweaking (and a little education).

how to measure ppc effectiviness roi

Let’s say you’ve got 2 products, each with an ad spend of $1,000. Product X brings in $5,000 in sales, with a margin of 50%, which generates $2,500 in profits. This products ROI is therefore 5:1.

Product Y has sales of $7,000, with a margin of 30%, which generates $2,100 in profits. Therefore, this product’s ROI is 7:1.

It’s a simplification of the entire process but it’s evidence that an overall ROI is an approximation of profitability. Some products might be more profitable than others and your average margin might not correspond to your initial estimates.

To put it simply, if your ROI is positive, then you’re doing something right and you should keep working towards it. If your ROI is negative, it can indicate that something isn’t working, and it needs to change.

So, is Google AdWords worth the investment in 2018?

Google remains the strongest advertising channel for direct response campaigns. The fact remains that, if you want to reach users that are actively searching for your products, Google AdWords is still your best bet.

Every case is unique, but let’s dive into some of the reasons that make this tool so powerful, both in cases where it works, and cases where it doesn’t.

Why AdWords campaigns work

Immediate Impact – A multi-channel strategy works best, there’s no doubt about it. In most cases, AdWords outshines other channels through speed and immediate visible results.  

SEO takes time, traditional channels such as radio and TV need frequency, email marketing depends on open rate and social media takes more exposure. With paid search, you’ll most likely get results from the first day, and it’s up to you to optimize as you go forward.

Quality of Channel – What sets search campaigns apart from the other channels is that it’s where people are looking for you, instead of you trying to look for them. The quality of search traffic has a higher chance to convert than a direct mail drop.

Niche terms – Some niches are tougher than others, but that doesn’t mean that AdWords won’t work for you. In fact, AdWords allows you to be as specific as you like with keywords, in order to maximize conversions. Even with a smaller budget, traffic is a given, so it’s up to the PPC strategy to pinpoint keyword selection. It can do wonders for niche industries with very specific terms.

Why AdWords campaigns fail

Set it & forget it 

Reaching millions of people – potential clients – from a computer sounds great. But you can’t just create an ad or two and then sit down and wait for results to come pouring in.

If I had a dime for every time I’ve looked at a new client’s account only to see that they’ve either let their AdWords account run on autopilot or have had under qualified personnel run the account for them, I’d be a rich man with a very large coin collection.

A Google AdWords campaign requires attention, dedication and constant optimization, best done at the hands of an expert, someone who knows what they’re doing. Either that, or you’ll be spending your budget faster than finding a turkey in November.

why ppc campaigns dont work

Lack of tracking 

I’ve seen cases where clients don’t have any tracking set up at all or, even worse, they do, but their old agency is the only one with the login details.

There are so many reasons you should be on top of tracking everything going on your website and ad platforms: your spending could get out of control, the algorithm could change, your landing pages might not be delivering and so forth.

No communication 

Another one I hear quite often is that “the traffic I get from AdWords never converts”. Most often I find that the problem is a bit more complex than that.

Knowing your product or service so well can sometimes prove to be a downfall. In most cases, visiting your landing page just isn’t enough for the average customer. They’ll likely need more information, maybe they want to talk to someone from your company. Listen and understand your customers’ doubts and act on them. It will only bring your visitors that much closer to a sale, in the long run.

Budgeting: How much should I spend on AdWords to see it work?

Spend too little, and you might leave sales on the table.

Spend too much, and that’s cash disappearing into the ether. Fact is, there’s no exact answer that works for everyone, but there are ways of figuring out what’s best for you and your business.

This is something that I see 90% of (small) business owners fail at. They have no idea how much they should budget and end up just throwing money at AdWords hoping something will work. It’s actually easier than you might think.

Say your average customer spends $100 and you have a 40% margin. For $100 in sales, you generally have to have $250 in sales to break even. If those $250 are generated from about 2 sales, that means that you acquired 2 customers at virtually no cost to your business, therefore the ads paid for themselves!

If you aren’t tracking and don’t know your numbers, you’re not alone, you’re just in the dark. We can help put these numbers together to help determine your ideal budget.

Comparing PPC campaigns effectiveness to Facebook Ads

Two very different advertising platforms, each of them able to help you bring in new customers.

As advertisements in social networks versus directly on Google go, you might be more familiar with Facebook Ads, so here’s how PPC compares as an investment – in terms of reach, costs and a summary on what each is best for.

To begin, there’s one main difference between AdWords and Facebook Ads: who is searching for whom.

On Google AdWords users search for keywords and the mechanism works in a way that the customer finds the business offering what he or she is looking for. On Facebook, the business is the one that is searching for the customer and lets them see what they might like based on their interests and behaviors.

To put it simply, Google is intent-based (people are actively searching) while Facebook is interruption-based (people are not actively searching).

ppc vs facebook effectiveness statistics

Reach

Adwords reaches billions of people every day, and it’s a great place to advertise if you’re looking to tap into that enormous search traffic. This platform excels in driving traffic with the intent to convert.

AdWords is also the most popular place to advertise to see results fast. That’s because their clicks are bottom-of-the-funnel intent searches that drive sales faster than a social network.

Facebook, however excels at targeting audiences for your ads. And with over 2 billion monthly active users, Facebook ads have a global reach with a diverse user base that cater to everything from driving brand awareness to generating leads and store visits.

The platform has some seriously powerful targeting options, from diverse demographics including job title income level, and even things like hobbies or specific interests.

Costs

In terms of costs, advertisers on Google AdWords can expect to make an average of $2 for every $1 spent, effectively doubling their ROI.

Facebook, on the other hand, has a minimum ad spend of $1/day, with a relatively average cost per 1,000 impressions, allowing advertisers to invest as much as they can and need to.

So, which one should you go for – AdWords, Facebook…or both?

That depends on your objectives. What is your end goal and what are you looking to get out of this?

Facebook Ads are powerfully visual, helps create brand awareness and require detailed targeting. AdWords is more of an immediate sale platform where the ads are search related, meaning that your potential customers is already searching for your product or service and he or she is ready and willing to buy.

In my view, it’s not an either/or question. It’s both. Build awareness with Facebook and close the deal on AdWords when people start searching.

Find out more about each type of advertising channel and choose what’s best for you!

Conclusion: Should You?

Let’s recap:

Yes, Google AdWords works and is worth it for your ecommerce if done well.
Yes, AdWords allows you to specifically target qualified, in-market prospects, and yes, if managed correctly, it can deliver strong ROI, helping you grow your business.

So… should you be using Google AdWords?
Well, your competitors are, and so is everyone else. After all, there’s a reason Google is one of the most profitable companies in the world.

It’s all a matter of perspective:

I’ve had clients that have never tried PPC because of how difficult it looks, or it seemed way over their heads. I’ve also had clients that had attempted some form of PPC themselves only to realize they were spending money on something they didn’t really understand. “I’ve set it all up so that we’re bidding only on exact matches” they’d say. Once I’d gone into the account and really pointed out the keywords they were paying for, there were some shocking conclusions.

I truly believe that Google’s enormously successful PPC advertising system can and will work for almost any type of business. Sure, it requires time and money, but thousands of businesses have found that it’s time and money well spent. And now, so can you.

If you’re ready to see how my ecommerce-only PPC agency can make PPC work for your brand,
book my free 30 minute consult to get your custom tailored 6 month roadmap to increased sales and profitability.

should you invest in adwords and ppc

Author: Bogdan Chertes

Bogdan has helped dozens of ecommerce businesses grow sales and acquire more customers by using data driven PPC marketing strategies.
At Adfix, he leads a team of top class PPC and Social Media experts that help clients maximize ROI from their campaigns.