How Can AdWords Hurt My Business

How Can AdWords Hurt My Business

A few years back, The New York Times made a big splash in the digital space with a bold article that claimed Google AdWords isn’t practical for small businesses. Their point was pretty valid: in today’s overcrowded and competitive market, consumers are becoming pickier than ever before. Ranking high in search results is becoming increasingly difficult, and costs are adding up quickly.

But, is that enough reason to claim that AdWords is not always good for small businesses?

The following might sound like an unpopular opinion, especially when so many studies and reports point to the effectiveness of paid-per-click advertising. But, the truth is that AdWords may indeed hurt your business.

First of all, as The New York Times pointed back in 2014, this advertising model may not fit your company. Secondly, you may unknowingly make a lot of mistakes that drain your ad dollars faster than you can say “conversion rate.”

Let’s examine both scenarios closely and see what we can do about them.

 Why Google AdWords May Not Fit Your Business

Here are a few reasons you should probably think twice before advertising on Google AdWords:

  • People Aren’t Searching for Your Product Online

Search engines are an excellent market research tool. They can tell you all about what your target audience is interested in and wants to buy. Don’t get the wrong idea, though: if people aren’t searching for your products online, it doesn’t necessarily mean that they have no interest in them. Maybe, your product is new, and they have no idea it exists. Just think about it: if you wanted to market TiVo online, what keywords would you have used, considering that most people had no idea this option existed?

The main takeaway is that if you’ve built a new product, service or app, you should focus first on building awareness around it, then invest in PPC. Otherwise, you may be just throwing thousands of dollars on a campaign that drives close to zero results.

  • You Don’t Understand How Search Engine Marketing Works

Pay-per-click advertising is not rocket science, but you do need a thorough understanding of its mechanisms to see any significant results from your efforts. If your plan is to read a do-it-yourself guide and then try your hand at it, you are going to lose a lot of money.

Many variables come into place when it comes to running an effective AdWords campaign, and without knowledge and experience, it’s almost impossible to be aware of all of them. That’s why it would be best to work with an agency or hire an in-house PPC advertising specialist.

  • You Didn’t Set up a Conversion Funnel

One of the biggest mistakes small business owners make is assuming that Google advertising means setting up the ad and watch how the money roll in their bank accounts. But, as we’ve mentioned already, there are many nuances to an effective PPC campaign. Everything from the text copy to the landing page and the checkout process must give your audience the confidence that you are, in fact, a reliable and trustworthy business. If you set up a PPC campaign without a proper conversion funnel, then your ad dollars are as good as lost.

 Mistakes That May Be Hurting Your AdWords Efforts

As with any marketing tactic, a well-managed one can bring in fantastic results while one that’s poorly done can cost you more than you may expect. Here are some of the most common mistakes that can turn your AdWords campaign from a potentially profitable endeavor to a financial disaster.

  • You’re Not Using Ad Groups

A lot of small business owners ignore or don’t understand the benefits of grouping their ads based on similar types of keywords. So, they create just one segment and show everyone the same ad. But, here’s the thing: the better your ad copy matches the keywords prospects use, the greater the chance they’ll click on it and take action.

Imagine for a second that you sell refrigerators, stoves, ovens, exhaust hoods, and other large kitchen appliances. If you don’t break up your products into different groups, then searchers are going to have a difficult time finding your appliances online.

 

  • You’re Not Using Negative Keywords

Another mistake that can drain you a lot of ad dollars is not using negative keywords when setting up your AdWords campaigns. Imagine that you’re a fashion retailer that sells men’s shoes. You sell dress shoes, Oxford shoes, slip-on shoes, and so on. However, you don’t sell any sports shoes. If you want to avoid unqualified clicks, then you should include phrases such as “men’s sports shoes” or “athletic shoes for men” as negative keywords. That way, Google won’t show your ads for these queries.

  • You Don’t Know the Lifetime Value of Your Customers

Small business owners focus on a variety of vanity metrics, such as likes, shares, impressions, and so on. However, most of them have no idea what the lifetime value of their customers is. Without this data, you won’t be able to tell how much each AdWords customer costs you.

Let’s imagine that the lifetime value of your customers is $15. That means that you’ll earn an average of $15 over the period of doing business with your customers. If you’re paying $9 per acquisition, then your margins are pretty good. But, if the lifetime value of your customers is $9 and you’re spending $15 on advertising then you’re going to go out of business pretty soon.

Make sure you know all your numbers before you dive head first into PPC advertising. This method may work for others but if you’re paying more than what you are getting in return, then maybe you should focus on other marketing tactics.