can adwords be profitable

Can Google AdWords Be Profitable?

There are two types of people in this world: those who believe that Google AdWords pay per click works only for big businesses and those who dive head first without knowing their numbers.

Both approaches are wrong.

Here’s the thing: if you set it correctly, pay-per-click advertising can generate a nice return on your investment. It doesn’t matter if you have the marketing budget of Coca-Cola or if you’re just investing a few hundreds of dollars every month. You can increase your bottom line with the right strategy.

But, not knowing your numbers, such as the average cost-per-click of your set of keywords or the lifetime value of your customers may cost you more than expected.

So, the short answer to the question is: yes, Google AdWords accounts and ad groups can be profitable. You just need to be careful about how you set it.

Let’s learn more AdWords tips! 

How to Determine If Your AdWords Campaign Will Be Profitable

When you’re pouring money into Google AdWords, it’s vital that you track every possible metric to ensure that you’re not spending more than you are making. While clicks, visits, and conversion tracking are important, two metrics can help you determine the profitability of your AdWords campaign. We’re talking about cost-per-click and the value of your visitors.

The first thing you need to do is to pick your three best performing keywords from the Google AdWords Keyword Tool. Then, look at their cost-per-click and write it down somewhere.

Next, you need to calculate the value of your visitors. Depending on your goals, you can choose to determine their short-term value or long-term value.

Short term value of your visitors = Average order value x Margin x Conversion rate

The long-term value of your visitors = Lifetime value of your customer x Margin x Conversion rate.

Now, it’s time to look at the data and determine if you can go full speed or tweak your numbers before investing a generous amount in Google AdWords.

If the short-term value of your visitors is greater than your cost-per-click, then that’s the ideal scenario. It means that your campaign is going to be profitable and help you increase your bottom line.

If the short-term value of your visitors is smaller than the max CPC (maximum cost per click) and the long-term value of your visitors, then you need to proceed with caution. That means that there’s a lot of competition for your target keywords and it may take a while before you can see a return on your investment.

If the long-term value of your visitors is smaller than your CPC, then that’s a massive red flag. You should focus first on increasing the lifetime value of your customers, optimizing your conversion rate, and tweaking your keywords strategy if you don’t want to pour money into an ineffective strategy. Then, only after the numbers are right, you can proceed with Google advertising. 

How to Improve the Profitability of Your Google AdWords

Here are some steps that could help you create a profitable Google AdWords campaign:

  • Create a Buyer Persona

You’ve determined that your campaign can be profitable. Now, you need set up everything correctly to ensure that you will get a maximum return on your investment. That begins with defining your buyer persona.

Learn as much as you can about your ideal customer, from their demographic data to information about their needs, motivations, and desires. Try to figure out the primary problem they are dealing with on a daily basis, what are they expecting, what can you offer them to persuade them to take action, and so on.

That can help you understand your target market better and create an ad copy that will trigger a reaction from them.

  • Make Them a Hard to Refuse Offer

Your prospects receive thousands of advertising messages every single day. If you can’t grab their attention, they will most likely discredit you as just another annoying interruption.

One excellent way to make them pay attention to your Google ads is to offer a first-time discount. Make it clear in your ad copy that if they purchase your product or service they will get a 30% discount or a 30-days free trial.

Another way to convince prospects that your business is trustworthy is to offer a money back guarantee. Customers might a have a hard time shopping from you, especially if you are a new business with no established brand name. A meaningful guarantee reduces the perceived risks and compels prospects to give your products a try. After all, if they are not satisfied with it, they can always return it and get their money back.

  • Don’t Forget to Set up a Highly Converting Landing Pages

Your Google ad is just the first component of your pay-per-click strategy. If after people click on your ads they end up on a page that has nothing to do with the initial offer, then they will bounce. Here’s the thing: it doesn’t matter how well optimized your ad is or how magnetic the copy; the landing page is where the magic happens.

First thing first, you need to ensure that the landing page has a relevant headline that is connected to the promise you made in your ad. The content should be consistent as well and provide additional information to the statement you’ve made in your initial offer. Make sure that you expand your offer and let your prospects know the benefits they will enjoy if they choose you instead of your competition.

Don’t forget to include social proof. Reviews, testimonials, and examples of people that have used your product can help add credibility to your offer, and further increase offline sales.

In the end, persuade your visitors to take action. You’ve hooked them with your ads, and you’ve convinced them to read and learn more about your offer. Now it’s time to close the deal and encourage them to purchase.

Just because your numbers are right and you expect your Google AdWords campaign to be profitable, it doesn’t necessarily mean that the outcome will be a positive one. You need to test your ads thoroughly until you find the winning combination.

Download our 5 potent online marketing strategies report for an ultimate Google AdWords checklist.