AdWords can be an extremely valuable tool to promote your business, but it's not the best option for everyone.
A little bit of research is all it takes to determine if AdWords is the right choice for you.
Determining the Potential Return On Investment
The most important thing to consider is the potential ROI. If you can't turn a profit from it, there is no sense putting in the time and effort it takes to establish an AdWords campaign.
To decide if using Google AdWords will likely be profitable, we need to do a little bit of math. AdWords charges a cost-per-click fee or CPC every time a lead uses the ad to go to your website.
The CPC varies widely depending on how many competitors are also using AdWords to advertise for your chosen keywords.
By doing a little bit of pre-research, you can roughly determine what your CPC will be. Once you have that number, it's easy to figure out whether there is a good chance for AdWords to become profitable.
A good rule of thumb while first starting out is to plan on a conversion rate of roughly one percent.
For example, if a certain keyword has a CPC of $1.13, and you have a conversion rate of one percent, that one sale would need to be at least $113 to cover the cost of the ads.
While these numbers don't seem great, once you are able to find and implement keywords with higher conversion rates, such as three or four percent, for your industry, your profit margins will likely increase significantly.
Next Steps
If you've decided to give Google AdWords a try, the next step should be keyword research.
By identifying top industry keywords and using trial and error to determine which ones convert for you, you can accelerate your success with AdWords.
Once you find which keywords perform and your campaign is profitable, don't worry about the cost and let the system work.
