Some Basic AdWords Tips

[Anthony Buchalka]

I thought some AdWords basics might help a few people and get some conversation started.

There are several important questions you need to ask and answer yourself BEFORE you set up a new AdWords campaign.

Failure to do so may well result in you wasting time & losing money!

The questions you needs to ask yourself include;

1. Have I carried out proper research in the niche I wish to advertise in?
2. Have I determined what my goals for this Adwords campaign are?
3. Have I carried out my keyword research carefully?
4. Have I determined my daily / weekly AdWords budget?
5. Do I know how to work out my dollar value per visitor?


It' s surprising how many people start a campaign without much planning.

Take you time and do you homework and will you end up a lot happier

[cab322003]

Can you clarify what you mean by ' Do I know my dollar value per visitor?'

[Anthony Buchalka]

OK, I'll address this AdWords question;

(it's a bit of a long answer)

Can you clarify what you mean by ' Do I know my dollar value per visitor?'

As soon as possible, it's strongly suggested that you calculate the value of each visitor to your site.

Your goal in business is to achieve a good 'value per visitor', or high visitor value.



How do you calculate visitor value?

Simple:

Burt bear in mind, math was never my strong point


Step 1. Figure out your visitor-to-sale “conversion” rate:

First, you need to find out the number of visitors you need to close one conversion (sale or optin etc).


To do this you divide the number of visitors to your web site by your total number of sales or optins.

So, for example, if you make one conversion from every 200 visitors to your site, your conversion rate will be 1 in 200, or 0.5%.

So we have a conversion rate of 0.5%.

OK.. I know, not rocket science.


Step 2. Determine your net profit on each sale:

This is the amount you get to keep after all expenses are covered.

First, calculate your gross revenue. If you had 25 sales (conversions) at $20 each during the month of May, your gross revenue for the month is $500 (25 x $20).


Then deduct your expenses.


Let’s say it cost $240 to produce those 25 conversions.

$500 (gross revenue) - $240 (expenses / 25 conversions)

= $260 profit.


Divide the total profit into the number of conversions;

$260 ÷ 25 sales

= $10.40 net profit per conversion.


Step 3. Calculate your “value per visitor”.

Stay with me on this, if it all seems to hard, I promise it will all make sense in a minute.

This time, you need to divide your net profit per conversions by the number of visitors you need to get one conversion:

$10.40 net profit per sale ÷ 200 visitors = $0.052 per visitor

That means each visitor to your web site is worth 5.2 cents to you.

So, in this example, the dollar value per visitor is 5.2 cents.

This is the maximum amount you can afford to pay to attract one visitor to your web site (using these example) numbers — and should be your maximum bid for PPC advertising.

Of course, when you factor in upsells, and backend sales, you may be prepared to 'lose' to get customers or prospects to our lists.

Yes, you may be sometimes prepared to have a very low or even negative dollar value per visitor which of course will depend on your overall campaign goals.

Why the heck go to all this trouble with all these numbers?

Well, interestingly, this is often where the money is made and lost in AdWords.

Unless, you know the value of every visitor or action for a particular campaign, you won’t know the maximum bid cost, and can easily start losing money unless you are extremely careful or lucky.

Lastly don't forget the stats provided by AdWords. Much of this information can be gathered from there.

You should use a tracking service as well (such as Google Analytics for example).