Why Do People Pay So Much for Google AdWords?

Google AdWords Logo“Why are my competitors paying so much for their Google AdWords?” It’s a question we hear we all time.

“It doesn’t make sense,” they usually say, “’IT Business Services’ is going to cost me ten pounds a click. We’re not a small company, so if we can’t afford that then who on Earth can?!”

There are two common answers.

Number 1; Your competitors are deluded. Not as glib a remark as you might imagine. There are any number of companies out there who have become so obsessed with grabbing AdWords that they are blinded to how much it is actually costing them. If the price of that AdWord is being pushed ever higher, then the potential revenue must be enormous – is how the logic usually runs. It’s completely muddled, of course. The cost of an AdWord is a reflection of the amount of competition there is for that phrase. That competition may reflect potential revenues, or it may reflect a crowded market place, or both.

The consideration of potential Google AdWordsrevenues leads us onto…

Number 2; Your competitors have a better conversion rate. If you are paying £10 per click but only have a conversion rate of 1% then each sale is going to cost you £1000. If you are selling a business service that is only worth £150 a month, then your contract’s going to be in its seventh month before you see any profit back. To make matters worse, the high traffic AdWord you have just bought is bringing visitors into your site at an ever greater rate, meaning your losses are growing faster than they ever would have done.

On the other hand, if you have a conversion rate of 10%, then each sale costs you £100 and you’re into profit as soon as your client signs up. The first priority of every ecommerce site has to be to get their conversion rates up.

The online market place for certain keywords is notoriously crowded. Some SEO firms won’t even take you on for search terms like “car insurance” because the number of man hours and the cost involved to fight your way to the top is not viable. True, that crowded market place does reflect potentially huge revenues, but it doesn’t mean paying £10 per click will deliver all those customers straight to your till. Leaving a website is easier than leaving a shop. Potential customers have to want to buy off you.

SEO is as much about optimising sites for human use as it is for search engines. Get in touch and we can discuss how to get those conversion rates up and make those big dollar AdWords a viable opportunity.

This entry was posted in Uncategorized. Bookmark the permalink.

Comments are closed.