In 2000, when the tech crunch was in full effect, an ambitious search engine company named Google launched the beta version of AdWords with just 350 advertisers. Fifteen years later, Google had earned nearly $52 billion in net annual ad revenue, representing 77.8 percent of all search ad revenue in the United States and 30 percent of global ad revenue.
There is no doubt that Google AdWords is one of the most impressive success stories in tech history, and it's largely responsible for Google's (now Alphabet's) $600 billion-plus valuation.
Google AdWords has been this successful thanks in large part to the fact that it's one of the most cost-effective advertising methods for companies of all sizes. Everything from small mom-and-pop shops to Fortune 100 companies use the same platform.
Running an effective AdWords campaign requires intelligent work. You can't simply throw $5,000 at Google and expect to get leads. Instead, you need to do your homework and leverage the targeting (and other) tools the AdWords platform puts at your disposal.
To get you started, here are some of the key steps you should take if you want to maximize your ROI on your next Google AdWords campaign.
Step 1: Understand What AdWords Is For
Before investing a single dollar into an AdWords campaign, it's important to understand its strengths and weaknesses. AdWords is excellent for highly targeted, measurable and rapid results that lend well to lead and sales generation.
On the other hand, AdWords requires a significant and ongoing investment, and every impression or click is paid for. It is typically not a cost-effective tool for brand awareness. This is compounded by the fact that brand awareness is difficult to measure on the AdWords platform.
When designing your campaign, keep the platform's strengths and weaknesses in mind, and save brand awareness for your other marketing efforts.
Learn more: How to Set Up Google AdWords Ads in Google Maps
Step 2: Research and Understand Your Target Audience
Step 3: Have a Specific Goal for Each Campaign, and Don't Combine Them
It's easy to get overly ambitious with an AdWords campaign, particularly if you're planning to spend a significant portion of your marketing budget. However, it's imperative that you choose one specific goal for each campaign. Doing so will dramatically improve the ROI of the campaign.
Step 4: Create a Targeted Landing Page for Your Ad
Perhaps the biggest and most common mistake companies new to AdWords make is directing traffic from their paid ads to the home pages of their sites. Many times, these companies invest in ads, find they aren't getting results, and write off AdWords as a waste of money.
In reality, home pages are a terrible place to direct traffic. Think about it this way: Users are looking for a specific thing when they search. By directing them to your home page — which likely has at least a dozen different elements and options on it — you've simply wasted their time (and your money).
Instead, you need to build highly targeted landing pages that directly address the query the user entered into Google. Landing pages should always be single-purpose. There is one conversion goal and a clear path to that goal for the user to follow.
Step 5: Create Lots of Versions of the Ad Copy
Before you start your campaign, you'll want to create a lot of versions of the ad copy — as many as you can realistically produce, but at least 10.
Slight changes in ad copy can have a significant impact on conversion rates. By testing lots of variations at the same time, you can quickly determine which versions convert best. Simply break your ad budget into smaller segments, and assign the budgets to each version of the ad. Be prepared to spend a relatively large amount upfront. The data you gather at the beginning allows you to focus your campaign (and your budget) on the versions of your ad that work best.
Step 6: Verify Positive ROI
When you started your campaign, you set specific goals. Once the campaign is up and running, verify that you are, in fact, generating the positive ROI you projected.
Calculating this is simple enough: Take the amount you are paying per click and multiply it by the percentage of clicks that convert. Compare that cost to whatever profit model you want — anything from the profit margin on a single product to your estimated lifetime value of a customer.
Learn more: How to Set Up Call Tracking in Google AdWords
Step 7: Test, Retest, and Retest Again
The work of an AdWords marketing campaign is never done. Once it's up and running, you'll want to constantly make adjustments. Try small variations on ad copy, keywords, landing pages and anything else you can think of to see what works and what doesn't.
Even a small improvement in ROI can make a big difference in the long term, so keep at it.
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