The one thing that Adwords has over SEO is that while you can spend a lot of money and time on both, AdWords is the one that requires money. If you’re struggling with getting results (read as: money) from AdWords, the issues are either problems understanding and managing your accounts or that you’re not ready for a relationship. AdWords may look cool and slick and ride a motorcycle, but if you’re not careful, it can break your heart.
Can You Afford It?
The biggest determination when considering if you should start getting into PPC advertising is if you can afford it, and there’s a fairly easy formula to help you decide:
Starting Bid = Max.CPA x ConversionRate
Starting Bid is the maximum bid you can make and still break even. Max.CPA is the most you’re willing to pay to get an acquisition (i.e. a sale or conversion), and the conversion rate is how often your landing page is able to convert.
For example, let’s say that you’re selling cat houses, and they cost you $100 to make, including labor and materials. If your website converts at a rate of 2 percent, the most you could pay for a click would be $2. Anything more and you’ll be losing money. If you’re new to AdWords, you may need to fudge the conversion numbers, but err on the side of reality. Don’t start bidding at $10 per click because you assume your website is so awesome that it will have a 10 percent conversion rate.
Understanding if you can afford to advertise with AdWords is crucial, especially if you’re a small to mid sized business owner. While it does have the potential to give you incredible reach, you can’t (or really, really shouldn’t) pay more for advertising than you will make from that advertising. For the same reason that most businesses don’t advertise during the Super Bowl due to the fact that a 30 second ad runs around $4 million, you shouldn’t advertise on AdWords unless you can make a profit.
Do You Have Time?
AdWords is a lot simpler and more complicated than SEO. The rules don’t tend to change as much, but you’ll need to keep up with your account, quality scores and conversions. You’ll also want to keep an eye on competitors and run tests to improve your conversion rates and CTR. While there are tools like TenScores to help you keep track of these things, if you don’t put in the time, don’t expect to like the results.