Adwords mathematical question

Hi all,
I sell mens accessories through my site and make about £10 profit on each item after postage and product cost. The average CPC in my field is around 0.50p, below which my site woudn’t be shown on page 1. If I aim for page 2, I don’t get as many impressions.

1. The quality score of all my ads is around 9/10
2. Keywords are very specific and exact match, NOT broad; to get very high quality targeted clicks.
3. I prefer to keep content network off as I think its best to aim for people who are actually searching for the product on google with full intention to buy.

So, lets say I was to spend £10 a day/£300 month on adwords – that will bring me 20 visits a day/600 month.
With a 2% conversion rate I get only 12 sales a month. Equalling to £120 profit, but I’ve spent £300 on adwords.

The adwords CPC ratio and my profit margins don’t match. My prices are very sensible and completely in-tune with the market.

For me to make money -
1. Either my CPC has to come down to atleast 10p a click.
2. or increase the conversion rate to 5% JUST to break even.

The only way to make it work is to increase conversion rate to 10-20%, does anyone get that kind of rates with adwords?

Thanks

You have done a good analysis and understand what needs to be done - up your conversion rate or get more visitors from your current ad spend - or better yet, do both.

Do you have a lot of ads running. I usually write about ten versions of each ad and allow google to pick the best one. Also you should experiment with different landing pages to increase your conversion rate. Get a copy of Tim Ash's book "Landing Page Optimization" and see if you can improve.

One more thing to consider. I have one site that gets lots of repeat sales. If you are selling consumable items then your customers might come back to buy over and over. So, even if you lose money on sale #1 you will make money in the long run through customer loyalty. This can be cultivated through email marketing.

Good luck. Let us know how you do.

As above, I agree with increasing conversion rate, or having repeat customers.

However, there are some industries in which PPC is not going to add value to your company. In these cases, I would suggest SEO (If possible for your industry)

I have had campaigns that only broke even, if you added the time for managing it, it was a bad business idea. Not everyone makes a lot of money from Adwords, especially in the current financial environment.

One suggestion, drop any keywords that will cost more than 10p to make it to the front page. This will probably result in a lot less clicks, however, at least you will be making money from them.

Thanks EGOL and BOB535.
I sell mens ties, cufflinks, bow ties etc to be precise. It would be nice to get repeat customers.
SEO is my ultimate goal, it would be fantastic to come up in free search for any business.
I have been working on it. My products come up of google products first page - yet very few clicks.

Site is coming up on 1st and 2nd page for certain 'KEY PHRASES' not keywords yet. This is a result of about 3 weeks work, bearing in mind the domain itself is about 18 months old but i did some heavy SEO on my site after being enlightened by loads of internet posts/blog.

So i though while doing SEO, ill try adwords. what conversion rates did you get on your sites?

I have sites with conversion rates ranging from 0.001 percent where large numbers of people enter looking for free materials to 10% where businesses return regularly to buy consumables.

The conversion rate depends largely upon: 1) the quality of your sales page and 2) the quality of your traffic. Other variables such as price, checkout ease and competition from other vendors and manufacturers are also factors.

I didn't even know we could see our quality scores. I haven't been paying that much attention to Adwords lately even though I spend a lot on it.

I took a look just now at my quality scores. Most are "OK" -- between 5/10 and 7/10. I only have a few "great" scores and those are 8/10.

I did find a fair number of Poor -- all were 4/10. I deleted some, but believe others are worth keeping in there.

I'm in a high-margin business where, in some areas, just one conversion can pay for the entire year's ad campaign, if it's the right conversion.

I'm amazed that so few of my keywords are ranked "Great".

I went back and looked just now. I have a few groups where the conversion rate has always been high, and many of the keywords in those are "Great" - even some 10/10. These have little competition in the ads and not much in organic results either.

Of course, then I check my Ecommerce stats and these keywords generate almost no transactions.

???