Test Your Business Model with Google Ads

Learn 5 ways to grow your business with Google Ads

Running Google Ads campaigns is about much more than just driving traffic to your business website. There are also ways to use Google Ads to directly improve your business strategy. The methods presented here leverage Google Ad’s vast data and ability to rapidly experiment with advertising ideas. In this way they allow you to accurately test and optimize your business model. Use the resources below (video, slides and transcript) to learn how to grow your business with Google Ads:

#1: Learn Your Online Prospect Volume
#2: Learn What Prospects Actually Search For
#3: Learn Which Marketing Messages Engage
#4: Learn Which Business Offers Resonate
#5: Learn How to Stand Out from Competitors

This presentation was delivered by Prometheus PPC founder, Andrew Percey, on MIT campus in Cambridge, MA, on January 24, 2019, as part of “The Startup Code 2019” marketing seminar, which he organizes and co-hosts with serial entrepreneur Kenny Goodman.  The attendees were MIT alumni, faculty, grad students and other members of the MIT community.

MIT Presentation: “5 Ways to Test & Optimize your Business Model with Google Ads”

While this presentation includes specific advice for startups, the advanced strategies & tactics described can be used by any business that is looking to refine or troubleshoot their business model and marketing plan.

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Complete Transcript of Presentation + Q&A

Introduction: Grow Your Business with Google Ads

Andrew Percey graduated from MIT in 1996 with a BS and an MS in electrical engineering and computer science. He then went on to Silicon Valley, first as an engineer, then managing engineering teams and later managing technical marketing programs. After returning Boston he launched his own marketing agency, Prometheus PPC, and reconnected with MIT. In addition to the clients Andrew serves through his agency, Andrew has also provided Google Ads guidance to over 50 MIT startups. He provides that service through the MIT Venture Mentoring Service. Please welcome Andrew!

Welcome, everyone! There’s a lot you can use Google Ads for as a startup – not just to sell, but to learn what’s going to work out there in the marketplace for your startup. So I want to start first with just a very brief overview of what is Google Ads to make sure we’re on the same page. And then the main part of the presentation covers five specific approaches I picked out that are very high impact. They help test some of the biggest questions that startups have to answer in order to find a product or service that’s going to work. And then I’ll wrap up with some recommended first steps and more resources for creating business growth with Google Ads.

Read the full presentation transcript

What is Google Ads?

Has this happened yet in any of your classrooms? I’m sure Google would love to get pop ups on the blackboards. Hopefully, that doesn’t happen. But this is kind of how people often feel about advertising. Everything is popping up all over the place… how effective can it be? And I want to talk about some of the ways that it can be effective.

But first of all, what is Google ads? It’s a global online advertising platform. At a very high level, it lets you do three things: promote your brand, drive traffic to your website, and sell your products or services. What made it so special compared to what came before is the very high precision control you have in terms of targeting and tracking and analyzing everything that happens when a user interacts with your ad and your website. And of course, you’re paying for these ad clicks. That’s where the name Pay Per Click comes in.

Some examples – the one that most people are familiar with is on the Google search page. In this case, I typed in an example for robot vacuum. And I’ll be reusing this example throughout the day. And you might notice the whole top of the page is ads. These are all Google ads. The first set at the top are called shopping ads, that show an image of your product, the price, the seller, some other information. And then you have text ads, which can work for products and services, and provide a wide variety of information on your offer. I think everybody’s probably familiar with these. And you may also be familiar with what happens on third party websites that host Google AdSense promotions.

So this is a site called livescience.com, and right here, they actually have three locations for display ads. There we go. At the top, on the right, at the bottom. Those are all also Google ads, visual ads, sometimes text ads that display on third party websites that you can choose and target. And there’s over a million websites and apps in the Google Display Network.

So just before going on to the rest of the presentation I want to ask, does anybody have any questions about what Google Ads is? OK. Then let’s go on.

Why Use Google Ads for Your Startup?

Why do we want to use this for your startup? Why do we want to use Google ads for your startup? So this is a good example. I think my Nest smoke alarm is going off, Google AdWords just pitched me a fire extinguisher and an offer for temporary housing. It can’t do that yet! But again, they would love to be there. But this is sort of the promise of it, that you can reach good prospects, great prospects, right at the moment when they need your product or service. What does that mean compared to other types of advertising? Well, what do you think? What do you guys think, who’ve had some experience with this maybe, are some of the advantages of Google Ads compared to traditional media, SEO or Facebook ads? What would you think?

[audience: “Fully trackable.”]

Yes, it’s fully trackable, which you can’t do with a radio ad or TV ad for example.

[audience: “Because they will show you advertising based on what you are looking for.”]

It’s more targeted advertising. It’s not just random stuff that you’re seeing. anything else?

[audience: “If we are getting the same volume of ads, it’s really cost effective, especially given the precision that you have.”]

And those are all fantastic. That’s exactly what Google Ads lets you do.

So compared to traditional media you get very precise targeting. You can target ages, genders, marital status, household income, devices, geographies, you can track their behavior, after they come to your website, all the pages they visit, every step they take on the path. And again, you can reach those 1 million plus websites and apps with those display ads.

Compared to search engine optimization, you again get the precise targeting. With SEO, you’re trying to build your website and content to focus on certain areas that you think are high value. But it’s still up to Google to decide when and where to show your content. With Google ads, you get to decide. Additionally, AdWords is very quick. [By the way, I keep saying Google Ads and AdWords. They changed the name last year, it was AdWords, now it’s Google Ads. So I’ll probably say both, I’m still getting used to that, too.] It’s very quick, to get up and running. Turn campaigns on, turn them off, start and launch multiple campaigns, and see test results very, very quickly. If you’re trying to go for those free organic listings through search engine optimization, it can take years in a competitive market to put out enough high quality content to start to show you’re at the top of the page. And again, you have the broad reach.

Facebook is a different creature altogether. I’m sure you’re all familiar with Facebook advertising, you’re not there looking for a specific product or service, you’re there to connect with friends, see pictures of families, cats, whatever it might be. And these ads come up in your news feed. So it’s interruption marketing. Now they do target you still, they target, again, ages, demographics, your interests, a lot of different things. But you’re not looking for that right now. With Google Ads, you target people based on what they’re searching for at the moment, which can get you those hot prospects.

Business Growth Timeline and Google Ads

Now I want to put this in terms of a startup, you’re probably familiar with something like this for a timeline of startup growth, from vision and mission to a minimum viable product, getting something out the door to test, to really adjusting the product market fit, and then finally, scaling. And Google Ads really has something for almost all these stages. Testing and optimizing is something you should be doing throughout most of this cycle. In fact, I probably should have continued it on… you never really stopped testing and optimizing. And using limited search campaigns, which I’ll be talking about different ways to do that, is a fantastic way to test. Later, you can drive those leads and sales.

Hone in your targeting using a variety of different campaigns, typically search shopping and remarketing campaigns. And then at the end, you can work on building the brand, once you get to a certain point, display in video campaigns to get your name out, to get the visuals, to get the messaging, and to get the feel out in front of as many people as possible.

But again, today, what I’m going to be focusing on is testing and optimizing using Google Ads to grow your business. By the way, according to one great source I found, the startup Genome Project, they found up to 70% of startups scale too soon. They even go so far as to say it can explain about 90% of failures in startups is going to scale too soon, you want to fail before you scale. And that’s what this sort of work can help you do.

5 Ways to Grow Your Business with Google Ads

So five things I’m going to talk about. Number one, how you can use Google ads to learn how many people are actually searching for your product or service or one like yours. What they actually search for, because it might be different than you expect. Which of your marketing messages can effectively engage prospects, we can test that. We can test which of your offers resonate. What are you offering once they get to your website? And which of those end up getting to a conversion? And finally, and very importantly, in a competitive market, how can you stand out? And there are a lot of great tools to help you do this as well.

Method #1: Learn Your Available Prospect Volume with Google Ads

So first, let’s look at the online prospect volume. And the key question here is, is your target market large enough? That’s one big thing you’ve got to take care of early on in a startup. A great quote from Gabrielle Weinberg: “Almost every failed startup has a product, what failed startups don’t have are enough customers.” So let’s test this early on and make sure you can have enough customers.

Google, as you might expect, has a fantastic tool for this. It’s called the Google Ads Keyword Planner. And here’s a snapshot of the type of data you can get from this tool. I put in at the top there, again, one term, robot vacuum, and this is just some of the data that’s possible. Average monthly searches, that’s primarily what we’re going to be looking at here. So it’s telling you that across the United States, every month, about 90,000 people put in the term robot vacuum into the Google search box. It shows you the level of competition, kind of on a qualitative scale and a numerical scale, as well as giving you a sense of what you might pay for an ad click if you’re going after these keywords.

But what we’re focusing on right now is the volume. And this is decent, this is 90,000 searches a month for the term robot vacuum. To think about what that can mean, let’s just round it up to 100,000. If you have a 100,000 searches a month, and you’re showing ads on those searches, and you get a click through rate of about 5%. So the people who see your ad, about 5% click through and of those about 2% buy your robot vacuum. And these are fairly typical numbers. You end up with 100 sales for the month. So if your business plan calls for 100 sales a month, then you need to generate at least 100,000 ad impressions per month to do that. And this is giving you a sense that yeah, we can actually do that for this product.

Now what if your product idea wasn’t that broad? What if as an MIT engineer you said, you know what, we can make this smaller, right? That’s what we want to do, make a smaller robot vacuum and sell that. And we can put in those terms to Google ads as well. By the way, at the bottom, these are all ideas that Google automatically generates for you just to give you more information. II typed in the searches at the top, and this is what came back. And this is kind of an “oops” because the online market for small robot vacuums is much, much smaller. It’s only about .3%. of the full robot vacuum market. This is very important information to know up front, if you’re expecting to turn this into a big business.

What can you do if the market is too small for your business model? What do you do? You have a few choices, you can build the market, you can go out there and educate people across the country why they need a smaller robot vacuum. That’s very, very expensive to do. You can find a big partner who can do that for you. But often you have to give up some control if you want to go that route.

Or you decide, you know what, we need to go back a little bit and see if we need to plan something a little bit different here, because it’s just not going to work out the way we thought it would. So this early type of upfront research can really help find market size problems early on.  Again, almost every failed startup has a product, what failed startups don’t have are enough customers – make sure that’s not your startup.

Method #2: Learn What Your Google Ads Prospects Actually Search For

Number two, we can test and learn what prospects actually search for. Are you speaking to prospects in the language they’re using, which is very important. I’ll show you some examples here. And I thought this quote encapsulates it well – “Good marketing makes the company look smart. Great marketing makes the customer feel smart.” And that’s what you want to go for here. If you speak in their language and talk about their needs, you’re helping them to feel smart.

What’s an example of that? Well, I’m going to go back to the robot example here. Let’s say your product plan is for a tiny robot vacuum called the iMicroVac. And your messaging is the micro robot vacuum for tight spaces. Do you see any problems with that possible messaging?

[audience: “No one is searching for that.”]

No one is searching. Look at the top there, it doesn’t even get to the 10 searches per month. Google can’t even count how many there are, because there’s too few. So if this is what you want to market, you’ve got to realize that that right now, there is no one out there searching on this, which is going to make it very difficult. You know, there are ways you can bid on different terms, bring them to the same sort of content. But if you speak their language from the beginning, so you’re getting the keywords that they’re typing in, your ads use the same language, your website uses the same language, it’s going to connect and convert far better. And again, this just gives you very good feedback, maybe this is not the right area to go after.

Here’s another example, Solar Panel example. So let’s say your product plan is to create a product called Hyper PV Panels. It’s the lightweight photovoltaic panel with 80% greater energy efficiency. That sounds great. But again, is there a problem with this, a potential problem here? Because if you look at the numbers, 165,000 searches a month for solar panels, only 880 for photovoltaic panels. Some of you might know that those two things are not synonymous. Solar panels is a broader category that includes things like solar thermal collectors, but that’s not what most people are looking for. And if you know that, if you know that there’s a difference, you know, darn it, you’re right. You’re right, and you should feel good about that.

But the question is, do you want to be right or do you want to have customers? This is what they’re searching for. Don’t spend your time trying to correct technical misconceptions. Spend your time trying to grow your business. So if you want to reach them with your product, call them solar panels. And you can find examples of this in any space out there.

So if your product language doesn’t match your target customer search language, well, then what can you do? Honestly, there’s only one thing to do – change your language. As much as you might love it, as much as it might be technically correct, change your language to match what the folks out there are going to be looking for, make them feel smart, make it easy for them to find your product.

Method #3: Learn Which Marketing Messages Engage Your Google Ads Prospects

Number three, we can use Google ads to learn which of your marketing messages actually connect better. Interesting quote from Howard Gossage, the real life Mad Man inspiration: “Nobody reads ads. People read what interests them. Sometimes it’s an ad.” Your messaging goes into your ads, and we can test how effective that is.

And here’s how you do it. Write a few different variations of your messaging, two to three is usually good. Test the high impact parts of the ad, the headlines, the images, test your most meaningful content, what are you offering? What are you asking them to do? What are your competitive differentiators? Very important to test. And you can try different styles, facts versus emotions, I’ll show some examples here. And then of course, measure the results.

So I pulled some examples from a tool called SEMRush, which is a great online competitive, sort of advertising spy tool. Another one is SpyFu, those are really the two big ones. And I tend to use SEMRush the most. And I went in and found what iRobot.com is actually doing for their ads, and what variety of testing they’re running for the robot vacuums.

Here’s a positive emotion example: “Leave cleaning to your Roomba, and start enjoying your home, buy here.” Here’s a different type, they are looking to focus on discounts and urgency:“For a limited time, save up to $80 when you purchase selected bundles.”

Here’s yet another style that they’re all testing concurrently. Looking at a feature, which in this case is free shipping. Maybe that is going to connect better with what customers are looking for. And yet another way to look at it is by market segment: “Got a pet, get a helping hand.” Lots of different ways you could think to position your product and test your messaging and see what brings the most traffic to your website.

The way you measure that, then is inside Google ads. And here’s an example report of what you might see for a couple of different ads. I blacked them out, this is an actual client account. You get a ton of data. This is just a small sampling, where you can see the clicks, the impression, the click through rate, and then of course, all the monetary information. And with this sort of information, just compare which type of ad is getting the most clicks. If one ad is getting five times as many clicks, and these turned out to be good prospects, that is probably the way you want to go for your messaging.

And all this can be segmented, too. If you get enough volume coming through, you can segment for keywords, for demographics, for devices, for locations and find out down to that level, which of your messages is going to work best.

And here’s a question, What if you want to do this testing, but you don’t have a website yet? What do you think you could do?

[audience: “Build a landing page?”]

Build a landing page and what would you put on it?

[audience: “Subscribe button.”]

Subscribe button. Yeah. So just something very simple, that they can go to, that’s not going to just be a bounce and a lost visitor.

And it could be something as simple as this:

“Hello, you caught us before we’re ready. We’re working hard to put the finishing touches on X, things are going well, and it should be ready to help you with Y very soon. If you’d like us to send you a reminder when it’s ready, please enter your email below. And oh, by the way, please accept our special gift below as a thank you.”

So in this way, you’re setting up a fake sale, they’ll let you collect email addresses to build your list to go out with, once your product or service is actually ready. And this is very important because first of all, you need a page in order to run ads, you can’t just run an ad that goes nowhere, Google won’t allow that. You also want to build that email list. And if you track this, track who is submitting their email, that also gives you information about not only who is clicking the ad, but which of those folks are actually good prospects for you. So you can map that together as well.

If your initial messaging doesn’t engage, well, then what, what do you do? Well switch to better messaging, using everything you just learned from running all these ad tests. Or again, you may need to go back and rethink, no one’s clicking on our ads guys, maybe this isn’t a product that’s really going to connect out there.

Method #4: Learn Which Business Offers Resonate with Your Google Ads Prospects

The fourth way you can test and optimize with Google Ads is to learn which of your offers will resonate. It is much easier to double your business by doubling your conversion rate than by doubling your traffic. That means once you get good people to your website, if you can get twice as many to take the next step, that’s a lot easier than trying to get twice the quality traffic coming in.

How can we do that? You want to create split tests. The page you bring them to is called the landing page. You want to create different versions of that. And I’m not talking about changing button colors and fonts and things like that. I’m talking about changing your offer, something that’s really important to the visitor, to see what’s going to work.

So if you want to test bringing prospects who are at the bottom of the sales funnel, or close to making a purchase, you can test offers like “Buy now”, “Call today to speak with an expert”, “Click here to pre-order”, “Get a custom quote”, “Request an account review”… all different things that good prospects might be very interested in doing. And this can help you learn which ones most of them actually want to do as a way to connect with your business.

If they’re instead at the top of the funnel, you can test offers like “Watch our video”, “Try our free calculator”, “Download our white paper”… they’re still in the research phase, so give them some help from your company to get them thinking more about what you can do for them down the road. “Subscribe to our blog”, “Get notified of our launch”.

Again, all very easy to test, just by putting together a few different pages and sending your Google Ads traffic to those pages. It’s very similar to the ad testing. Ideally, you want to publish two to three different pages, you want to change the high impact elements together. So if you’re testing a “Buy now offer”, make sure from the banner to the images to the call to action to any testimonials you have on there, it all pertains to buying the product now. Try to test your most meaningful offers.  Is it a sale? Is it an opt in? And then measure the results.

And again, there are fantastic tools for doing this. You can see a lot of the data in Google ads, but one thing that’s important to do, that I would say a lot of clients need to be educated about, is to test to statistical significance. I think this crowd is probably more familiar with that than most. And that is making sure you’re not fooled by the data. Get enough data to make sure the decisions are accurate.

This is a little snapshot from a tool called Adalysis, which I use as part of my Google Ads agency. And it makes it very easy to see what is significant or not. In this case, once results become significant above an 80% to 90% threshold, it gets color coded, and you can very quickly visualize what’s different. In this case, the first offer actually had a higher click through rate. But the second one had a much higher conversion rate. And overall, what that meant was you’re paying considerably less for each conversion with offer B. And this is with statistical significance, you can have high confidence in these results to say this is the way we want to go to achieve this desired result.

What if you don’t yet have anything to offer? Again, you can do the same trick and offer a fake sale. You can put it behind each of those offers, whether it’s a “Buy Now” button, a “Contact us for a consultation” button, put a page like this behind that to capture their information. Because you want to do two things: don’t disappoint them – these are people who’ve already showed some interest in your company – and do get their contact info. If your initial offers don’t convert enough visitors, then what? Well again, you can try switching to better offers, based on what you learned through this testing. Or you may need to go back and reevaluate what it is that you’re actually trying to offer. Is it enough value for people today?

Method #5: Learn How to Stand Out from Competitors in Google Ads

And the last way I want to talk about to test and optimize your business model is to find out how can you best differentiate your business in a crowded market? How can you stand out against all those other ads that people see? Sam Altman says, “Move fast. Speed is one of your main advantages over large competitors.” And your differentiator is a great way to do that because big companies can’t change their benefits and features and differentiators so quickly. You probably can.

The first step is to find out who your online competitors are. And Google has a fantastic tool for that within Google ads. It’s called the Auction Insights Report. Down the left hand side, those are all different companies that are advertising on your keywords. And it tells you what percentage of the searches their ads also show up on, in what position on the page their ads, on average, show up. Again, for your keywords that you’re targeting, how often you overlap with those ads. And the outranking share is how often your ad appears above theirs, or appears when theirs don’t. So right here, this gives you a great snapshot of who you’re actually competing against, and where you fall in the pecking order for the keywords that you’re targeting. In this case, Amazon is the big Goliath in the room, almost always showing above our particular ad.

Once you have this information, then you can go back to other tools to research these competitors. This again is going back to SEMRush, the tool I used before to extract those iRobot ads. They give you ad information, keyword information, a lot of additional competitive research to see everything that they’re doing once you know that this is your competitor to help you figure out how can I sound different? How can I make my ads different, my offer different? How can I compete against this giant company. And to do that, you’ve got to find a way to stand out.

You can also see this information inside Google ads. There’s yet another tool, the Google Ads Ad Preview and Diagnosis Tool. It looks just like a regular search results page but happens inside the tool, and it’s better because it lets you control things like location, device, language and audience as you figure out who is competing with you. And then again, look at their ads. I think iRobot did a very smart thing here. They’re competing against Amazon, so their ad says, “If it’s not from iRobot, it’s not a Roomba.” What a great way to put it in your mind that you should buy from them instead of Amazon. I bet they did some competitive research to figure this out.

And that’s the sort of thing you want to be thinking about too. If your ad looks  just like everyone else’s, I mean, really, why would someone click on it? You have to give them a reason. And if that is the case, if you find that your ad sounds just like everyone else’s, what can you do? Well, I suggest focus on one meaningful differentiator, because honestly, your offer can be identical in every way, except one. As long as there’s one difference that’s meaningful to your ideal prospects, that’s enough to connect and get them to click through. For example, if your offer is just like Amazon’s, but you can offer a full lifetime warranty, while they can’t – that can be enough to win business through your website against Amazon.

Additionally, it almost always works better to speak directly to a single niche instead of speaking generally. For example, if you’re looking for a Ruby on Rails developer, and you see an ad come up that says “Ruby on Rails developers” next to another ad that says “Broad range of developers”, obviously, which one are you going to click on? You get much better results when you can be more specific, targeting your niche audience.

It’s creepy, how targeted these Christmas ads are, how the marketers collect so much data on us. How many of you guys have kids here? Anybody else have Elf on the Shelf? Oh, I do, my three kids absolutely adore this creature, who shows up every single year around our house. I just dread the day when I have tell them that she actually works for Google…

Conclusion: Best First Steps to Grow Your Business with Google Ads, Plus Tools & Resources

So let me talk about the best first steps to take here. This is kind of bringing this presentation together. What you can do right now is go sign up for a Google Ads account. It’s free to sign up, and they often have promotions where you can get free credit to start. And without spending any money, you can do the first two things we talked about – you can learn your online prospect volume, and you can learn what people are actually searching for. Those tools are immediately available to you, once you sign up for a free account. Once you start spending money, you actually get an additional level of detail provided by those tools. But you can get a good early first approximation without spending a dime.

Secondly, you can go create a quick landing page and launch some initial search campaigns. And this really doesn’t have to take a lot of time. Once you do that, you can do the other three things we talked about, you can find out which of your messages actually get those clicks, which engage, which of your business offers actually resonate and get people to take the next step with you, and how you can stand out from all the other ads in this space.

And two final tips as you do this. Number one, put your best foot forward, and then test around that. So pick your one best offer, your one best audience, your one best landing page, your one best Google Ads campaign, and do everything you can to get that to work. Because if you can’t get your best thing to work, again, you might need to reconsider your plan here.

And allow sufficient investment for meaningful conclusions. This gets back to the statistical significance I was talking about before. And I get this question a lot. How much do I have to spend? Especially if I’m just getting started? The answer is going to depend tremendously on your scope. It’s hugely different if you’re targeting Boston versus the whole country or the whole world, and the range of keywords you are going after. But I’d say, for a variety of cases, if you can take one to three months, and spend $500 to a couple thousand dollars a month, you can very confidently answer these questions and get a good start on your Google Ads marketing.

Ok, and that is it from my presentation. If you go to this link, you’ll find links to more tools, the presentation itself, and the videos will be there. In fact, for all the presentations we’ll have it up there in the near future. And now I’d like to open it up for questions.

Q&A

[audience question: “How should I approach it on a B2B level for enterprise, because it appears like it’s driven towards B2C?”]

So certainly Google Ads does both. One big visual difference is if you remember those shopping ads I showed earlier with the image and the price, that’s only for products, and that’s usually B2C. Not always, but usually. But actually, most of my clients are B2B clients. They are looking to sell high value services. That’s what I do as well with my own advertising. So that also can be done, just in a slightly different way. But it’s very much the same set of tools and resources.

I will say that, typically, you’re going to spend more in a B2B space, if it’s at all competitive. As one example, for my agency advertising, my average cost for a single click is about $45. Whereas, if you’re selling a consumer product, it might just be $2 or $3. Or if you’re in the legal space, heaven forbid, and you’re going after asbestos cases, you know, a couple hundred dollars for a single ad click. So it can range tremendously. But the potential is there. It works for all those cases. And I can show you lots of examples and case studies of markets where it does work. Ads that are working there just have a little bit of a different use of the way you’re doing them with the tools, the options available, but it works great.

[audience question: “Is there a price point that is just too much?”]

Absolutely there is. So it’s going to be different for every company. Obviously, you have to figure out the click cost. And then of the people who click and come to your site, what percentage then buy something. Then figure out how that compares to the return on investment you’re going for. And I will say it’s often difficult for product companies to make search ads, regular text ads profitable, because those are more expensive, and they eat very quickly into your product margin. If you’re selling a $20 product, text ads are probably not going to help. It’s very hard to make that work from an ROI point of view. Whereas the shopping ads can be fantastic for that.

And then for services, again, I encourage you to think about not just how much this particular sale is worth, but the lifetime value of that client coming in. It could be worth spending $1,000 for one conversion, just to get a client who’s going to be with you for the next 10 years and spend $10,000 on you, or $100,000 on you. You know, it can get scary thinking about it. And it’s often difficult if you haven’t done this kind of advertising before to think, well, gosh, $50 for an ad click, what if just my competitors come on and click ads? I mean, am I wasting all this money? But do the math, and for your business, it could make fantastic sense. Lawyers don’t spend $200 per ad click because they’re losing money, right? It works out for them in the long term.

[audience question: “How do you discern potential markets and compare them with actual market?”]

Well, I wish I had that kind of crystal ball. I will say that if you do this sort of research and find the market size is small, you then need to ask another question – is some other force right now making it bigger? Is someone else starting to promote or talk about this space in a way that it can reasonably become big enough, in the next, you know, whatever your timeframe is, to make it work for your business? And if the answer is no, that means you’re going to have to do it. And if you don’t have the money to do it, then you’re in a tough spot.

[audience question: “If your product isn’t even built yet, what is the benefit of using [Google Ads] to test the landing page?”]

So I would kind of flip that around. I hope before you spend the time and resources to build the product, that you’ve done some testing like this. You know, often we get the idea of a great product or service from our own experience. But that can be very different from the experience of consumers out there or businesses out there. And you might end up being extremely surprised if you invest the time, especially for a complicated project, a year and a half, two years, to get a project out there, and only then find out there aren’t very many people looking for this.

I would advocate doing this sort of research as soon as you start to formulate an idea, because it’s going to help shape your product development. It can help shape the benefits you choose, the features you choose, and it may even help you scrap the idea before you spend a lot of time and money on it.

[audience question: Have you ever had an experience of someone coming to you and using Google Ads to test, but then actually saying, I’m going to spend my actual money going forwards on LinkedIn advertising, for example?”]

I have had those cases, I’ve had clients come in who have never done Google advertising before, and I started to work with them. And we learned, within a few months usually, that it’s just not working for them. This is one reason I prefer working with established businesses who have already done Google advertising, because they have a proven model that I know I can help with. But in those cases, what they usually go to, I haven’t seen them go to LinkedIn yet. I’m sure Mark can speak more to that, he’ll be up next talking about LinkedIn.

I do see people go to Facebook, and that tends to be more for, I would say, smaller product companies, where a cost per click on Google Ads doesn’t work. But the much lower cost per click on Facebook, together with the enhanced demographic and interest targeting on Facebook can make it work.

[audience question: “So typically, how long does it take for a startup to get results from Google Ads, to give them enough feedback to move forward?”]

I typically give the guideline for almost any business, that if you set up these campaigns well, and test for about three months, you’re going to get a very good sense of what your long term potential is, how much it will cost to bring in a new client or a new buyer, and how much traffic there is. Three months, you know, with monthly iterations, with sufficient volume is usually good enough for that. For a startup,

I would just advocate really early on focusing on the testing part. You’re not so much, you’re not going to want to blanket the whole United States necessarily, and try and drive leads yet. You just want to test your ideas. And that can also be done very quickly and more cheaply and can be done continuously as you go through the product process.

[audience question: “After the three months of testing, do you need to carry on, or can you stop at that point?”]

In all honesty, you do need to carry on because everything keeps changing. The market may change for one thing, Google will absolutely keep changing, they roll out dozens of new features every year, change the way the interface works, to give additional reach if you learn about these new features. And most importantly, your competitors are going to change. They’re probably not going to sit still. Unless you’re all in the room and you agree, “Let’s just sit on this guys and see what happens,” they’re going to keep trying to improve and do better than you. So what you do see, if an account just sits still, is a general gradual decline usually, over time.

[audience question: “When you’re looking at a keywords, how many searches is a level that is acceptable to say let’s try this, let’s try out this keyword?”]

Right. I gave one example before saying if there are 100,000 searches for a product, and you have a typical 5% click through rate, and a typical 2% conversion rate, that gets you to about 100 sales a month. So if that’s your business model, that’s what you need. If you’re looking for 100,000 sales a month, you’re going to really have to kick up the volume much beyond that.

But to give a very different example, if you’re in the services business, in my business, for example, I’m happy to get just a few good leads per month. And so if I get maybe 100 impressions, and maybe 5% click through and then a couple converts, you know, that’s a very good rate for me. So much lower volume keywords can work as well. It goes back to your economics and what you’re trying to achieve each month for your business.

And also, just one last thing to keep in mind too, for products, the conversion rate is usually much lower. If you’re in the service business, and you’re focusing your ads well, you can get 20% or 30% conversion rates or better. For products, it’s usually in the 2% to 3% range, so you need that much more volume for products to work in Google ads.

[Host] Great. Round of applause for Andrew please!

 

Rating: 5 / 5. Votes: 3

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Andrew Percey

Andrew founded Prometheus PPC in 2012 and has helped grow over 100 businesses through Google Ads advertising. He holds two engineering degrees from M.I.T. and has 8 U.S. patents from his years in Silicon Valley. Andrew hosts marketing seminars at M.I.T. for current and future startup founders.

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