Are your AdWords campaigns losing profit?

As a freelancer I often come across small business owners that are disappointed with AdWords campaigns and tell me things like, “I have tried Google AdWords campaigns and it doesn’t work for me.” When I ask how long they ran their campaigns they usually reply just over a month. In any life cycle you need to learn to walk before you run specially with AdWords. ROI campaigns require testing and maturing before they become profitable. You seldom start out running profitable right from the start. I am going to discuss the stages of a growing AdWords campaign and clarify why ad campaigns appear to fail and what to do in order to have successful profitable AdWords campaigns.

AdWords Campaigns grow within three stages. Google calls the first stage of a campaign (testing) you can refer to this as a crawl. The second stage is (growth). We will just call it growth and keep it simple. And the last stage is maturity or (run) yes you guessed it. The beginning of any AdWords campaign is all based off of a best estimation coming from keyword data. For example, we can get the data about the cost and traffic performance of keywords from Google but we still don’t know how our text for our ads, our target settings and landing pages will work out. So we have to run a testing period to find out. And the only way to test our new campaign is to give it enough time for data to be collected by Google. Google advises leaving your account alone for a minimum of two weeks before optimizing anything. Once enough data comes in about keywords, text, target settings and landing page performance we continue to adjust our campaign for better results. Eventually over a period of time we finally end up with a mature account.

In stage one the crawl, the advertiser is paying for clicks. The AdWords user has two ads running at once and is testing two different headlines for example, “Join Skyrocket Fitness Gym” and “Join Skyrocket Gym.” Both similar but one will get clicked on more than the other. Let’s say “Join Skyrocket Fitness Gym” returns 10% while “Join Skyrocket Gym” returns 15%. Now ask yourself, what are the keywords that are doing well and can we maybe change the text to “Join Skyrocket Gym Today” and get better results? There is only one way to find out. The thing to remember here is you must test your bids, ads, landing pages tune them up and get profitable first. Testing phases by the way, never ends entirely but you can stop or slow the testing phase once your ROI is positive.

When you can clearly see that every dollar you spent yielded more than a dollar back that’s the signal that we are running profitable and it’s time to consider increasing your ad spend. One thing to note here is that if your AdWords campaigns are new and you have placed a cap or a limited daily budget on your ad which has not become profitable yet, the cost of getting through the growth phase is limited. This is why many clients seem to think AdWords fails and quit before ever reaching maturity. Don’t blame Google for AdWords failure here’s why. If Skyrocket Fitness spent $1.00 and made $1.50 from a membership inquiries then Skyrocket Fitness has grown up and is now ready to mature. So the only limit here is the amount of traffic. Buying traffic is something you control not Google based on the amount of your daily budget. So let’s say Skyrocket Gym pays $40 a day and receives $60 in Gym membership inquiries. So spending more will earn you more, right? What about spending $200 a day and earning $400? Hum, not bad is it? And spending $20,000 a day and earning $40,000 that's a little exaggerated but you get the point. The growth phase is the time to see how deep we can dive. If your budget can not afford to take the plunge, then it may not be AdWords fault for lower yield profits. When all of the available traffic has been reached maturity has taken place. We now know how deep can we go and what deal we have settled on. A capped budget is when you say I won’t spend more than $75 a day on AdWords. An un-capped budget is one that you understand that for every $1.00 you spend you earn $1.50 and you opt for that deal regardless of what you spend daily. At maturity you don’t miss out on impressions, because of a daily budget. You find the sweet spot or profit margin and invest in that decision.