Does Adwords Work?

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People often ask “does pay per click work”? Or “will it work in my industry?”.

I want to talk about these questions because they don’t really make sense.

PPC is just a form of multi-step direct marketing.

Step 1, someone sees your ad. Step 2, they arrive at your landing page. And so on … and the final step is when they agree to buy.

The simple rule is: if someone doesn’t complete the final step, no sale is made.

It all boils down to this: an adwords campaign works when you make enough sales to cover the money you spent on the marketing.

i.e. when your value per visitor is greater than your cost per click.

When this doesn’t happen, it’s rarely the “fault of Adwords” and is usually down to one of 3 reasons:

(1) The conversion rate of the website/landing page is poor.

(2) The business is working to lower margins than their competition, so can’t afford to pay as much for a click

(3) Adwords is being used ineffectively. Noramlly, this means the business is generating a lot of wasted clicks and impressions. And both of those drive up costs. 

So, if you’re not making money with your Adwords campaign and you’ve any one of these three problems, you’re probably better off fixing that problem rather than blaming Adwords and giving up on a potentially lucrative marketing channel. 

Steve Gibson, July 2007