Google AdWords is like a casino for most small business owners. They put money in the front end and hope to strike it lucky. But sadly, most don’t. Inside information from Google shows almost 90% of Google AdWords accounts operate at a loss. In other words, most advertisers pay more to Google for clicks than they get back in profit as a result.
How to beat Google at its own game and come away a winner
I’ve always been tight-fisted when it comes to spending money on marketing. So when I started advertising on Google back in 2008 I was determined at the outset I was going to come away with a profit. Admittedly, it took a few months to achieve. Like most small business owners who venture into AdWords, my credit card suffered badly at the start as I made elementary errors.
But as I poured over the data in my AdWords account, I was struck by something that proved enormously significant. I could see a small number of keywords and ads were producing great results (based on click through rates and conversions). But the vast majority of keywords and ads were giving poor results. So the overall effect was negative.
So, I thought, what if I just focus my efforts on the handful of star performing keywords and ads? Better to have a small but effective campaign rather than a large, impressive looking one that’s losing money.
This was a turning point in my AdWords journey
I have been a believer in the 80/20 principle long before it became fashionable among internet marketers. I remember studying the “Pareto Principle” at university (Pareto discovered the principle that in any endeavour, 80% of the results come from 20% of the efforts). It applies pretty much universally in every aspect of life.
The 80/20 principle applies perfectly to Google AdWords
In some cases it’s even 90/10. In other words, in any AdWords campaign a small handful of keywords and ads will generate most of the results. The rest will be just dead wood, wasting the advertiser’s time and money. Of course, it takes a few weeks or months to build up sufficient data to discover the star performing keywords and ads. But once you find them, the secret is to ruthlessly prune away everything else and just pour your efforts into the winning combinations.
Surely this is too simple?
For AdWords geeks who thrive on complexity, there are certainly other factors such as keyword bids, match types, quality scores etc that have an impact on results. And the quality of the ads themselves is important. Better ads mean higher click through rates etc.
But I believe applying the 80/20 principle gives by far the biggest “bang for your buck” when it comes to optimising an AdWords campaign. Once you find the 20% of “winners” among your ads and keywords, you can then focus on other details to improve the results even further.
The advantage of starting with 80/20 is you are focusing your efforts on the keywords and ads that really matter – rather than tinkering with combinations that won’t make any difference to the bottom line result. For the frugal-minded marketer (like me) this has enormous appeal.