Is AdWords worth it?

I answered this question on Quora.

Is Google AdWords really worth it? I have found that through tracking my CPC, I am not having that much success.

My answer saved below.

The only real answer is “It depends.” I know you were probably looking for something more concrete than that. Choosing the right online marketing strategy can be a life-and-death (for your business) decision if you’ve got a limited budget.

If your business can’t tick all of these it makes it very hard to get a positive ROI on AdWords.

  • Size of the addressable market. There must be enough potential customers searching Google for what you sell. This is difficult if your business only works in a small geographic area - think local plumber or kitchen fitter.
  • The level of competition. Google sells clicks on an auction basis. If there are lots of people bidding for the same limited 4 spots at the top of Google it pushes the prices up. It’s even more difficult if you’re competing against a big established player. An independent B and B or guesthouse will find AdWords uphill because of the big players.
  • The value of a sale. This is tied to the level of competition. If you’re making a lot of profit per sale you can obviously afford to spend more on advertising to get that sale. New advertisers who’s business model is selling lots of low-profit items will find it difficult to make AdWords pay in the beginning.
  • Your ability to turn clicks into sales. Google can put a prospective customer on your website, but you haven’t made the sale yet. There are many things that can go wrong between the landing page and the time you get your money.
  • Your ability to execute on AdWords. Having the market and product fit AdWords perfectly still doesn’t mean that you’re automatically going to make sales from AdWords. Someone has to build and manage the campaign - either you, or someone you hire. I’ve lost count of the time I’ve heard people say “AdWords doesn’t work” when the truth is closer to “The way I did AdWords didn’t work”.
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