Let's get something straight, SEM is not SEO and no amount of paid ads will boost your organic rank within Google. This is one of the most common misunderstandings I come across when working with new clients using AdWords.
SEM vs SEO
Search Engine Marketing (SEM) is the act of promoting your website within the search engine results page. This includes paid ads as well as organic Search Engine Optimization (SEO). However, SEO is focused on making changes to the content and structure of your site in an effort to influence your position in the organic search results page determined by the search algorithm. That is, SEM encompasses paid ads in addition to SEO while SEO excludes paid advertisements.
Profitable AdWords Campaigns
After that confusion, the next problem I hear about is how difficult it is to build a business around high CPC prices that eat up the profit from a handful of sales. The problem here is not the cost of the clicks, but rather the quality of those clicks. If you could pay $2.00 for clicks that result in one $50 sale, most businesses would want to do that as often as possible.
Cost per Conversion vs Cost per Click (CPC)
Unfortunately, the CPC abbreviation is already used for Cost Per Click leaving Cost / conv. to be the AdWords abbreviation for Cost Per Conversion. The key is to start with the acceptable cost per conversion and work backwards.
- Let's say that you're selling a $50 widget with a 20% profit margin.
- This means you will earn $10 for each widget sold.
- If you can get a new customer at a cost of $2, you would still have a profit of $8.
- We can now create an ad campaign that may take 10 clicks at a cost of $0.20 each to generate one sale - or one click at a cost of $2 per sale.
AdWords Tracking Pixels and Conversions
Properly setting up your campaigns and tracking pixels makes it easy to ensure you get a positive return on your AdWords investment. Rules can event be created to automatically stop ads that do not deliver positive returns.
AdWords Audit
Want to know if your AdWords campaigns can be improved? Learn how an AdWords audit can help improve the return on your ad spending.
