I have looked at quite a few Google Adwords accounts as part of a 1-day consulting package I do for other microISVs and small software vendors. I have also talked to a lot of people at conferences and on forums about Adwords. It clear that a lot of people are wasting a lot of money on Google Adwords, sometimes with really basic mistakes.
For example:
- paying $1.50 per click to advertise a $20 utility
- paying $1 per click for an expensive, English language only development tool in some of the poorest, non-English speaking countries in the world.
Ouch.
Below I list 5 great ways to waste money in Adwords. I have seen them far too often. I have considerable admiration for what Google has achieved. But I think Larry and Sergey are probably rich enough already. I would like to see a lot less people throwing money at them and getting nothing useful in return.
1. Don’t use conversion tracking
With conversion tracking you decide a goal to track (typically a customer buys your software) and put a small script provided by Google on the appropriate page (e.g. the ‘thank you for buying’ page). Google will then use cookie tracking to calculate the cost per conversion for your ads and keywords. It is that simple and you can set it up in a few minutes. I can’t understand why anyone wouldn’t use conversion tracking. With conversion tracking you will soon notice that some ads and keywords convert consistently better than others, often much better. Armed with this information you can optimise Adwords by changing bid prices and deleting under performing ads. Without conversion tracking it is pure guess work.
Conversion tracking isn’t perfect:
- Adwords cookies time out after 30 days. If someone buys 31 days after they click your ad it won’t be tracked. And the cookie may be pushed out of the cache before 30 days.
- If someone clicks your ad on one computer and then buys it on another computer (or even using a different browser on the same computer) the conversion won’t be tracked.
- Some customers may have cookies disabled.
But imperfect data has to be better than no data. Obviously the 30 day limit on cookies is problematic if you are selling software with a sales cycle that is typically 30 days or longer (e.g. software with a 30 day trial). In that case you are probably better off tracking downloads, rather than sales. The fact that someone takes time to download your software, rather than bouncing straight out of your site, at least shows some interest. If you have stats which show your typical download to sale ratio (and you should) you can use this to work out what a download is worth, and set your bid price accordingly.
2. Don’t use negative keywords
My own experiences with Adwords quickly showed me that people will click an ad, even if it isn’t at all relevant to what they are searching for. For example people searching for “747 seating plan” will click on an ad with the title “wedding seating plan”. It is the nature of the web that people are surfing rather than reading, and clicking on an irrelevant ad doesn’t cost them anything. You can avoid a lot of wasted clicks with carefully set-up negative keywords. For example, you can be sure that I have “747” set up as a negative keyword.
Ways to find negative keywords include:
- Generating ‘Search Query Performance’ reports from Google Adwords reporting
- looking through your web logs/analytics for the sort of terms people are typing into search engines to find your site
- using Google’s keyword suggestion tool
- using Google suggest
There is also a useful list of negative keyword suggestions on Alwin Hoogerdijk’s blog.
3. Advertise in developing countries
Over a billion people have access to the Internet. Many of them are in developing countries and aren’t realistically going to buy your software due to a combination of: cost (even $20 is a lot of money to people in many developing countries), payment issues (they may not have access to credit cards), language issues (your software isn’t localised for them) and cultural issues (there just isn’t much respect for intellectual property and copyright in many parts of the developing world). But that certainly won’t stop them clicking on your ads and you still have to pay for the clicks.
Start with wealthy countries where plenty of people speak a language your software has been localised into. If you really think you might be able to make a return in developing countries, then test it by creating a separate campaign that only runs in these countries and set your bids much lower (it is very easy to duplicate a campaign with Adwords Editor).
4. Bid too much
Lets use an example:
- Your software sells for $30, of which you get $20 after subtracting ecommerce fees and average support costs.
- Your typical visit to sale conversion ratio is about 1%.
That means you will only break even if you pay $0.20 per click through Adwords. Personally I find it hard to justify paying more than 50% of my profit to Google. So I wouldn’t bid more than $0.10 per click. If I couldn”t get any impressions at $0.10 per click I would try to either improve my quality score (e.g. improve my ads or delete keywords with low clickthrough rates) or find cheaper ‘long tail’ keywords to bid on. Paying $0.20 or more just to ‘get on the first page’ of Google is crazy (unless perhaps, it is a loss leader for market research purposes). You can’t make up on volume what you lose on each sale!
5. Don’t monitor your results
Leaving your adwords campaign running for months on ‘auto pilot’ is ill-advised. Adwords is a constantly changing landscape. Google is continually changing the system and your competitors are coming and going and changing their Adwords campaigns and their products. So you need to continuously monitor how you are doing. Google makes this very easy. For example, you can just set up Adwords reporting to email you a weekly summary of the number of conversions and the cost per conversion for each adgroup. A quick glance through this will let you know if things are going awry.
Conclusion
Adwords can be a very responsive, cost effective and well targeted form of advertising, if you take the time to learn the ropes and experiment. Below is a graph of my return on investment from Adwords for my table planning software over 5 years (almost certainly an underestimate due to the short-comings of conversion tracking, as discussed above). You can see that, after a few months finding my way, I was able to get a consistent ROI of around 4 or 5 to 1 and maintain this in the face of increasing competition.
ROI = number of dollars in sales for each dollar spent on Adwords (1=break even).
Adwords is a complex system and the defaults are weighted in the house’s favour. In this article I have only touched on a few of the biggest mistakes I see. Google will give you plenty of rope to hang yourself and there are lots of other, less obvious ways to lose money. You really need to take the time to learn the system and experiment if you are going to have any chance of getting a decent return.
When I started with Adwords 5 years ago I read the Perry Marshall e-book on Adwords (beware – long copy!). I found it quite helpful. I assume they have kept it up to date. If nothing else, you will learn what it is like to be relentlessly marketed and upsold to. Google also has lots of free Adwords documentation and videos. If you go to conferences such as SIC or ESWC it well worth listening to Adwords specialists such as Dave Collins of softwarepromotions.com (formerly sharewarepromotions.com) talk about Adwords. There is also lots of useful information in the blogosphere. Start with a small daily budget and gradually increase it as you learn what works for you.
If you haven’t got the time or inclination to learn the system and experiment, pay someone who knows what they are doing to do it for you or stay well away from Adwords. Also bear in mind that Adwords works better for some products than others. If I was selling a $20 Mac-only product in a market with lots of more expensive competitors, I probably wouldn’t even bother trying Adwords.
** Update **
I used a deliberately provocative headline for this post, because I wanted to emphasize the fact that a lot of people are wasting a lot of money on Adwords. It seems to have worked in terms of traffic. But, judging by comments here and on Hacker News it has also confused some people. Sorry about that. To clarify, the sections heading are telling you how to waste money. To maximize your ROI you should do the opposite:
- use conversion tracking
- use negative keywords
- only advertise in richer countries
- not bid too much
- monitor your results
Successful Software 
Solid! I have been researching like a mad man for over a week on how to navigate Adwords..I would have thought Google would make easier for folks…
In any event, thanks for the advice.
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Thanks for this it’s great advice. I haven’t been using Adwords for very long but I seem to have avoided most of the pitfalls you outline here thankfully.
The one thing I struggle with is monitoring my results. I do try, honestly, but the amount of information Google throws at me when I check out my campaigns has the same effect on me as information on pensions. I just can’t seem to get interested in it, despite the fact that it’s all costing me money. I think my main problem is that my products are widely varying prices and I can’t seem to get goal tracking working in Analytics, so my conversion tracking is rather vague. Must try harder.
Your planning software looks great, I would suggest a design update and adding an affiliate program to increase your exposure.
Design update? Do you mean aesthetics, or something else?
My thoughts on affiliate marketing are here:
Yes, I mean design aesthetics. I bet you would be surprised at the traffic change from a redesign.
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Great points and sensible suggestions.
Another common mistake is to set incorrect pricing on overlapping campaigns or ad groups. For instance, bidding on a keyword may be set higher under broad match under ad group 1 than a longer keyword string containing the same keyword under exact match in another ad group. That is a surefire way to lose money.
Hi Andy – great post, stuffed to the chops with useful advice. Adwords can be a money sink if you don’t understand it fully, and some of these little wonders will surely help some folk get the most from it.
Advertising in developed countries is an interesting point, and one I hadn’t thought of before myself. A buyer is a buyer, and you could argue that those with access to the web searching for well targeted keywords are just as likely to purchase depending on the market – but I take your point.
@Paul anthony
>you could argue that those with access to the web searching for well targeted keywords are just as likely to purchase depending on the market
I have seen hard data that suggests otherwise. Either way it is an assumption you should definitely test.
Very helpful. Thank you. I think a lot of questions I’ve had were regarding the Quality Score, but you touch on that above and I understand what should be valued the most when it comes to ad words. I think you’re dead on regarding your statement of “Personally I find it hard to justify paying more than 50% of my profit to Google.” Great and educational write-up. Appreciated.
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6. In your ad copy, spell the word “Quality” as “Cuality”. (Yes, I’ve really seen this. I felt like clicking the ad to punish them, but I restrained myself.)
Interesting post.
Unfortunately, regarding my adwords campaign I did not make any mistake you describe (but plenty of others I guess) and I am just break even… (a conversion cost me approximately the same price than the price of my software).
I am toying since month, but it seems to be a hard cap for me :(
But as you say “Adwords works better for some products than others.”
Anyway, thanks for this blog: I always read it with attention.
I’m confused… first you say that people who search for 747 seating plan DO click, then you say that you should use the negative keywords? Which is it?
@Erik
Both. I use ‘747’ as a negative keyword so my ads don’t appear for ‘747 seating plan’.
But the title of that entry is, “Don’t use negative keywords”, yet you use that feature [eg: you have 747 listed as a negative keyword]. I guess what you mean is, make sure you use the negative keyword *feature*, but don’t use actual negative keywords to get people to click your ad.
Perhaps the title to that entry should be, “Don’t include negative keywords”?
/vjl/
Nice post. Thanks
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Great info, thanks for the heads up and sharing it.
Excellent Post and tricks. In addition to these tricks I would add another one that is even more basic and that I have seen on an important number of accounts: When creating a new campaign,(on the Adwords Editor for instance), Google will automatically, and by default, publish your ads both on the search and content network which is, as am sure you all know, one of the basic recommendations in Adwords (separate always your search campaigns from the content network campaigns). Why does Google do that?? Any possible explanation or is it just to fish for more unwanted spending until you spot the mistake?
Thanks for the article.
Some good and simple tips here. Particulary on ROI.
I was interested to see that your not using Google Analytics on site? Any reason?
Dave
nice share, great job, are you really do that tips :D
This is great information. Truly appreciate you sharing this. Also wanted to add another resource, Internet Advertising Guru David Szetela’s new book, Customers Now, on how to master two simple content advertising programs – Google’s AdWords content ad network and ContextWeb’s ADSDAQ Exchange – so that you can efficiently get your message out and effectively generate a strong customer base.
A free copy of the ebook is available at http://www.customersnowbook.com/ds/free_ebook.html
Agreed. Especially about negative keywords usage. Many do forget or simply know nothing about them, hence their ads show up in the results with “torrent”, “free”, “crack”, etc words combination in a search – which is indeed a waste of money!
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Thanks a lot for the post!
Google had given to me a 80€ voucher to try “Adwords”. This is pretty cool to make experiments. I don’t know if everybody has benefited from this “favor”.
In the list of “what to do to waste money in Google Adwords”, I would also add “define a lot of keywords” (Google allows up to 80 keywords!). Indeed, when looking to my traffic logs, I suspect a lot of visitors coming on my site via Adwords will *never* pay nor download my product.
When using Adwords for the first time, your are tempted to add every keyword related to the subject of your software (in the same way it is tempting to stuff the meta tag “keywords” of your website homepage). But people may be interested in that subject without wanting to experiment it by themselves via your software. Ok, they will know your product exists, that’s all…
Having said that, I think when you are selling a software, you should at least include the word “software” or “tool” or “add-in” in your keywords. For example, “qualifier1 + qualifier2 + software”. By this way, you are sure that people coming to your site will be interested first in downloading your trial version (first and necessary step before the sale).
Second advice: at the beginning of your Adwords experience, exclude the “Google display network” since you have no control on the conditions that make your ad be displayed. In addition, this network yields far more display that the “search” one and can burn quickly your budget.
My business has a fairly competitive market, and this is great info considering im just getting into adwords from google, the first time I used adwords I really messed up, made it for the whole state instead of just my surrounding cities. So thanks for the tips.
A great article, thank you very much. We wasted a lot of money to now and still do on e-Marketing. I hope this will help us in some progress.
Thank you again.
Hi,
I sell a Mac only product for $14.95 and I DO make a profit by advertising on Google!
You have to learn the game to play in it. Just throwing up a campaign will no doubt cost you money, time and lots of frustration. I’ve been in the Affiliate Marketing space for over 3 years now promoting other people’s product using Google. Now, I’m promoting my own products, hand-coded by yours truly.
Here’s what I’d like to share. I have never used Google Search. All my campaigns in Google utilize the the Content Network, with image ads, not text ads. I guarantee, 90% of your readers never touched the content network and probably 97% of them never used image ads.
Most people feel that search traffic is it. DEAD WRONG. About 80% of those online are busy reading content, not searching. And guess where my ads are showing up? Yep, right next to the content, which needs to be contextually relevant to my ad (actually, the other way around).
You are right about including foreign countries, to a degree. I am getting very good results with Canada, UK, and Australia in addition to US of course. So, learn the game before you play it. You will get hurt if you are ill-knowledged.
Cheers,
Marlon