AdWords Income

Thursday, September 30, 2004

Thursday, September 23, 2004

Some people who link to me . . .

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Google Adwords: Campaign management

Hello again, my AdWords friend.

Sorry. I know communication has been quiet lately. Tara and I have a new baby on the way and I've been intently focused on getting everything in order so I can, more or less, take that first month off.

September has been a challenge, Adwords wise. And, here's the scoop . . .

The Scenario

My top producing Adwords campaign soared to new heights last month. For perspective, I made more from that single affiliate program last month than I made per month at my previous job. Total ad costs were about $300. I sure don't share these things to brag, because there are people out there who make my earnings look like pocket change. But, I do hope to show you the possibilities.

Enter the Gray Cloud of Doom

As August turned into September a new competitor entered the picture. My ad costs tripled, while my sales have dropped nearly in half. (I will still triple my money, however)

What to do?

After some initial panic, I began to appreciate this new scenario. It has forced me to use my head a little more. As my costs were rising, my tempatation was to lower my bid rate.

"Pull back", I thought. "This is getting too expensive."

Truth is, I was still very profitable - just not as profitable as I'm accostomed to. And, I quickly realized that by dropping my bid rate I was taking pressure off my competitor and allowing him to become profitable. And that's kind of like allowing a dog to taste blood - he'll want more and that would open the door for a real fight.

So, I kept my bid rates high. And even though I've had consistently high CTR's for this campaign (by high, I mean over 10%), I began running test ads against my top performing ad. I had to put all assumptions aside.

Where things are today . . .

Keeping the pressure on seems to have paid off. Whereas I've been paying an average of over .50 per click for much of this month, today those numbers are back in the range I'm accostomed to - .16 per click. Maybe my competitor was using the "bid high" initially approach to boost his CTR. Or, maybe he's finding he can't be profitable at those higher cost per click prices. Either way, I've had to sacrifice some short term profits to maintain long-term profitability.

Some people suggest that holding the number one ad placement spot generates more junk traffic and it's more profitable to bid for a lower position. This may be very true for high traffic products. I know I generate junk traffic - or, at the least I get a fair amount of current customer traffic because using Clickalyzer I can actually view the pages visited by the people I'm referring. (That's cool, because I can ensure I'm being properly credited for all sales and/or determine if the page I'm referring to isn't converting well).

Rather than sacrificing the top spot, because last month proved that spot was worth significant extra income in this campaign, I recognize the need to "pre-qualify" better with my ads.

All in all, I feel I've defended my turf and it's made my business stronger in the process. I hope you've learned a thing or two from my lessons learned.

Best wishes, John