Qualifying: AdWords

Smart companies know that today marketing and R&D have to be attached at the hip. Why is that? It's simply because you have to make sure there is a demand for the type of product you are trying to produce and that there is a cost efficient way to create a marketing mix for the product or service.

I'm involved in working with a small nutritional supplement company on their first product launch. Other than preparing their website and on-line infrastructure AdWords became very important to us before there was even a product.

Why? Because you can use AdWords to estimate a certain amount of demand. Let's say R&D says they can put out a pretty good A, B or C. You start comparing the number of searches Google gets for that type product. You start looking at what your cost per click would be. 

That gives you a number of variables: 

1. potential demand
2. estimated # of clicks on your ad
3. estimated cost per advertising click
4. estimated cost per conversion (we internally calculate a 10% conversion rate (sale) once a customer hits a landing page. We are pessimistic like that)

So let say I'm designing a brain supplement. What would your ad word keywords be? How vague? How many people search for 'brain health' in a given day? A metric ton. How many people search for 'study supplement' per day? Far fewer. 'Brain Supplement'? Something like a couple of hundred.

Now you have to qualify your target. While 'brain health' has the greatest number of searches its also the vaguest and odds are the conversion percentage will be the worst. 

Is it cost efficient for the company to be ok with a 5% conversion rate? Let's say a click costs me $1.25 at brain supplement and I only convert 5% to a sale: 20x1.25=$25. That's the cost of acquiring a customer/sale. Can I be profitable with spending $25 per customer on marketing? Heck no.

What's my point? There are diminishing returns when picking keywords for on-line advertising. A lot of people new to on-line advertising pick generic terms because they create the greatest exposure. And that's how you waste money. Instead of developing a qualified lead, you are just blindly throwing money at a problem. 

Rather think like this: If you wanted to find your product on-line what would you search for? Well what if that doesn't work? Write down the keyword combinations, make 20-30. Plug them in, and then systematically weed them out by removing the low performers. Add a couple of new keywords every once in a while to see how they compare. Put in a competitors product by name? Yeah, why not but be sure that your ad positively differentiates you.

This led to a remarkable change in how my customer approached R&D. They found the product that they thought was the most marketable based on simple on-line demand. They changed their focus and are now a few months away from rolling out a quality product that they are sure there is demand for and can approach the market cost efficiently. 

I like simple efficiency.