Forums » The Round Table: Brainstorming & Problem-solving

The true cost of Google Adwords! Amazing

    • 61 posts
    May 17, 2018 6:41 PM PDT

    And this is supposed to be our competition?!?!?!


    Recently a media buyer sent me some information on his experience with Google’s AdWords.  This media buyer controls a seven-figure marketing budget.

    He told me this started out with some of the managers in his company telling him that they need Adwords for new contacts.  So the media buyer called Google to start the conversation.


    He reports that the first thing that struck him was how attentive and nice the Google salesman was and his knowledge was incredibly deep.  He went on to say that the salesman was very positive, never mentioning a competitor or demeaning any other form of advertising. But here is where it started to go off the rails.


    Each “word” that you would like to look for in a search has a price associated with it that is based on the use of the word in searches.  In this case, it is a service business serving seven different cities. Best practices tell you that you should buy a word combined with a location.  For example combined with . The Google rep suggested 20 words that are most searched for in the media buyer’s businesses categories.  This multiplied by the number of cities involved would be 140 designated ad word combinations. Still with me?

    Okay so let's talk money:  According to the Google rep and verified in a number of blogs that the media rep could find, the average conversion rate for an ad word is between 2 and 5 percent.  This means that for every 100 people who actually CLICK on your ad, 2 to 5 percent will actually follow the click all the way through to contacting the business. Now we look at the cost of each click.  For the adwords this marketing rep wanted to have directed to his web pages in the geofenced areas that he has businesses, the rate per click is about $28.


    So take $28 times 100 clicks and get three leads.  $2800 divided by three is $934 per lead. His company’s closing ratio on a new lead is about 50%.  So that would mean basically 1.5 closed leads per 100 clicks or $1868 per lead as a final cost. Considering his average ticket is about $1200 with a 27% Gross Margin you can see where the disconnect starts.  He agreed that there is a lifetime value component which will obviously tip the scales at some point but initially he will lose money on every lead. Also, consider that Google is suggesting a buy of at least 100 clicks per day.  This would mean that on the average month he would be looking at an $86,000 ad spend, or about $1 million per year!

    My reps hear from people all the time how they want to do Internet marketing.   Many just don’t know the facts. These days many Yellow Page companies are ending books in small and even major markets because of lack of response.  They are all now becoming “Google Partners” and “Facebook Partners”, selling ads for these giants and taking the scraps off the bottom. I think it is imperative that our salespeople understand what they are selling against so that they can help our shared customers make informed decisions about marketing.

    Rick Murphy


    • 167 posts
    May 18, 2018 7:02 AM PDT

    Add in what major national and international advertisers have learned about human v bot 'clicks' and 'impressions' and 'engagement'... millions and millions of dollars wasted.

    Some would call this fraud:

    • 2 posts
    June 26, 2018 9:18 AM PDT

    Internet advertising is much more than pay per click or banner ads.  While both have their value when used in the correct manner for a client's unique needs, nothing beats radio in driving local search.  However, if your client has a terrible website (doesn't work on mobile, slow to load, old, no relevant info, etc) then they are not getting the max value from their radio campaign as they will lose people who research them online.  Further, if a radio campaign drives organic search (think car loans not banks, or fishing rods not sporting goods stores) but your client can't be found in search, you also have a problem.  They key is to figure out the best combination of digital + radio to maximize impact.

    • 61 posts
    August 18, 2018 8:57 AM PDT

    Well Said Jack.

    • 14 posts
    April 30, 2019 10:22 AM PDT

    This is an excellent post. Radio drives so much traffic online, but the truth is, unless the product can be purchased online you should think twice about sending people there. How much business is being siphoned away from companies that invest in radio advertising that sends people online where all the competition is? They should seize the opportunity they paid for by advertising on radio and using a memorable recall mechanism. I would much rather hear an HVAC advertise on radio with 1-800-COMFORT than tell people to visit their website.