Return on Investment. “ROI.” It’s become a cliché buzzword, I won’t disagree with that, but the fact it’s been regularly used in business conversations since the 1960s is indicative that it’s here to stay. Put simply, ROI is asking “what am I getting in return for the capital I’ve invested?”
For many marketing mediums, such as billboards, radio ads, and television ads, calculating ROI can be difficult and often cumbersome. Perhaps you simply chalk up the ad spend as “branding” and move on. That’s why online advertising is different. With a clear-as-day¹ ROI, why not find out if paid search can have a positive effect on your business’ bottom line?
Previously I’ve written on paid search advertising in higher education. While I stand by the importance of incorporating search ads into your higher ed marketing mix, the educational keyword “degree” is one of the top ten most expensive Google keywords, making higher education a difficult industry to compete in. Therefore, for this post, I want to emphasize paid search advertising in niche markets.
What industries might be considered “niche” you ask? Well, if you’re in one of the industries below, this post may not be for you:
- Insurance
- Financial Lending
- Law
- Education
- Software
- Website Hosting
- Conference Tools
- Trading
If not, then congrats! Your business is probably in an industry with a reasonable cost-per-click (CPC). Please proceed.
Clear-as-day ROI
¹ You may have noticed the superscript earlier in the post. Before ensuring online advertising has a “clear-as-day” ROI, you’ll need to have a few things already in place:
- A website (since you’re currently using the internet, I’m going to assume you have one…)
- Knowing the macro and micro goals of your website – Subscribing to a blog? Submitting a form? Purchasing a product?
- A web analytics tool
- Tracking website goals in your web analytics tool
- Knowing how much a lead is worth to your company. Talk to your sales team – they should know!
What revenue can you expect from the average “lead?” $10? $100? $1000? Once you know what a lead is worth, you can begin determining whether paid search advertising is a channel you want to invest in. After a few months of optimization within AdWords, what is a conversion costing you? If the cost of the average lead is less than the the revenue generated from the average lead, then you’ve got yourself an ROI in the green. And that’s something your boss is going to be happy to hear.
Success Story
Take a look at the data below:
If you’re bidding on keywords in a competitive industry, you probably haven’t seen numbers quite like this: average CPC is in the $1.50 – $4.00 range, average position is top 2, and the cost per conversion (in this case a form submission) averages out to just $35.00 for these 4 campaigns. Cost per conversion (or CPA) for other channels have been over $100. I could pat myself on the back and say I built an excellent campaign, but with a low CPC, it’s also simply easier to build a successful campaign in an industry with less competition – and therefore cheaper clicks.
If you’re in a niche industry and your competitors aren’t running search ads, why not try and gain that competitive edge?
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