Google Adwords

When it comes to SEO, The question commonly asked is why spend so much time optimizing a page?

Isn’t it easier to just purchase pay per click advertising? That way you’re guaranteed page one of Google.

Well sort of. The way Google Adwords works is that you’re in an auction with other Adwords customers for search terms. Where the competition is high, naturally the price rises.

What this means in practise is that for some of the more popular search terms, the cost per click can be up to $12.

Now think about that. The mathematics of any marketing campaign are simple.  You get lots of lookers, a small amount of them become potential customers and then an even smaller amount become actual customers.

I don’t know what the actual conversion rate is for most eCommerce sites. Apparently the figure most often bandied about is 3%. Your conversion rate could be higher, it could be lower, but let’s just work with that 3% figure.

That means that for every 100 visitors to your site, 3 actually purchase something.

And that is where the problem lies with Adwords at the moment

If you get 100 clicks on a competitive search that is at roughly $12 per click, it has cost you $1200 to get those visitors. Now assuming that 3% conversion rate, that means that whatever you’re selling, you have to make a lot more than $1200 out of those customers to make it worth your while.

At that is assuming that you convert at 3%. You may not reach that level. The one essential thing for any web based business is  traffic. If you are getting 5000 hits a day and a 1% conversion rate, that is 50 sales a day. That is most likely a booming business.

So there is brief explanation about why SEO  currently is preferable to Adwords for most small businesses.


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