As a
team, we were discussing how to market our brand-new mobile app. Of course
Google Adwords is a great tool, easy and fast to implement. However, is Google
Adwords a good investment for all kinds of online-based business?
Our
project consists of a mobile application that provides information about health
care institutions and services in Chicago. Now, lets consider the cost to be
associated with a simple Google Adwords campaign:
- Approx. Cost per click: $2.11
- Approx. Total Clicks per day: 18
- Approx. Total Budget per month: $1,100 (This is a very conservative budget amount).
Sama and
I were looking for the standard conversation rate in the industry, and there is not such thing as a standard
conversion rate. Conversion rate are subjected to different variables such as
devices, type of product, price, budget and segment market, just to name a few.
All these variables make it very difficult to have a good estimate of what our
conversation rate would be. As our application will be downloaded mostly on
smartphones and tablets, we will base our calculations according to a study
made by EQ3 that specifies the average e-Commerce mobile conversion rate in the health industry is 3.33%.
3.33% of
conversion rate means that for every 100 clicks, only 3 or 4 clicks will
results in sales. In our case, we are expecting 540 clicks per month, resulting
in 18 sales of our application.
This doesn’t sound good! Our application will be sold for
a price no greater than $5.00. Let’s do the math:
- Sales Revenue: $90
- ROI: -$1,010
Based on
our budget, we will need a conversion rate of 41% in order to perceive a
positive return. Even the best conversion rate doesn’t exceed 30% according to
a study that analyzed AdWords accounts with a combined $3 billion in
annual spend.
Conclusion
We are
true believers that Google Adwords offers a great tool to advertise products
and services and generate brand awareness. However, this method doesn’t apply
to all type of products.
As a
marketer with professional experience working with Adwords campaigns for B2B, I
can say that 5% of conversion rate is perfectly fine because products and
services are sold by more than $500. For instance, cloud companies can spend an
average of $2,500 on Adwords campaigns monthly (Approx. 1,000 clicks). Every
click that is turned into client means at least a $500 contract.
In our
case, Google Adwords might work for brand awareness and to position our application
in the market, which we will explore in depth throughout our marketing planning.
No matter
how good your landing pages are, or how good your campaign is planned, Google
Adwords is not for everybody.
