Hello guys, I have been using adwords for quite a while now, but this is something that I still have problems understanding. So, I have a product to promote as an affiliate and I earn about $25 every sale. This product is in a competitive niche, let's suppose "man boobs". Supposing a bad conversion rate of 1/100, I shouldn't bid more than 0.25 \ click. The problem is that if I start a campaign bidding 0.25 on keywords like "lose man boobs" I will not get more than 1\3 clicks every day due to the low position of my ads. So I think there are 2 ways to overcame this: 1. Finding a long list of long-tail keywords and start bidding low on them. But I will need a list of 200 kws, because these will not have many searches every day. 2. Start bidding very high on the competitve kws, in order to achieve a good ctr and quality score and then gradually decrease. But doing so, I will spent about 250-300 dollars on adwords in the first week and maybe 1 or 2 conversions. What do you think about? Are there any other ways?
Here's my point of view: Knowing the numbers, you know the maximum you should pay per click to break even and not go broke. Of course you want to make a profit, so you want to lower your advertising costs. Decide how much you actually would like to make. Say $5 per sale which means in your example your actual CPC should be no more than $0.20. Now here's a revelation. It doesn't matter how many clicks you get, you will make $5 net profit per sale. This of course over the long run. You may make 2 sales in the next 100 visitors but none in the following one hundred. But assuming the conversion rate is stable at 1% over thousands of visitors, you'd make $5 per sale. Whether that's one sale a day or one per month. Sure, you'd like to maximize your clicks. But you also want to make a profit. That means you have no choice but to bid accordingly. Of course, a lower bid affects your position, your click rate relative to other higher positions, possibly number of impressions if you fall off the first page. So what to do? To get more clicks out of your position and bid, you must increase your click rate. Best way is creating better ads. QS is an indication of that, no matter the position. You can be on page two with a QS of ten. I explain that in my Adwords FAQ that you can freely download. Once your click rate improves, you will slowly move up the rankings without changing your bid. Your cost per click may go down. You have thus increased the number of clicks, reduced your costs an therefore increased your profits. That sale will come a little quicker. Instead of 30 days, it may be 25 days. If you made one sale every two days, you might now make one every day. Another way is to weed out poorly performing keywords. That will increase your CTR for the group but of course, that doesn't give you more clicks. It can increase your conversion rate and profit however. Longer tailed, more precise and relevant keywords will do that too. Maybe you can find 200 but as mentioned earlier, it doesn't matter how many clicks you get. You just want to maximize quality traffic. You can only go so far and you are dependent on the number of searches for your niche. If you want to make $50 a day, you probably won't make it if only 30 people search for that product. As for bidding high, whether on competitive keywords or not, that won't get you a higher quality score. Doesn't work like that. Read my FAQ and you should understand why. Assuming you are using relevant keywords, your QS is your click rate. QS is a relative measure of all advertisers and is weighted by position. So if your QS is seven in tenth position, it will be seven in first position. Sure your absolute CTR will go up because higher ads naturally tend to get higher click rates. But that won't affect your QS much. In fact, it may be detremental and you'll just spend lots more. So my advice, as always, is to improve your ads.
Very insightfil adwords information. Many like me don't do the research before setting our prices and spend or waste money! I will read your report and get put into action your advice. Thanks again for sharing!