However, I can see where Adwords might not be as profitable for other types of businesses. If I was selling music CDs and only making $2 per sale, it would not make much sense to spend a lot of money on Adwords unless it brought in a lot of sales.

If you’re making $2 per sale, and being charged $5 per click, that means that each customer lured through Adwords has to buy 3 items or more for it to be worthwhile.

The key here is getting people who have found your site through adwords to bookmark it, or remember the url, and return to it directly. If they return through PPC adverts, they’re costing you money.

Simply amazing the kind of money that Google can make from people who just don’t get it. Another example of a company trying to do it all on their own. Like somehow that proves something. I think quite the opposite.

Whether Adwords works or is cost effective, I believe depends on the type business using it. In my case, Google has saved my employer at least $40,000 a year. My employer is in the commercial real estate business and until last year, the company was spending nearly $63,000 annually for real estate classified ads in the New York Times and other newspapers. These newspaper classifieds did bring in many leads and did pay for themselves and then some. However, as ad rates grew we started looking for alternatives.

We decided to try Google Adwords. At first, we limited our budget to $15 per day. Within two weeks, the $105 per week we were spending on Adwords was bringing in more leads than the
$1,200 per week we were paying the New York Times. After the ad contract expired, we stopped using the New York Times and doubled the budget for Adwords.

Unfortunately, other real estate companies discovered adwords too. The per-click cost for the better keywords has risen from $2.50 - when we started - to almost $5.

However, even with the increase, the company is still way ahead with Adwords. For example, a client found my employer from Google adwords, and has signed a one-year agreement to rent office space at a cost of $120,000 annually. If a broker brought in the deal, the commission would have been $12,000. This one commission alone pays for a big chunk of the annual Adwords budget.

However, I can see where Adwords might not be as profitable for other types of businesses. If I was selling music CDs and only making $2 per sale, it would not make much sense to spend a lot of money on Adwords unless it brought in a lot of sales.

Andrew, I have been reading your blog for more than a year and I have learned a great deal from you. But in this case, I don’t think you are looking at the big picture. Maybe you should write about what when using Adwords makes sense rather than calling it overrated.

Great point in your last paragraph. AdWords is a very useful tool, not a panacea for all people. But — ALL PEOPLE should carefully track and test their marketing. Start small, and expand what works. One of my beefs with AdWords is that often there is no place to expand except outside AdWords; it simply doesn’t generate enough traffic (all the time).

Andrew, you are very old school, but what works for you works, and may or may not work for others. I like adWords for some things but not for others.