Opinion: AdWords provides marketers with ROI

Now, along comes AdWords, a much-talked-about yet relatively unacknowledged weapon for identifying and capturing that elusive prey: the buyer with genuine interest to buy, and real dollars to spend.

What is AdWords?

Simply put, AdWords is a Google-owned and sponsored service that has been specifically designed for small-to-medium sized businesses with the purpose of driving customers to an advertiser’s business and/or Web site.

Although larger companies such as Home Depot, Starbuck’s and eBay are committed users of the service, the major benefit resides with the smaller business that lacks the visibility and marketing clout of the mega-brands.

For Manhattan-based restaurateur Dan Kobin, it was the need to generate leads for a catering service to offset seasonal down periods in the restaurant trade. “I wanted my business to be bigger than four walls,” Kobin said.

For John Gunter, who runs a one-man real estate firm in Seattle specializing in luxury residential real estate properties in the $500,000-plus category, it was all about attracting qualified buyers and sellers.

How does it work?

The AdWords methodology is relatively straightforward. Advertisers list the key words or categories that they want identified by Google online searchers. It could be someone searching the Web for information on a product (e.g., oriental rugs), a service (e.g., landscape gardeners in Marin County, San Francisco), or advisory help (e.g., consultants or brokers in specific locations or serving specialized fields).

Whatever the need, a Google search will locate the subject matter, and AdWords will expose the prospect to the advertiser.

In order to gain prime position on the Google search results page, the one or two listings or links on the top left hand corner, or the advertiser list running top to bottom on the right-hand side, advertisers take part in a real-time auction, bidding within a range that varies from 1 cent to $100 per click.

For example, assume I bid on the key words “marketing consultant for small business,” with an accepted bid of $5 per click.

Every time Google users (who are presumably conducting a legitimate search for small-business marketing consultants) click on my advertised message and link, which transports them to my Web page, I pay Google $5. That’s a qualified lead. What happens next depends upon the efficacy of my Web site and marketing message.

Google also factors in what it terms a “quality score,” which is simply the relevance and applicability of each bidder’s key-word selection to the search category, based on historical performance factors.

Logistically, the sign-up procedure is simple. There is a standard $5 sign-up fee and an online menu-driven process that takes 15 to 30 minutes. Google provides online support as well as tools that help in key-word selection, the most important factor governing success.

Where the real benefit lies is in budget control. Advertisers specify up front how much they want to spend each month. As soon as the predetermined spending level is reached, the ad comes down, and the clicks stop.

Investment vs. return

Advertisers who have followed the formula attest to the results. In Gunter’s case, he’s sold one property to an AdWords-identified buyer for more than $10 million. He’s also closed multiple deals for properties in the $1 million to $3 million range as a result of key-word advertising.

Restaurateur Kobin, who has catered events for companies such as J.P. Morgan Chase and Diesel Jeans, has experienced similar success, booking one corporate party event for $40,000. An initial commitment of $600 yielded an $80,000 return in three months, while a recent monthly investment of $2,000 delivered $110,000 in bookings.

Where can things go wrong?

AdWords Senior Manager Emily White warns advertisers to have a mechanism in place to deal with the leads. As she notes, “Some advertisers can’t handle the sudden lead volume.”

The mistakes that White warns against are common to the novice advertiser whose appetite for leads can cloud rational strategy and direction. Mistakes include:

• Using key words that are too broad (“free” is a classic example). As White advises, what counts is not the number of impressions or clicks, but their quality. And quality leads tend to come from more tightly defined and specific key word selections.

• Not knowing the return-on-investment objectives. For example, in the auction process, why bid more to be listed No. 1 if a slightly lower ranking, with a lower attendant bid price, will suffice?

• Not writing concise, effective, compelling ad copy for the ad text (to entice searchers to click on your ad) as well as for the landing page (the Web site page they land on or view once they click on the ad)

AdWords is a lead generator with enormous potential and patent power because it makes sense for a buying environment that continues to gravitate to the web. It’s ideal for small business because it’s easy to create and manage. It’s an accountable marketing tool that provides smart marketers with guaranteed ROI as long as they identify the sweet spot, the balance point between optimal spending and generated revenue.

Alf Nucifora is a California-based marketing consultant.