Parent Category for Adwords Scams, Adwords Tips, and just a general Google Adwords information category

Red Flag

Pay Per Click Red Flags

I’m just payin’ some bills with these ads

One of the sure fire ways to get on the first page of Google is to pay for it.  Google AdWords (or Pay Per Click) program can have some very good results, and it can be a money pit.  Learning to navigate the waters of Google AdWords is something most small business owners don’t have the time for, or just don’t have an interest in.  Many of these small businesses are left with no choice but to trust someone to run their AdWords campaigns for them.  While there are many good AdWords companies out there, there are also many more bad ones.

How do you distinguish the good from the bad?  It’s tough, but these red flags should help.  If someone approaches you, and 2 or more of these red flags pop up – DO NOT DO BUSINESS WITH THEM!  It will cost you a lot of money, and you will NOT get a return on your investment.

  1. Markup
    • Companies are required to share Actual AdWords Click Cost – but most of them only show you a report with the Price they charged you for the click.
    • Ask the representative point blank “what is your companies markup for managing my AdWords Campain?”  If they won’t tell you, run!
  2. Lack of Access
    • Ask if you will be given access to your Adwords Account – and all the information it contains.  The fact is, any AdWords account manager can authorize any email address to have “read only” access to the Adwords account.  If a company will not provide you with this access, you should not do business with them.
    • One of the tactics companies will use to divert your attention away from this point is to tell you that they provide “custom reports.”  They might say that you will get “proprietary reports”.  What these reports (or report access) really are is a summary of some of the information that is available to you.   In their version of your reports, you will never see things like Bounce Rate, Time on Sight, New vs Returning visitor and many other valuable bits of information.
  3. Lack of information
    • Restricting your access to available analytics information is a BIG RED FLAG.  Ask yourself, why would a company not want you to see all available information?
  4. Promising you top postion
    • The top position is not always the one that provides the best return on investment.  Their are a lot of things that go into determining who get’s that number 1 position in the ad’s section of Google.  One of which is your bid.  If a company promises you the #1 position, they are just bidding super high to buy it.  The problem with this is that your R.O.I. from this high bid will most likely be negative.  If someone promises you the number one position – kick them out of your office.
  5. Letting you sign up with too small of a budget
    • First – the budget recommendation that these companies give you INCLUDES THEIR MARKUP on the clicks.
    • Second – Let’s say they tell you that to “Dominate” your type of business, you need to spend $2,000 per month, to “Compete” you need to spend $1,500 per month and to just “Show up” you need to spend $1,000 per month.  You say “I only have $600 per month.” – if they are willing to take your money anyways – run.  You will just be flushing $600 per month down the toilet.  For more info on why this is, see my post “Why a small AdWords budget is a waste
  6. Long Contracts
    • I hate contracts with a service like AdWords.  Sure, in order to dial in an AdWords account, it takes a few months worth of data – but if you are in a popular category (plumbers, electricians, hardwood flooring etc) a good AdWords Account Manager should already have an idea on what types of ads work, how much they cost, where to put them etc.  They can also do a lot of research on the industry before launching your campaign.
    • My motto is “people don’t mind giving me money, if I’m making them money”  Good campaigns should make you money, but if something were to come up for you and you needed to pause your campaign, why would I not let you?
    • Pausing an AdWords Campaign (and re-starting it) is as simple as clicking a button.  Why would a company not let you pause and resume it at your discretion.  After all, IT’S YOUR ACCOUNT!   The only reason I can think of is because THEIR REVENUE IS TIED TO YOUR SPEND, hence the contract.

In the beginning of this post I stated that if 2 or more of these red flags pop up – Do NOT do business with them.  After reviewing this list – I would say that if ANY of these AdWords Red Flags pop up – do not do business with them.  Shop around – you will find someone that will not have any of these red flags.

I hope you found this information helpful.  Feel free to let me know in the comments below if I left any “Red Flags” off the list.

Shameless plug: 

I charge a flat 20% markup, give you full access to your account, and do not have minimum term contracts.

100% transparency – 100% of the time.

P.S. - (if you think I wrote this JUST to get business - check out my "Bashing the Competition" page, then decide)

 

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Why a small AdWords Budget is a waste

I’m just payin’ some bills with these ads

A Deadly Pay Per Click combination:

Low Budget + Bad Management + High Markups = Money in the Toilet

In most cases – and underfunded Pay Per Click Budget is a complete waste of money.  Not because you can’t have a successful campaign on any budget, but because of the way that most companies run AdWords Campaigns. When you combine a poorly ran campaign with huge markups and a low budget, you might as well be flushing your money down the toilet because you are NOT going to get any customers from your investment.

Companies that have ridiculous markups don’t usually tell the customers their markup at all.  Most customers are not educated enough to know that Google actually requires AdWords re-sellers to share this information, and that Google goes so far as to warn the small business owner about companies that do not share cost information.  (Google Advertiser Guide)   (Google Third-Party Policy)   (Google Third-Party Policy FAQ)

Three of the biggest offenders of mixing under funded campaigns with poorly ran campaigns and having ridiculous markups are Dex Media, Hibu, and Reach Local.

Pay Per Click Example:

Here is a hypothetical, but VERY MUCH a real world example.  Suppose you are a plumber in the city of Seattle, WA.   The sales rep from a Pay Per Click re-seller tells you that in order to “Dominate” the competition – you need to spend $2,000 per month, in order to “Compete” you need to spend $1,500 per month, and in order to just have a “Presence” you need to spend $1,000 per month.  You reply – “I have a budget of $600 per month”.   The Sales Rep says “Great” and signs you to a 6 month contract @ $600 per month.

Now let’s apply some basic math to this equation:

$600 per month – 40% (their markup*) = $360 left for ads

$360 / 30 days per month = $12 per day

Most clicks come from the word “Plumbing” so that word is “broad matched” in your campaign.  (this means that any time the word “plumbing” is in a search, it can trigger your ad to display.

According to the Google Keyword Planning Tool – as of today (7/9/14), they recommend a bid of $11.92.  That does not mean you will pay that – it’s just the suggested bid from Google.  If you bid $5, your ad probably doesn’t show up, if you bid $50 – your ad will show up – but will cost you way more than you should have to pay.

Someone at home types in “plumbing company, Seattle WA” and an auction is triggered.  You ad shows up in the 4th spot and the cost is $5.

If your Average Cost Per Click were $5** – you could get 2 clicks per day.

2 clicks a day = 60 per month.

60 clicks per month X 1.5% (average conversion ratio – conversion = phone call or contact form filled out)

If you are lucky – you might get 1 conversion.  This may or may not be an existing customer, and it may or may not lead to a new customer – it just means they contacted you.

If you land the customer AND your profit per customer is over $600 – then you got a positive return on your investment.

If not – then you got screwed.

* the big companies have markups as high as 60%
** average cost per click for a plumber in Seattle for the keyword "plumbing" is likely to be way higher that $5.

There is just no way that the small business, with a small budget get’s a positive R.O.I. from Dex, Hibu, or Reach Local.

It is possible to take that $600 and turn it into a successful campaign, but it requires choosing specific “exact match” or “phrase matched” keywords, setting up the campaign to only run during periods of lower competition, and narrowing down the radius where the ad shows to a very specific target.

If you factor in that companies like Dex also send all their traffic to a profile page and not the actual website – the problem get’s even worse.

Are you a customer of Dex, Hibu, or Reach Local?  What has your experience been?