One of the most common questions I get from my tree care clients is “How much will a Google AdWords campaign cost?” It’s a fair question – but not an easy one to answer.
There are several different factors that make up your AdWords costs. Some you have clear control over and some you don’t.
At the most basic level, you have costs for
- the ads you run (this is the cost per click, or CPC, multiplied by the number of times someone clicks on one of your ads) and
- either your time or someone else’s time to create and manage your campaign.
If you hire an agency / AdWords specialist to manage your campaign for you, they’ll either charge you a flat monthly fee or a percent of your total ad spend. And you’ll generally pay the agency regardless of how well your campaign works.
Setting Your AdWords Budget
One thing you always have full control over is the maximum amount of money you want to spend on your AdWords campaign. You’ll never pay more than your maximum budget, although you may well end up paying less.
So how do you determine the right budget?
Think about your AdWords campaigns as having two phases – (1) testing what works and (2) maximizing return on investment. Your budget will probably look different for these two phases.
Phase 1: Testing
In the first phase you’re essentially doing market research to find out what works best – which keywords, ads, and landing pages are a profitable combination for you and which aren’t.
You’ll need to know the average cost per click (CPC) for the keywords you’ll be using. You can find this information in the Google Keyword Planner tool within AdWords. It’s just an estimate but it’s usually not too far off and is helpful in planning your testing budget.
In the tree care industry, the cost per click for many of the key search terms can be as much as $10 or even more. It’s a pretty competitive market in many areas of the country.
There are three common reasons why CPC can be expensive in the tree care AdWords market:
- Tree service can be pricey so business owners are willing to pay more to get a new customer because they know the lifetime value of a customer will likely exceed their acquisition costs.
- Some of the large tree care companies spend a lot of money on AdWords and bid up the CPC.
- Many business owners try to do it themselves and end up spending far more than necessary for very little return.
About Cost Per Click (CPC)
Many business owners look at a $10 CPC and say “No way – I’m not spending that just to get someone to click on an ad!” But that’s short-sighted.
The cost per click is only the first part of your online sales funnel, and it’s not the most important number.CPC is NOT the most important metric when running AdWords campaigns.Click To Tweet
What if you spent $1,000 on ads (that’s 100 clicks at $10 each) and got $2,000 worth of new business as a result. Would that be worthwhile? You be it would!
At that point you’d want to spend as much as you possibly could on AdWords because you’d be doubling your money. Of course, this is assuming your business can handle the increased workload – if not, stop getting new customers until the proper staff/crews and equipment are in place.
AdWords Performance Estimates
As a general rule of thumb, you can estimate that 1% of the people who see your AdWords ad will click on it. Of course that depends on the quality of your ad, your targeting, budget, etc. but for planning purposes it’s a good number to work with.
Of those people, how many will then go on to call you and eventually become a customer? Each business is different but you probably have at least a rough estimate. If not, it’s time to get analytics and call tracking in place!
A good estimate when you’re starting out is that 5% of the people who click on your ad will eventually buy your tree care services. So at $10 per click with a 1% click through rate and a 5% conversion rate, you’d be paying $200 for a new customer.
Throughout the testing phase you’ll be monitoring your AdWords performance very carefully and making adjustments to try to increase the click through rate, bring down CPC and improve conversions (such as calls to your business or completed contact forms).
The length of time you spend testing your ads depends on search volume for your keywords and your budget. If very few people are looking for what you’re offering, then it’ll take longer to get enough clicks to determine how well your online sales funnel is working. And if your budget is too low, you won’t get the number of clicks you need.
Tip: Google will tell you if you’re using a low search volume keyword and I recommend removing those keywords from your campaign.
Assume that in the tree care industry you’re going to spend about $500 to $1000 testing your campaign and that it’ll take 2 to 4 weeks. That’s just a ballpark figure – you can spend much less (it helps to have an expert do this for you as you’re likely to get better results).
Phase 2: Maximizing Your Return
Once you have your keywords, ads and landing pages dialed in, you’re ready to start maximizing the return from your AdWords spend.
The testing will have given you a good idea of how much you earn (on average) per click. Look at how much each click costs you, how many of those clicks turn into customers, and what the average lifetime value of a customer is for your business. If that number is positive (you earn more per click than you spend), then spend as much as you can! If it’s negative (you lose money with each click) then go back to the drawing board.
Most tree care business owners don’t know their earnings per click – that’s why they end up spending too much on AdWords and seeing nothing in return.
Monthly AdWords Budget For Tree Care Companies
The typical monthly spend for a small tree care business is in the $1,000 to $2,000 range, although it’s not unusual to see budgets up to $10,000 per month. I know that may seem like a lot to spend on something that many people say just doesn’t work. But when AdWords is done correctly, it can have a significant return on investment (ROI) that makes the monthly spend worth every penny.
When setting an AdWords budget, the key things to look at are:
- the expected CPC,
- the number of clicks you’ll get,
- the number of those clicks who convert into customers, and
- the average lifetime value of a new customer.
You should have all of that information from your testing process. Ultimately, you want to set a budget that will allow you to maximize ROI (the value of a new customer divided by the amount you spent to acquire that customer).
The Bottom Line
You need to spend enough money to get a large enough number of people to click on your ad. But BEFORE you do that, you must optimize your entire online sales funnel – ad wording and keywords, ad extensions, landing pages, call tracking, and a solid customer service person to pick up the phone when prospects call.
Without all of that in place, it doesn’t matter how large your AdWords budget is – you’ll just be flushing your money down the toilet.
Focus on ROI, not on managing AdWords costs – that’s what will make or break your AdWords campaign.
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