Virtual Business Success

Ensure the Success of Your Next Business Idea

To help you confirm the potential and value of your next business idea, use the "Google AdWords Test" before investing too much money.
Latest posts by Justin Q. Croxton (see all)

Entrepreneurs face the challenge of selecting a viable business. Even after the launch of the business, owners are continually faced with the need to determine the potential of new business opportunities, products and ideas. To help you confirm the value of a new launch, you should explore the power of search engine marketing, and more specifically the
"Google AdWords Test," before you spend too much investing in the new business idea.

What Is Google AdWords?   

First, a quick backgrounder on Google AdWords. Google represents the largest search engine in the world. Businesses can choose keywords to market their services. Google AdWords is an advertising program that derives its pricing by conducting auctions in which advertisers bid for specific keywords they deem contextually relevant and valuable to their business. Google allows advertisers to group those keywords into specific ads that speak to that business’s target audience. When your ads appear on the first page of Google, you will only be charged when a searcher clicks on your ad. Over the course of time you will be compiling data on the number of corresponding searches, phone calls, and clicks. This is where the Google AdWords Test comes in.

What Is The Google AdWords Test?

The Google AdWords Test allows potential and existing business owners to test business ideas to determine whether those ideas are worth pursuing. The test provides much more data than business owners realize. This test gives you a breakdown of the total number of people who are searching for your specific products or services in a given area, the cost per click for specific keywords, the rate at which searchers click through to your website, and the number of individuals who call for your services. These four metrics are critical in determining the commercial viability of a business in a given area.

Analyze The Numbers

For the sake of analyzing a test campaign, I recently executed one for a property management company.

Over the course of two days, we spent $140 to run the test. We achieved 2,700 impressions (searches), 61 clicks, and 5 phone calls. This translates into a click through rate of 2.24%. Generally, anything higher than 2.00% is good. Also, the average cost per click was $2.30. Anything higher than $1.50 showcases the demand for that product or service. If there were low demand, advertisers would not be bidding up the cost of those keywords. Based on this data, we can determine if starting a property management business in this particular area presents an opportunity for a potential business owner.

If the average customer value for a property management company is $1,000 and we’ve spent $140, which produced 5 phone calls, we would have to convert 20% of those calls in order to produce 1 client. This represents an 86% profit margin, which is good dependent on the other expenses of the business that dilutes those margins.

OK, What Does This All Mean For Your Business?

First, it means Google AdWords is worth exploring as a marketing channel whether this is a new business or an existing small business you are operating. Second, this AdWords test means property management in this area is worth considering.

This test does not represent the sole marketing channel for your marketing campaigns. This test also should not mean you can’t pursue that particular business idea. A plethora of other marketing channels can be considered for testing. Ultimately this is just another tool in the toolbox to ensure you’ve made a good decision in starting up a business or expanding one that provides the returns you desire.

Google AdWords is not the only search engine. Of course you have Yahoo, Bing, and a few others. But because of its reach, Google provides business owners the opportunity to test business ideas as well as simultaneously determine if search engine marketing represents a relevant marketing channel for your business. Spending $100 to $1,000 on this test is well worth the investment.

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