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What would happen to your business if you could double your profits generated from Google AdWords advertising? Well, if you’re not advertising in AdWords, then I admit that wouldn’t have much of an effect. :)
However, the tactics I’m about to share in this article are not specific to AdWords. So what would happen if you could double your profits from ALL of your advertising?
That would be a game-changer. Doubling profits could instantly convert a flailing business on the brink of bankruptcy, to a growing empire on pace to acquire or eliminate all competitors. Of course, it also means more money in your bank account, which everyone loves (except that baby in the Capital One commercials…).
But do you honestly believe me when I say you can double your profits with only 20% improvements? That’s a bold claim so I expect some skepticism. I mean how can small 20% improvements possibly double your overall profits?
Well let’s take a closer look at the numbers. I promise if you bear with my brief math lesson, then you’ll have the keys to unlock massive profits from all of your advertising, including Google AdWords.
First, let’s define the 4 critical areas in any advertising campaign:
- Response Rate = Your click-through rate for online ads. This is how many people respond to your ad campaign.
- Conversion Rate = Number of sales divided by number of responders/clicks on your ads.
- Avg. Transaction Value = Average dollar amount of revenue per sale
- Avg. 90 Day Value = Average dollar amount of future sales revenue within a 90 day period. This is sometimes called lifetime value or backend value.
It turns out, if you improve each of the four areas above by a mere 20%, then you will double your profits. This isn’t theory. I’m talking about basic, elementary school arithmetic here. And I’ll give you an example so you see this in action.
Below is a chart with an example Search Google AdWords campaign on the left, and another campaign with 20% improvements in the four areas.
| Example Campaign | Metrics | +20% Campaign |
| 1.00% | Response Rate | 1.20% |
| 1.00% | Conversion Rate | 1.20% |
| $500 | Avg. Transaction Value | $600 |
| $500 | Avg. 90 Day Value | $600 |
| 50,000 | Impressions | 50,000 |
| 500 | Clicks | 600 |
| 5 | Sales | 7 |
| $5.00 | Cost per click | $5.00 |
| $5,000 | Total Revenue | $8,400 |
| $2,500 | Total Cost | $3,000 |
| $2,500 | Profit | $5,400 |
As you can see, all we did here was improve the 4 areas of the campaign by 20% and we went from $2,500 profit to $5,400. That’s MORE than double! And you can run this analysis with any numbers you want on the left hand side. You’ll always double your profits if you improve each of the 4 areas by 20%.
20% is not very hard. Here are some ideas for each of the 4 areas.
Response Rates:
- Use a benefit focused headline in your ad
- Promise to answer a question you know your prospect is seeking to answer
Conversion Rates:
- Create scripts for in-bound phone calls to ensure every call is handled properly
- Make your offer irresistible by shifting the risk from your prospect to your company
Avg. Transaction Value:
- Raise your prices by highlighting the true value you provide to your customers (i.e. time savings, long term money savings, future profits, etc.)
- Offer additional products or services at the point of sale that will make your customer’s life even easier/better
Avg. 90 Day Value:
- Offer additional products or services after your customer is satisfied with the first purchase
- Set up a referral system so that every new customer is worth at least one more customer. That can quickly double the 90 day value.
Those are just a few ideas to get you started. Now that you know you can more than double your profits, you should have all the motivation you need to start systematically improving your ad campaigns. Good luck testing!
Phil
P.S. Want more Google AdWords tips?
Download my Ultimate Google AdWords Checklist
