Over the last few weeks as areas across the country have begun to slowly reopen, many of my private clients who paused their online advertising back in March have decided to relaunch their Google Ads Campaigns.
I’m excited to announce that I’m seeing preliminary results based on advertising over the last few weeks and those results have been very good for business owners.
Each one of my private clients’ accounts has been more profitable during May than they were in February of 2020.
Here are what I believe to be some reasons for the increase in profitability using paid Google ads:
- Less Competition On Google
It is a fact that many advertisers paused their online advertising in March or April of this year.
Google works by displaying ads in the most prominent position based on a real time auction. When determining how high an advertiser’s paid ad appears within Google search results, Google uses a combination of an advertisers bid and other factors such as relevancy to the user search query to determine what is called ‘Ad Rank’.
The higher the Ad Rank the more prominent on the page an ad will appear. The more prominent an ad appears, the more likely an ad, whether a product ad like in Shopping or a text ad as in Google Search, is to be clicked on by a potential customer.
With less businesses advertising, it translates into less competition and cheaper bids for those who advertise meaning higher Ad Rank and more prominent positions within Google.
Right now, I have seen some of my private clients with their average cost per click 50% or less than what they were paying earlier in the year for the same search terms!
Combine cheaper bids with the relatively same conversion rates and it is no wonder that profitability has been substantially higher.
And although I’m not sure how long this phenomenon will last, current advertisers are certainly taking advantage of cheaper clicks thus reducing their costs per click thereby helping to drive their profit margins higher.
There is also an opportunity to reach more shoppers. Less competition online means less options for shoppers. This may not be a good thing for consumers, but it is a REAL good thing if you are one of the remaining choices.
Increasing Business In The Long-Term …
I always like to remind clients that advertising using paid Google ads is not a short game.
Not only is advertising in Google about optimizing profits per sale, but it is also about the average lifetime value (ALV) of a customer.
Advertisers are paying for that first sale, but how many future sales will an average customer make from your website after their initial purchase?
This is the data you need in order to calculate Average Lifetime Customer Value. Increasing the ALV depends on factors like staying in contact with past customers (how often are you emailing your customer base), how happy customers are with your products (are you doing everything you can to exceed customer expectations) and how smooth was the initial transaction (did they receive their order in the manner promised).
Combine good service with good products and you have the initial recipe for increasing your average customer lifetime value.
2. More People Shopping Online
What has happened in the past few months is like nothing we have ever seen. In California, we have been asked to stay at home for almost 3 months and counting.
That not only means that the grass in the backyard has been getting worn out, but it also means that personally I’ve been buying a whole lot of stuff online some I need, much I don’t.
Do you know what?
In the action of increasing the amount of shopping done online over the last few months, I’m not alone.
It isn’t just the people who are already accustomed to shopping online either that are increasing how much they are shopping.
In addition to regular online shoppers, there are people that have never previously shopped online that have had no other choice due to stay at home orders.
Including especially some generation Xers and a whole lot of Baby Boomers, the stay at home orders has created a whole new wave of online shoppers and it is a big wave!
In 2019, online purchases made up 16% of commerce. Many experts predict that the COVID-19 pandemic will change the way shopping is done and specifically how online shopping is done forever more.
In 2020, online shopping could skyrocket to as high as 50% of all sales. As new shoppers become more accustomed to shopping online and become more adept at doing so, this percentage could increase even higher than 50% over the next few years.
If you are selling products online, you should be filled with optimism. If you are not selling products online, you should be thinking about how and where you can start.
3. People Ready For Normalcy
Let’s face it. After weeks or even months at home, people are ready for normalcy. And I’m not talking about purchasing that 10ft inflatable pool for the backyard, although yes I did recently order one or even that new videocam and yep I bought one of those too.
Instead, I’m referring of the new baseball batting helmet for little Johnny or a new volleyball for the beach.
Items that return a sense of normalcy even though the activity for which they are bought may still not be back at full capacity.
Demand has picked up online, due to what I believe is people’s desire for a sense of normalcy.
Combine this demand for normalcy with lack of competition and many advertisers are seeing more profitable sales even when logic may dictate that it would be better to hold off on resuming advertising for certain product lines.
If you were using paid advertising before COVID, there is no reason not to resume advertising now. When I say resume advertising now, I’m not referring to next week or even next month, I’m referring to today.
If you are not quite ready to take a full plunge but want to just put your toe in the water, then you can resume on a limited basis.
Restart your advertising with just your best-sellers or restart your advertising bidding at reduced level (say 50%).
In what method you decide to restart advertising, know that the opportunity is high right now to see cheaper clicks and higher profit levels from your online marketing. The time for being timid with your ad budget is gone and customers are again wanting your products.
However, like that 48-hour sale at Macy’s, be warned that this sale (the Google ads sale on cheap clicks) may be over before many know that it even began!
Remember to stay safe and stay healthy!
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ABOUT THE AUTHOR
Andy Splichal is the founder of True Online Presence, author of the Make Each Click Count book series, founder of The Academy of Internet Marketing and certified online marketing strategist with twenty plus years of experience helping companies increase their online presence and profitable revenues. To find more information on Andy Splichal, visit www.trueonlinepresence.com or read The Full Story on his blog, blog.trueonlinepresence.com.