A prospect recently asked me what sort of results they can expect if they run Google Ads for their local service business.
What to expect in terms of Google Ads results is a complicated question to answer, because it depends on your:
- Click-through rate (CTR), which can affect your Cost per click (CPC)
- Conversion rate %, which affects your Cost per lead or acquisition (Cost / Conversion)
- Lead close rate, which affects your Cost per sale
So how much is an average sale worth to you in revenue and profit?
If your Cost per sale is lower than your Average Client Profit (over whatever time you determine: one year, five years, ten years, etc.), then you have found a profitable way to grow your company. Congratulations!
You can see why, even if your Google Ad campaign isn’t profitable immediately, it can be worth tweaking and optimizing until it is, because IT’S MAGICAL TO BE ABLE TO GROW YOUR BUSINESS BY JUST BUYING NEW CUSTOMERS!
Should I try Google Ads?
For this reason, it’s best to decide whether or not to try Google Ads and give it a good go for 4-6 months.
I speak and write about this elsewhere, but to recap, there are many good reasons to try search engine advertising:
- you only pay per click for people searching for what you do
- you can actually measure the results of your marketing
Neither of these things is strictly true for other forms of marketing. The next closest might be Facebook Ads, where people are hanging out but not searching actively for any products or services.
So What Kind of Results Can I Expect from Google Ads?
Because our agency manages Google Ads for dozens of clients, we can give you rough ballpark estimates based on what our clients see.
But just remember: it’s best to take a testing mentality in order to find a profitable marketing channel that you can later scale up by investing more in ads.
With all that said, here are some numbers I see for other local service business clients in our Google Ads Manager Account from Oct to Nov 17, 2020:
What to make of this data?
The first thing to note is how much the Costs Per Click (CPCs) vary. Google Ads are an auction, so for competitive verticals like Law, we generally see much higher CPCs, even way up in the $9-16 per click range.
Whoa! That’s like running a LinkedIn Ad.
But it can still be worth it. Law clients are worth a lot of money, so paying $103-123 per lead can still be profitable.
Speaking of which, I included conversion rates in these numbers so you can see how much these vary. The higher your conversion rate, the fewer clicks you need per lead.
That reduces your cost per lead, which can ultimately reduce your cost per sale.
One way to improve conversion rates is to create custom landing pages like the one below to send people to. That way the people who click on your ads don’t get distracted by your whole website, they can just opt-in to be contacted.
What Should I Do Next?
- Determine internally what your acceptable cost per lead and cost per sale is.
- If paying somewhere in the neighborhood of $50-200 per lead could be profitable to you, I strongly recommend trying Google Ads.
- Performance could be even better than that, but there’s no way to know unless you try.
Feel free to reach out to us if you’d like us to set up and/or manage your Google and Bing Ad campagins.