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Yours is an interesting AdWords case with some challenges.
1) Low cost products and Adwords
Low cost products (like a $10 sauce) will generally struggle to turn a direct profit from adwords. There’s just not enough cash in a sale to pay for all the clicks.
2) Your higher cost products
Although you have higher priced products, a brand new customer may tend not to sign up for those (say an $85/mth subscription) and prefer to just try a jar or two.
3) It’s not all bad news
Big upsides to your advertising may include:
- Repeat business. If your average customer loves your food and buys hundreds of dollars worth over the year, then your ads are in fact making money.
- Getting your products to more people is essential for growth even if not initially at profit.
- Those customers tell their friends about you.
These sources of revenue are an example of why pay-for-results is often not suitable for a marketing company (as [USER=8031]@JohnR[/USER] has pointed out). Your ad campaign is usually judged on immediate returns, but often the initial returns don’t show the true success of the campaign.
5) A possible path to adwords profit
- Calculate the Lifetime Value of your average customer.
- Once you know what a customer is really worth to your company you can calculate the real (long term) profitability of your ads.
- Work on increasing Lifetime Value further, to further increase the profitability of your ads (develop a relationship with your customers after their first purchase – email marketing may be important – and awesome products).
- Once you realise that the initial purchase isn’t where you get the profit from, it frees you to start making very attractive offers to first time customers like “Our sauce is so good we’re willing to give you a bottle for free to prove it”. And now you have a growth strategy for getting a lot more online customers.
- Your competitors can’t afford to make offers like this, because they’re still focused on the initial sale.
6) Scope of adwords companies
A good Adwords company will probably be able to push up that current 60 to 80c return per dollar spent to break even or better (esp you’ve DIY so far). But you should see this as one small element of your overall results.
Hope that helps you to see a way forward
Thanks heaps for your thoughts mate, as with the other guys apologies for my delayed response been off the forums for a while. Your suggestion was great found that of our total website customer base the returning “Friend of the Farm” customers are far and away our most important in lifetime customer value. Despite us making less per sale most stay with us for 6 months or more and are great advocates to help us share our produce with others too. Sorting a small video to run through social media channels at the moment to help promote them sharing this message further and then build from that- hoping someone else saying our products are yummy carries more weight than us saying it! (both in real world and online)