Lately, I’ve received more requests from newly started ecommerce stores than usual. Nearly all of them had the same challenge when starting out with AdWords that I felt the need to touch on the subject in this post.
For many years, AdWords has been one of the key pillars in driving new ecommerce stores to greatness. The calculation has been rather easy:
- Start a random store
- Stock some great products
- Buy clicks from AdWords
- Sell, sell, sell
However, I’ve recently noticed the opposite to be true. This scenario is rather hard to bring to life and there are several reasons to why new ecommerce stores shouldn’t rely on AdWords to propel them into online stardom.
Realize that Competition is Tough in All Industries
Nowadays, most ecommerce stores face a quite tough competition. When you enter a market, chances are there are several big players who already have vast experience in price setting, inventory, etc. That’s a given.
Besides entering a competitive environment in general, you will also see a lot of fighting for the top spots on to Google Search Results Page. You will start to enter this fight as well, but without the baseline that your already established competitors have.
One of the biggest misunderstandings I get from new ecommerce Clients is the fact that they did 10-20 (or more) searches for their products using long-tail keywords. To their big surprise, and initial happiness, they didn’t see any of their competitors appearing for these searches. So, they mistakenly think this is a hugely untapped market and if they do just what the ‘experts’ recommend (going for long tail keywords), they will get the cheap conversions and propel their stores to the next level.
I’m sorry to burst your bubble, but this is simply not true. If you search for a product or a specific search term on Google and you don’t see any advertisers using the terms, it’s usually because there are no searches for the product or keyword.
Market competition is so fierce nowadays that if you find a lucrative keyword, chances are your competitors are certainly using it. And if they are not, it means your potentially ‘lucrative keyword’ is not so lucrative after all. So you can already forget about trying to overtake your competitors from the get-go, because it will most likely not happen.
No Account History will Make it More Expensive for You to Buy Clicks
Another caveat about starting out with AdWords is the fact that you’re just starting out. Account history is huge in AdWords, and the professionals who have successfully advertised for several years (perhaps longer than you) will have a distinct advantage over you.
Google relies on their Quality Score (Ad Rank) calculations to determine where you will be placed in the Google Auction. Google’s main revenue stream is from AdWords clicks, so they do whatever they can to protect their baby. This means that you shouldn’t expect to get as good of a grade as your established competitors when you’re just starting out.
Google can’t know in advance how good of a CTR (click-through-rate) you will have, so they hold you back in the beginning. Your CTR is the number of clicks you can convert impressions into. The higher your CTR, the more clicks you and Google get.
Most Likely, You’re Not an AdWords Expert (You will Make Mistakes)
Unless you’re a seasoned starter of ecommerce stores, you will not have the experience needed in order to build a “perfect” AdWords campaign from scratch in the first try.
Becoming successful with AdWords is all about tweaking, optimizing and squeezing out all the profits from your money-making keywords, and vigorously cutting out any losing keywords.
During this process, you will make mistakes, especially if you don’t have the experience in managing AdWords. Some of the most common mistakes AdWords beginners make include:
- Too many keywords per ad group
- Using broad match
- Not bidding adequately
- Not following best practices for ad writing
- Basic mistakes in terms of budget setting and bid management
This is just a small list of the many mistakes you may make when starting out AdWords campaigns for the first time. Even when you think you have everything under control, you will be surprised by the mistakes you’ll make due the lack of AdWords knowledge and practice.
You Don’t Know What Works Yet = A Lot of Wasted Money
As a business just starting out, you usually don’t have a vast sum of cash you can use on advertising. One truth you don’t know about AdWords is that no matter what you do, you will not be able to advertise profitably for every single product or even product category.
You will undoubtedly run into situations where either your competitors are too aggressive with promotions or pricing that they will make it impossible for you to advertise profitably.
You won’t know in advance what parts of your inventory will sell well with AdWords and what parts won’t. You will need to start campaigns covering different categories in a strategic, prioritized manner. Sadly, no matter how well you plan, you will waste money. Your level of AdWords capabilities and industry know-how will determine how much money you stand to waste until you reach profitability.
Your Inventory Might Not Be as Big as Your Competitors
A big part of your AdWords sales will come from keywords that require a category or sub-category. Generally, very few sales come from exact product numbers or product names.
Striking an appropriate balance between having too few products and too many products is key from an AdWords’ point of view. You want the users who reach your site to feel comfortable enough with your selection, so they don’t need to look at other sites.
On the other hand, you can’t have too many products. Too many products will result in indecisive users if you don’t figure out how to showcase your products in clean manner.
Additionally, since you are just starting with your site, your inventory will most likely not be as big as your competitors’, which might hurt your AdWords potential. The categories you used to think were easy to sell through AdWords will quickly become highly unprofitable if it turns out you don’t have enough products.
Good Luck and Some Final Tips
Every year, the Build-A-Business competition becomes better and better. I’ve been hooked since the beginning when Tim Ferris was a mentor. With great business minds like Mark Cuban, Gary Vaynerchuk and Arianna Huffington (not to mention Lil John), I’m even more psyched and sometimes wish I could join the competition. I couldn’t do it wholeheartedly though, so I’m sticking to being an active bystander.
For contestants, I have one big tip though: Video. In my opinion, the Build-A-Business contestants who can get a very good video production going will have the best chances for building a solid business that can grow exponentially over the next 12 months.
AdWords, SEO, Social Media, Email Marketing, etc. will contribute greatly to your success if used properly, but incorporating video marketing and general inbound marketing tactics will take you very far.
Good luck to you all!