Return to the homepage - Julian101 - A CEO's Ramblings on business, startups, entrepreneurship and life | | |

ProActive Software is a company driven by metrics. We measure and test EVERYTHING. We like to know what works, what doesn’t and what will drive the company forward. In regards to marketing, one of the most commonly used tools by software co’s is Google Adwords. We did an experiment lately to see how ours were performing. We have regular sales but how many were coming from Google Adwords?

Although we use other marketing methods, both paid and free, our typical budget was $1000 per week on Adwords. We have a professionally built campaign with 900+ keyphrases. Our campaign is split to different groups based on country so we can selectively geo-target locations (ie: spend on Australia this week and lower spend on the US). For as long as I can remember the campaign has been going well. We started at a few hundred a week and have been lifting spend each month.

One of the reasons we had to evaluate Google was that:

A. Other PPC providers were offering good deals (ie: Yahoo, Miva, MSN etc)
B. Google’s “Price per bid” to retain a set position has lifted 80% in the last year.

So we did a test!

We knew that our sales cycle from demo to sale is typically 3-4 weeks and has been for years, so we turned off Google Adwords completely for a month to see how it affected sales and traffic. Google is 80% of our marketing spend so we figured we may lose 80% of new sales.

We were wrong! We did lose probably 80% of traffic to the website immediately, but here’s the interesting part:

One Month with Google Adwords turned off completely

– Website Traffic dropped about 80%
– New Trial Accounts dropped only 25%
– New Sales dropped only 10%

So we thought we’d then push Google hard. We turned up the Google Adwords spend to $5000 per week! Surely this would have some impact and we’d all be buying new cars with the flood of sales rolling in! Wasn’t to be. This is what happened:

One Month with Google Adwords set at $5000 per week! (5x original budget)

– Website Traffic increased 2-300%
– New Trial Accounts increased 50%
– New Sales increased 10%

So then we did one more experiment and set Google Adwords to $100 per week for a month. Heres the results:

One Month with Google Adwords set at $200 per week (1/5 of original budget)

– Website Traffic dropped about 10%
– New Trial Accounts dropped only 10%
– New Sales dropped only 5%

Spending 5x the Google Adwords spend didn’t increase sales 500% (only 10% increase). This is pretty dismal. What we discovered was that the Google Adwords delivered good traffic, but the traffic that was delivered converted to sale at about 20% of the conversion rate of traffic from natural search engine results. All the Adwords traffic was doing was flooding our demo pool with poor converting leads.
So we’ve dropped the Adwords completely for a few months now to confirm the conclusion. Basically we’re still making good sales but saving thousands of dollars per month in poor performing traffic.
In my opinion, Google Adwords aren’t a ‘waste of time’ but you need to test thoroughly to understand the conversion rates. The amount we’re saving could be another staff member’s wage!
So we’ll be concentrating on other (free) marketing approaches and keeping those wasted Google dollars in our bank.

Some final thoughts

Myth 1. Google Adwords Marketing is Controllable & Dependable!
It’s not. You can be knocked off the list easily by other higher bidders. There’s heaps of click fraud and you have no control over the quality leads you pay for.

Myth 2. Google Adwords Convert Well!
They may for some people but didn’t for us. This depends on a lot of factors. One other factor we’ve measured is the conversion rate of Adwords leads now as opposed to a year ago. The conversion rate has dropped considerably (but not for other marketing methods). So we believe the ‘Quality’ of Adwords has dropped.

Myth 3. Google Adwords are an easy cost to budget!
In the past year, the bid price has increased about 80% on average for our keyphrases due to competition forcing the bid prices up. So whilst we can fix the daily spend limits we’re getting 1/2 the leads referred today as per a year ago. To make the same sales level or profit per sale as a year ago we have to double marketing spend! And this is always increasing!

Technorati Tags: , , , , , , , , ,

Republishing Note:
Anyone is welcome to republish this article as free online content, provided that the paragraph below is included in the full form as shown.
About the author:
Julian Stone, CEO – Project, Task & Time Management specialist for:, &

Be Sociable, Share!

About The Author:
Julian Stone begin_of_the_skype_highlighting     end_of_the_skype_highlighting is the CEO of ProActive Software, developers and creators of the leading web based project management software