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To my surprise yes ads are very effective. Without getting too specific, my close relatives run their own business as home improvement contractors. In the early
by ProfessorLayton 7y ago
To my surprise yes ads are very effective. Without getting too specific, my close relatives run their own business as home improvement contractors. In the early days, before they had their reputation built, I setup a google adwords campaign for them — having never run an ad campaign before.
It was a simple PPC campaign that included keywords in google search results and geofenced it to the SFBay. Here are some numbers and findings:
- PPC costs were about $1-2.50/click with a ~$15/day max spend
- Selected cities by hand to fit the service area
- We did in fact get clicks outside of the zones we selected. Many if them were B2B trying to sell their services.
- Customer acquisition costs specifically for the google ads campaign was ~$70 (clicks/conversion)
$70/customer sounds like a lot except these home improvement contracts were typically thousands of dollars, so the campaign was a fantastic ROI. Furthermore, we dialed down ad spend as the reputation was built, and now most leads come
via referrals and review sites.
In the end all that mattered was that customers were signing contracts so even if there was some funny business going on it was still worth it for our particular case.
- ohazi 7y agoThat's not exactly a shining endorsement... "Yeah, Google was robbing us blind and kind of scamming us with their geofencing shenanigans, but we were making enough money that it wasn't worth fighting, and eventually we figured out how to stop buying ads from them."
- chmod775 7y agoI don't think it was supposed to be an endorsement.
- muro 7y agoIf I could pay just 70$ per customer bringing in 1000+$, I would spend all I could and borrow heavily to run those ads. From a business perspective, it's a great endorsement.
- im3w1l 7y agoIn this case they were selling skilled labor though so at some point their capacity would be reached. I'd guess that's why they only spent $15 a day.
- pjc50 7y agoBut in order to run a business you have to get customers from somewhere. And referrals aren't an option until you already have customers.
- TeMPOraL 7y agoAnd I think that's exactly how adtech works, both internally and externally. Everyone is scamming everyone else with fudged and pretty opaque statistics, but there's enough ROI at the bottom that the whole thing hasn't collapsed yet.
- felipemnoa 7y agoSo what you are saying is that all that is needed is for a newcomer to come and do things a little bit better and it will eat everybody's lunch. Just like google did to search engines when they started. Sounds like a great business opportunity.
- TeMPOraL 7y agoThe core innovation that would be needed here is providing such good transparency and attribution that such newcomer could turn around and prove that all their competitors are scamming their customers. Without that, fudging numbers will prevail simply because it can make money without having to do as much work.
- solarkraft 7y agoThis is how almost any business deal works. If you get more money out than you put in you do it. Sure, the partner may be hard to work with, but so is almost any big tech platform provider (... Apple ...) and it can be quite profitable to put up with.
- deleted 7y ago[deleted]
- w1nst0nsm1th 7y agoIt only works if you sell a hugely priced item/service. If you want to sell everyday consumption or end consumers items, this scheme will eat all your income/benefit. After reading about all the flaws in automatic online advertising through clicks on this thread, it looks like a big scam prospering more or less in favor of opacity, lack of fine tuning or targeting and fraud. Referral systems and social influencers seems to be a better option, as long as your product is good and would not shame the ones endorsing it. Betting on viral marketing and endorsement seems to be more natural and a better bet, but require maybe more work and preparation than blind automatic system.