John Cheney, CEO, Workbooks, discusses the risks associated with spending money on Google Adwords without any clear understanding or measurement of whether the campaign is working correctly. Whilst the campaign may be driving more traffic to the company’s website, is it driving sales and providing value to the business?
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In 2014 it is pretty surprising to find any Marketing budget that does not include Google Adwords. The ‘pay for results’ model is compelling – with Adwords, displaying the ad is free; costs are only incurred when someone clicks on the ad and lands on the website. Real time response with measurable ROI – it’s a marketers dream.
But is it? Getting someone to your website is not the same as closing the deal. How do you know if that person is a genuine, 24 carat lead – or a student researching a dissertation? Just how many of those paid for leads actually turn into business sustaining sales? If so, how much work does it take to close these deals and just how much revenue are these customers generating? Any marketing activity that generates a whole load of leads that are extremely hard work to close and deliver only small amounts of revenue is not going to be well received by the sales team.
So just what value is that Google Adwords investment actually delivering?
Understanding Sales
The problem with Google is that it is just too good at measuring conversions. Indeed, the company actively encourages marketers to refine and improve key search terms and optimise Adwords making it so easy to get sucked into the whole Google metrics game – what is the company’s ranking this week? How may click throughs? What is the pay per click?
Achieving conversions, however, is just the first step in the sales cycle. The next step is to measure the progress of each lead through that process. Of course, for any organisation that is purely online and selling to a consumer marketplace Google can offer a great ‘ad to lead to sale’ tracking process. It is all online, it is visible and provides a clear ROI. In addition, Google has added the ability to track calls using custom phone numbers on the advert – again very useful for a simple B2C operation.
But for those organisations in the B2B marketplace, with complex, often long drawn out sales models that demand repeated interaction with prospects via email, phone and face to face, Google clearly cannot provide the answer. Organisations need to be measuring the results of advertising spend in relation to actual sales closed and orders placed, not click rates or cost per click.
Measuring Value
Marketers need to scrutinise in detail the quality of leads generated by the Adwords campaign and assess their worth against a number of criteria. Are the leads within the company’s key target markets and geographies? Do they convert into the expected sales pipeline at the ratio expected? And ultimately, what proportion result in closed deals? Essentially, companies need to measure, and not just estimate, the true return on marketing investment.
The only way to determine an accurate ROI is to track the leads throughout the sales process. By using an effective CRM system, a business can follow the progress of the unqualified leads that arrive at the web site. The first stage is typically Marketing Qualified Leads (MQL’s) – those that meet the basic qualification criteria, such as geographic region or size of company. The next stage is usually Sales Accepted Leads (SAL’s) or Sales Qualified Leads (SQL’s), those leads that meet most of the normal BANT qualification rules – Budget, Authority, Need and Timescale. Most will then consider a conversion into an ‘opportunity’ for the sales team when all four criteria are met. But, finally, and most decisively, ‘closed/won’ which enables the finance team to generate an invoice – the ultimate proof of lead value!
ROI Reality
The shocking fact is that many B2B organisations that have measured the value of the Google Adwords leads have discovered little value. Indeed, at Workbooks we have never been able to make Google Adwords work – despite continually refining campaigns, the cost per lead runs at around £1000 which is a huge cost when compared to other lead generation activity such as breakfast seminars, trade shows or lead purchase that runs at around just £30 per lead. There is simply no justification for throwing more money at Google.
How many other B2B businesses are in the same boat? Hard to say, simply because most don’t measure. In 2011 a survey conducted online by YouGov revealed that less than a fifth (18 per cent) of SMEs using Google Adwords were recouping the cost of their investment. The remaining 82% were either not recouping costs or simply did not know.
One company found that every £1 it was spending on Google Adwords generated a mere 18 pence in sales; while just 10 per cent of survey respondents said that Google Adwords had led directly to sales and new clients in the last 12 months. Three years on and the digital marketing environment is, in theory, far more sophisticated. But what has changed? If anything advertising with Google has become more expensive, due to the increasing competition. For any organisation operating in a popular sector – such as CRM – the costs are prohibitive. Yet despite the near ubiquitous use of Google Adwords there is little sign that organisations are measuring any more today than they were in 2011.
Conclusion
Google Adwords is clearly one of the world’s leading advertising media, offering enormous potential for a more level playing field between SMEs and larger competitors. It is therefore a real shame that many firms are still struggling to quantify the benefits. Getting lead generation right is a fundamental component of the marketing activity. And, for marketers under increasing pressure to prove ROI, Google Adwords is compelling, with its analytics and tips and tricks for optimisation and refinement.
But lead generation is not sales. And unless Google Adwords are generating any sales, whether the ads are optimised or not is totally irrelevant. Given the limited marketing budgets available to smaller firms, it is essential to maximise the return of every single investment. Isn’t it time to find out just how much value the Google Adwords investment is delivering – or whether that investment could be better placed elsewhere?
By John Cheney
CEO
Workbooks