How are Google adwords affordable?

[pdenya]

Most of the keywords i've seen on the keywords tool are priced at around $1-2 per click. If a decent conversion rate is .5-1% then each conversion is costing $100-200. Since all of the products I've been researching are well under $100 (more like $20-30) how is it that companies can afford this advertising?

[jeffmould]

First the keyword tool pricing is just an estimate and many times the actual cost of the click is way less.

Second, you only pay when someone clicks on your ad. So if your ad is shown 1000 times and you have a 1% clickthrough (very high percentage) that would only be 10 clicks. Assuming you are paying a $1 a click that is only $10.

With that said, while an Adwords campaign can be setup and left alone, you will find yourself spending more than you hoped if you do not continuously monitor and adjust. Your results and conversions will be much better with long-tail keywords too. For example if you were to select the keyword "web design" you are most likely going to spend more than if you were to select "$YourState web design" or something like that.

There is an art and science to running an Adwords campaign and sadly it does take a little money to get it just right. It also takes time. But if you monitor and adjust accordingly, over time you will find that you are paying less and less for each conversion.

[pdenya → jeffmould]

Thanks, The long tail keywords is something i'll definitely try out.

I was originally referring to my site's conversion rate. About .5% of visitors buy my product for $25.

[jeffmould → pdenya]

Taking any fraudulent clicks from Google out of the equation, you can generally assume that everyone that clicks on your ad is a "qualified" lead. They are interested in your product or service because they searched for it. You may also want to do some A/B testing with your site as well, including adjusting pricing. You may find that you can increase your conversion rate dramatically and spend less on your Adwords campaign.