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Profit Calculation to niche, how to make it work with Adwords?

by aspektor
3 replies
I have a Profit Calculation question I will give you example from one niche, and you tell me where I am wrong. For this example, I care about first 2-3 months where my product is NOT appearing in Google first pages. Lets say that niche does not have a lot of competition and has 10k searches.


Lets say Niche A has average product oder: 305$
Profit Margin: 30%
Which makes Avg Profit: $92 (305 * 0.3)
Average PPC (Google Ads) bid is: $1.0
Impressions: 10k
Clicks (average per industry 2%): 200 (10k * 0.02)
Sales from Clicks (average per industry %1) : 2 (200 *0.01)
Based on this:
Total PPC Cost: $200 (Clicks * PPC BidCost)
Profit: $ -17 ( Avg Profit * Sales - Total PPC Cost )
Based on this I will be loosing money exponentially as I increase my Google Marketing Costs.

What am I missing ?
Would you go with this niche ?
What would you do to make a profit in this case?


Thank you for your responses!
#adwords #calculation #make #niche #ppc #profit #sem #work
  • Profile picture of the author ChrisBa
    Sounds like the bid is too high to make any profit?
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    • Profile picture of the author aspektor
      Originally Posted by ChrisBa View Post

      Sounds like the bid is too high to make any profit?
      Yes, but if you look at Adwords, this is an average bid to get impressions for most industries these days. If bid is lowered, there wont' be many impressions.
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  • Profile picture of the author dburk
    Hi aspektor,

    Averages don't matter in marketing.

    Marketing is all about segmentation. When you start segmenting the data you will find some keywords that you target in your niche have lower than average costs, some will have higher than average conversion rates Conversion rates will vary based time of day, day of week, location and device type. When you start analyzing each of those segments some will be profitable some will be unprofitable.

    When you test various value propositions within your ad text, some variations will perform better than average some below average. As you begin the process of optimization you increase bids on the more valuable ads and decrease bids on the less valuable ads, After a round or two of optimization adjustments your overall performance is now way better than average.

    Ignore averages and focus on segmentation and optimization of each segment.
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    * Get Results - Outsource Your PPC Management |
    *     Don Burk Advertising & Marketing - www.donburk.com

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