How to determine how much money I need to spend on AdWords to test a market?


3

I need to test the market to determine how many people are interested in subscribing to my site. The niche is related to "web design" and "themes". I would like to know if the project I'm planning is worth pursuing.

It will be something like this: on the site there will just be a subscription box stating that if you're interested in what I will be offering to please subscribe. The traffic will be from Google Adwords campaign.

Adwords PPC

asked Jun 29 '13 at 07:21
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Pennf0lio
140 points

3 Answers


4

You can use the rule of 1% for approximations. About 1% of your adwords ads will be clicked on. Of those people seeing your home page, about another 1% will click on your subscription link. In order to derive meaningful statistics, it would be nice to target 100 subscriptions. That makes it 10,000 adword clicks. One adword, depending on keyword demand, is at least $1 - $2 (in the US). So $10,000.

If it's too much for you, start the other way: spend $100/day and tweak your parameters/keywords/landing page until you achieve the metrics you care about.

Of course, your mileage will vary.

answered Jun 29 '13 at 10:39
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Alain Raynaud
10,927 points
  • I see, thanks for that meaningful info. I didn't take that percentage into account, now, i realize my budget may not be enough to test it. Are there other cheaper route you can suggest to test if the project is viable or not? Thanks! – Pennf0lio 6 years ago
  • If you are lucky, maybe you success rate will be closer to 5%. So instead of spending $100/day, you only need to spend $20. That may be more reasonable. Bottom line: spend a few dollars, see what data you can get out of it. Just don't make decisions based on 2 subsribers, it's just too random. – Alain Raynaud 6 years ago
  • Ah, thanks again with the advice, Alain. Will surely note this. – Pennf0lio 6 years ago

2

Remember that this is not a "fire and forget" exercise. As you gather data you should be tuning your :

  • Keywords
  • Ad Copy
  • Landing Page copy

Tuning them as you go may lower your costs and will get yo more information when you're done. You'll know not only what the market is but messages deliver the best results.

And I suspect that for $3,000 to $4,000 you can get a rough idea of whether there is NO market or there is a market but not of certain size.

More than just one data point

There are actually a few data points you'll want to know about your Conversion Funnel: What is the Click Through Rate for people clicking your ad. And what is the Conversion Rate for people subscribing.

  1. Find the Keywords that deliver good returns (lost cost/ click and low cost/conversion)
  2. Estimate (predication) of the Cost/ Click Through
  3. Estimate (prediction) of the Cost/ Conversion
How large a sample size you need will depend on the variance in results. (E.g., if you are comparing 3 things and #1 is giving you 2x the results of 2 or 3, then you'll need less data to have confidence that this is representative of the market as a whole.
You use tool like this confidence calculator to figure that out.

The first might get expensive. Figure testing 20 keywords and needing 100-200 click throughs.So maybe $2,000. But as you figure out which keywords are doing better, you'll get more effective results for that which makes #2 and #3 cheaper.

#2 should be fairly cheap. Your data from #1 should give you this.

#3 Could get very expensive but you'll be gathering data on this while doing #1 and #2 and you will have improved your Click Thru Rate (CTR) by picking better keywords.

Also, when you get #1 and #2 done, you should also be A/B testing your landing page.

answered Jun 30 '13 at 05:09
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Clay Nichols
737 points

0

If you want to test - you do need to spend thousands of dollars. It is only a test. I would recommend you to start with 100-300 USD per the first campaign. It will give you an understanding if there is a demand on your product/service. And how much you need to pay to drive that demand to your site. Moreover, in the first campaign you will learn which keywords to use to drive traffic and how to overcome your competitors in your niche. The first job you will need to do is grow CTR of your ads (find keywords and apply appealing text of the ad) - way to know to clikc price. If the price is high you will need to look for other ways to drive leads (PR, articles, SEO - very hard for young sites). Start with 0,5-1 USD per click and see the results (impressions and clicks). Then when you find "workable" click price do the math as offered in one of the answers.

answered Jul 1 '13 at 16:58
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Alexey Grigoryev
62 points

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