Test It Out

Boy, things have changed since I began my main web business in 1998. Then, I had no way of trying to figure out whether my idea for a website on memory foam made any sense, or the potential market for the site. I just took a flier - I had the time, so I did a website and hoped that maybe I would get enough sales to pay for the hosting, etc.

Fast forward to the present, and small businesses now have an amazing tool in Google AdWords for determining the viability of their web business. For just a few hundred dollars, typically, you can get real time marketing information on the size of your market and the amount of traffic you might expect.

It isn't an exact science by any means - my stab at this when I was starting out with my wife's baby carrier site seems to have underestimated the amount she would sell (I figured she would be lucky to sell 1 every day, and for years she averaged 2 - 3 a day). But it is still just about the most amazing test marketing tool I've ever come across and allows me to get a good handle on the viability of a project before spending a huge amount of time or money on it.

Get a good list of your site's important keywords

Before I get to setting up an AdWords trial, though, I usually spend some time getting a good list together of the important keywords for a prospective web business. The keywords are the words your potential customers will use when searching for your types of product or services on the Internet. It is very important to get the best keyword list possible so that you will be able to target your potential customers effectively on pay per click advertising like AdWords. And knowing your important keywords in very important when you are constructing your web pages so they will hopefully rank well on a search result.

Back in the day, this meant just sitting down and getting creative - and it is still a good place to start. A lot of coming up with keywords is just putting yourself in your customers place and thinking what they might type in if they were searching for your type of products or services.

Many times the keywords are real obvious - for my friend's futon cover site it isn't any surprise that his big keywords are futon cover and futon covers. But sometimes there are sideways keywords that are big as well.

These sideways searches include product names that people may search for (if you are selling air beds, for example, one big keyword would be "Select Comfort" since they advertise so much) or types of problems or issues that might lead people to your product (for my Tai Chi video client, it has made sense to advertise under the word "stress" since Tai Chi can help with stress relief).

Now, though, there is an abundance of tools that allow you to determine that actual keywords used by people in web searches. This has been a real boon in getting keyword lists together, for these tools let you know not only the types of keyword searches being used but their relative importance (the amounts of traffic for these different keyword searches). So what I tend to do is first come up with some general keywords for my niche area that I think make sense, and then use these tools to refine my keyword list and make sure I'm not missing any important keywords.

The two keyword tools I use are Wordtracker and the Adwords Keyword Tool. Wordtracker offers a free version to start with, and a paid version that gives a lot more information and detail.

While I used to subscribe to Wordtracker, I've gone to just using the free Adwords Keyword tool. Of course, so do most of my competitors, so it isn't a bad idea to try out Wordtracker or other keyword tools to see if they can add some depth and variety to the keywords lists you are putting together.

These tools allow you to see how much traffic any keyword has gotten over the last month or two. In addition, Wordtracker has a thesaurus and synonym feature that helps you find related keywords easily as well. I've had good luck using these tools to build on my basic keywords and come up with a fairly comprehensive list of keywords I should concentrate on in my Google AdWords test.

One note on using these tools - specifically in using Wordtracker. As part of the free trial, you can take the keyword list you come up with and have Wordtracker prepare a report that supposedly gives you an idea of the business value of these keywords. Wordtracker calls this business value a keywords' KEI, and comes up with this number by factoring in the amount of traffic a keyword gets versus the amount of websites that currently cover this particular keyword.

The idea is that higher the value of the KEI, the greater the potential business value of the keyword. A high KEI basically just means that a particular keyword has a fair amount of traffic and very little competition. The value claimed here is that because of the relatively small amount of competition, you have a better shot at getting good placement in the search engine results for this keyword.

I'm only mentioning this KEI rating because I had a client go through this process, and she wasn't sure what to make of the KEI numbers. My opinion is that the KEI numbers are basically meaningless. Just because there is a lot of competition on the net for a product doesn't mean that you can't do well in that particular product area. That is all a low KEI number means - that there is a fair amount of competition.

But competition in of itself really doesn't put me off an web business idea. I've done well with a great deal of competition, and so have many of my clients. So don't let a low KEI or a fair amount of competition put you off. In fact I would suggest ignoring this step and only using Wordtracker to give you a feel for the important keywords for your niche area. The crucial thing in this step is purely to get the best keyword list you possibly can. Once we have this list, then we can move into our AdWords test to see for ourselves what the market potential of these keywords may be.

A last note on using Wordtracker and the Adwords Keyword tool. I've found that the amount of searches that these tools report on keywords can vary dramatically from each other and also from the actual amount of searches I see when doing a real-time AdWords campaign.

So take these traffic estimates with grains of salt - they are just to give you a feel for the traffic, but aren't really all that reliable. And don't be put off if these results show low numbers of searches for your important keywords.

I've personally seen that these numbers can be very misleading - I have several businesses I've been involved with do very well with keywords that didn't show very much traffic when tested with these tools. Again, the point to using these tools is to assemble a good keyword list - our AdWords campaign will hopefully gives us a good feel for the actual traffic we might expect for our business.

AdWords is an incredible tool for testing a site's viability

Once you have assembled a good list of your important keywords for you prospective website, now comes the fun part. You can actually use Google's AdWords to do a real time marketing test to see what amount of traffic you might expect for your future website.

If you aren't familiar with Google AdWords, it is Google's ad program that serves up the advertisements you see next to the search results on Google. And these ads also appear on other search engine results pages as well (AOL for example).

I can't tell you how much I love AdWords - they allow you to take some control over your web business and proactively drive traffic to your site (rather than just passively waiting and hoping that you somehow, someday come up on the search engines). I have clients whose entire business and all their traffic comes basically from AdWords (Bing Ads is a similar program, and I don't focus on it as much because it just doesn't offer nearly the traffic of Adwords).

Note: we will discuss running an actual AdWords campaign in some detail in the Making the Site Work - Traffic and Sales section. But if you want to get started on learning about Adwords, the place I started and recommend is Perry Marshall's Definitive Guide To Adwords.

In my experience, it takes 2 - 3 months of really working on Adwords to get it to work -- that is, to make more than $1 in profit for every $1 spent. And to get into positive profitability, I often have to work all parts of the Adwords equation: writing better ads and landing pages, working on the page's conversion, and also getting a better Adwords quality score (which often means getting higher click through on the Ads along with making sure the keywords, ads, and landing pages are all in synch).

Getting a high quality score takes some time, but it is a key to making Adwords work since those keywords getting a high quality score often pay much less per click on their ads.

Since this all takes time to sort out, I find it takes often these few months to really find out what my real price per click will be, what kind of conversion I may get on different keywords, etc.

Because of all these factors, you won't get very good information when you first start running your new Adwords campaign. If nothing else, Adwords has a preference to its current advertisers and you pay a premium at first to compete in new keywords till your account has a history. Which is why you may expect to pay a fair amount more than your competitors when you start a new campaign.

Below, you will find information I wrote when I put this site up originally in 2004 about using Adwords to test a market. The reason I'm including it still is that I still find it an intriguing use of Adwords. But given how off Adwords campaigns are at the beginning compared to their cost and conversion once you optimize them for a few months, I think you need to understand that this sort of testing won't necessarily give you much insight into how Adwords might work for you when you end up really working a Campaign.

But if you are starting in a new market, it still might be something you want to try just to get a feel for the competition

I have to be honest here -- I really never use this testing method. Why? Because I don't feel comfortable going into new markets that I know nothing about. The couple of times I tried to help people with this, it just failed. And not necessarily because of Adwords, but because the people didn't know that market since they hadn't every participated in it. They messed up on the margins, on what people wanted to buy, etc. since they had no experience either selling in this market and so didn't understand what people wanted, what sold, etc.

What I learned is that I only feel comfortable playing in a market that I, or the person I'm working with, has actively worked in for a fair period of time

And then I don't test it using Adwords -- once I decide to go forward, I just jump in with both feet and start competing on Adwords. Knowing full well that it will probably take me months to optimize the different parts so that I'm finally not only breaking even but making money.

So I caution you that if you are trying to enter a market you have no experience in, it makes things very hard and there are all sorts of land mines. The two times I did this, I was able to get plenty of traffic from Adwords, but other competitive issues killed the businesses (one was because margins were so thin due to price competition (which I would have known if I had been in the market), and the other customers were just not willing to pay the price for a memory foam dog bed (which, again, I would have known if I had been selling dog beds)

If you, however, are bound and determined to enter a new market that you have no experience in, then you can use Adwords as a way to get some information on the market. Below you will find my description of how to do this. But you should be aware that the results may differ greatly from what you would find if you ended up actively competing in the market (both in terms of click through, cost, and conversion) since these all vary dramatically depending on how optimized your campaign is. And if you do end up doing this, you need to be aware that Adwords will only allow a URL to be on the page once for its ads. So if you do end up trying a test, you need to run it to a page that would not already be showing in the ad results (and if it is seen as a low quality landing page, this will also affect the price you pay since it will be higher).

But here I want to suggest a different use for AdWords - not for driving traffic to an existent website, but for testing how much traffic you might expect to get for a prospective web business. Anyone can quickly create an AdWords account, and while it gets a bit complicated as to how it all works, the basics are that you need to determine the keywords you want to bid on, how much you are willing to bid, and come up with an ad that will show when your keyword bid is sufficient to get your ad shown.

But the important point is that there is no requirement that you have to have an existent website to run an ad. All that AdWords requires is that you list some web page that people will go to if they click on your ad. But the web page doesn't have to be your web page. It can be that of one of your competitors or any other page with relevant information to this keyword.

So you can run a real time test for your important keywords without having to actually have a website. I can't tell you how revolutionary this is - before spending thousands of dollars on a web project you can get a very good feel of the market by running this kind of real-time AdWords test. And you can simply set out a budget you want to spend on the test, say a few hundred dollars, and just shut down the ad once you have enough information to see if the site idea is viable.

And if your product is one offered by an affiliate site like Click Bank, you can start out by selling your competitors products first -- just to get a feel for the traffic in this niche and how it converts. And if you can make it work, then you can set up your own site to sell your product.

But how would the test help you see if the site idea is viable? A well constructed AdWords test can give a real-time forecast of your traffic, and once you know this you can estimate your sales easily. Just decide on what % of sales conversion you think you will get from the traffic that you are getting from AdWords.

A conservative estimate is 1% of those clicking through to your site will buy, but I usually get 2 - 4%, depending on the site and how targeted the keyword is. Once you have an idea of your expected sales, you can decide if the time and money involved with creating the site makes sense. All for a few hundred dollars - now you know why I love this idea so much.

To make it as reliable a test as possible, you need to play it straight. What I mean is that you have to spend the time to come up with the best keyword list you can, write good ad copy, and bid competitively.

This is important for a few reasons. If your keyword list isn't as good as possible, you may end up seriously underestimating the amount of traffic that might be interested in your site. Similarly, it is important to write as good an ad as possible so you can get an accurate feel for what percentage of people who see your ad will actually click through.

And if you don't bid competitively, you won't get as good an idea of your possible traffic. This is because those ads that appear in the top 3 - 4 on Google also get picked up on AOL, etc - and this extra appearance on other search engine results other than Google can ad up to a good amount of traffic.

As for the actual logistics of setting up an AdWords campaign, you may want to read over Step 1 of the Designing your Website section. In that section I walk you through the steps I went through in setting up the AdWords test for the My Favorite Baby Carrier site. As you will read, I learned a fair amount on this test and made some mistakes that underestimated the traffic we could expect that I hope you will learn from. You may also want to spend some time reading Adword's general information on the AdWords program, which includes their editorial guidelines for all ad copy. It will take a bit of time to read all this over, but in a couple of hours you should be able to get comfortable with how the AdWords works and how to go about creating a trial. If you do need help getting this test set up though, we will be happy to help you set up your AdWords test. See my Service section of the site for the types of consulting I offer.

What to expect from the test

If you do a good test, you should be able to get a fairly accurate feel for the potential traffic you could expect for your site. Take this base amount of traffic, and increase it by 50% or so if you feel you will also be able to advertise fairly effectively on Adwords. This is the baseline traffic estimate for your site, based solely on your advertising efforts. Since you can't count on good search engine results placement, I think you should treat any subsequent free traffic you might receive from search engines as gravy on top of this paid traffic. To get your expected sales from this traffic, multiply it by the expected conversion rate (use 1% as a basic estimate, although I tend to get at least 2%).

The test, though, won't necessarily give you a good idea of the cost of driving this traffic to your site. I've seen that it often takes me a month or so to get my AdWords campaign sorted out, and the amount I pay for a click can vary wildly as play with ad copy, the amount I'm bidding, the click through rate I'm able to get, and how well I'm able to convert this paid traffic once it gets to my site. I've only been able to get an accurate read on the true advertising expense I can expect after I've got a site fully functioning and spend at least a month working on these different variable.

So I would suggest just using this test as a gauge purely of the traffic you could expect - and thereby sales.

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