Are prices quoted on Google Keyword tool realistic?

[hotstuff]

Hi,

I'm new to Adwords and planning my first campaign for a startup directory, based in London UK, generating leads for local tradesmen. I'm going to be buying keywords like 'plumbers in chelsea' 'electrician in hackney' and that sort of thing.

I'd love it if someone could help me approximate how much I'll be paying for clicks.

When I look at Google Keywords Tool at 'plumbers in Chelsea' the estimated avg CPC is £0.04. If I assume that I'll convert 5% of those clickers into customers it'll cost me £0.80 per customer. That's such a low cost it makes me very suspicious. Am I either overestimating my likely conversion rate hugely or are these costs quoted on the keyword tool just nowhere near as high as they are in reality?

This calculation is central to the viability of my business model so any pointers would be greatly appreciated.

Thanks,
Steve

[rebecca-may]

The keyword tool has not got enough data, hence the price of £0.04 which is the default... try plumbers west london or similar for budgeting purposes, looks like £3.50-£4.50 per click.. That is not necessarely the actual CPC but you will not know until you start bidding. Set up a test campaign with a limited/small budget against the terms required and you'll soon find out...

[deepsand]

The CPC estimates provided by any PPC platform are highly dependent on factors which cannot be adequately accounted for by such applications. Such factors include, but are not necessarily limited to :


The match types used by yourself and all other bidders;
The user settings of both yourself and all other bidders with regards to geographic scope, time of day to display, budgets, and many other too numerous to mention; and
Search volume.


The only way to find out what you'll really be paying is to experiment.

To avoid being hit with an unacceptable spend, you should begin by :


Using exact phrase match only, thus allowing you to set individual bids accordingly;
Use search match only; i.e., do not use content match;
Begin with low bids, and slowly ramp up; and,
Begin with a daily budget that is affordable to lose.


Be sure to do your own searches for the various query strings bid on to see how your ads rank; and, keep a very close eye on the statistics re. the performance of each keyword phrase until you've a handle for how all are behaving.

As for conversion rate, while I've no experience re. plumbing, I can say that an average conversion rate across all direct marketing is more on the order of 1%, so that your estimate of 5% might be on the high side.

In this regard, be sure to install Google's Conversion Code so that conversion will be included in your AdWords stats. And, if you are, or will be, using Goggle Analytics (GA), link AdWords with GA.

[hotstuff]

Thanks Deepsand that was really useful!

[deepsand]

My pleasure.

I've been doing PPC for at least 7 years, starting with Overture when it was independent, and am still trying to cope with Google's poor documentation and communications - to the point of contradiction at times - re. AdWords.

So, while I'll make no claims to being an "expert" in such regards, feel free to ask further questions as the need may arise, and I'll do my best to help.