Google/Facebook Advertising is so frusterating

[HPstache]

It's hard to figure out someone can actually make money advertising on Google or Facebook.  It seems like the going rate for $/click is something like $0.50 per click through to your website at best.  With a conversion rate of 5% of those that click through to your website (which would be damn good) that's $10 in advertising to make one sale.  More often than not it's going to be $0.75 per click and a 2% conversion rate.  That's $38 in advertising to make a sale.  What am I missing here?  How can this possibly pencil out for anyone?!

[Smokystache]

Couple things:
- There are different click rates and conversion rates for different products/services
- The biggest variable missing from your equation is the net revenue per sale. For example, if someone is selling an online course and makes a net revenue of $200 (lets' assume the price of the course is $279, minus $79 in costs to the seller (advertising ($38 or more), hosting, website, payment processing, etc.), then it's a great deal. Spend $38, make $200. Spend $38,  make $200.

But you're right, you can't spend $38 to sell (for example) a $19 product/service. That math don't work. 

[HPstache]

Couple things:
- There are different click rates and conversion rates for different products/services
- The biggest variable missing from your equation is the net revenue per sale. For example, if someone is selling an online course and makes a net revenue of $200 (lets' assume the price of the course is $279, minus $79 in costs to the seller (advertising ($38 or more), hosting, website, payment processing, etc.), then it's a great deal. Spend $38, make $200. Spend $38,  make $200.

But you're right, you can't spend $38 to sell (for example) a $19 product/service. That math don't work.

Oh yeah, I totally agree with you, it makes a whole lot more sense when you're selling something that has decent profit margins built into it!  I am working with making $20 per sale, so yeah, I am starting to think this is the wrong method for me to reach my audience.  Fortunately, I am just burning though a "spend $25, get $100" bonus from Google, but I'm not sure if I am going to continue down the adwords path after that.

[OkieM]

Are you using keyword planner and all that? It is harder with a $20 product but there could still be niche keywords that are less expensive. Generally you have to find the lower competition keywords then build a landing page for the specific ad and sells your product exactly to what that searcher is looking for.

This raises your conversion rate and lowers your CPC.

But at the end of the day Google is a behemoth because they use auctions that sell ads and extract most of the value your product generates. Other channels may be better options.

[damyst]

This might be interesting for you:

http://onstartups.com/tabid/3339/bid/43774/The-5-Minute-Guide-To-Cheap-Startup-Advertising.aspx

I've been devouring Rob Walling's blog posts lately, and learning a ton.

[HPstache]

This might be interesting for you:

http://onstartups.com/tabid/3339/bid/43774/The-5-Minute-Guide-To-Cheap-Startup-Advertising.aspx

I've been devouring Rob Walling's blog posts lately, and learning a ton.

Fantastic article,  thanks for posting it

[zazpowered]

I agree. You have to really optimize and know what you're doing if you want to make a profit. It's very competitive. Try other channels like Reddit and other smaller platforms.