My $17.77 gout ebook was unable to compete against two types of competitors:
1. Big Pharmaceutical Companies who were willing to spend any amount of money on branding campaigns
For example, two advertisers are gout.com and thegoutmed.com. Both are owned by Takeda Pharmaceuticals, and are designed to raise awareness and demand for their FDA-approved drug, Uloric.
I’d be willing to bet that the paid search manager for Takeda doesn’t pay for Google clicks with their personal credit card. I’m also pretty sure that if Takeda’s ads don’t appear for any of the top gout keywords, that paid search manager has some explaining to do. Those are two powerful reasons for Takeda to engage in a crazy bidding war over those keywords.
2. Supplement providers with high margin pills and continuity programs
These are the real competitors, because they are able to make more money than I can from each Google click.
Every single product is more expensive than my ebook. And the margins for herbal supplements are huge; almost as fat as digital downloads.
But – and here’s the big difference – a MicroNutra customer is usually a repeat customer. They may go on a continuity program that bills them in the range of $80/month just for herbs that address gout.
And people with gout often suffer from other lifestyle diseases as well – high blood pressure, obesity, diabetes, ED, recurrent yeast infections, and so on. So MicroNutra can cross-sell their other remedies like there’s no tomorrow.
There’s simply no way that a $17.77 ebook can compete with that. I simply couldn’t afford to stay in the click auction when the most I could profitably pay was $0.14/click.
The most important AdWords number
Had I wanted to stay in the gout game, I might have tried to improve my ad clickthrough rate. I might have looked for new keywords. I might have tried sites on the Display Network (formerly known as the Content Network). And none of it would have made a bit of difference.
The only AdWords number that could help me compete with Takeda and MicroNutra is Lifetime Value of a Visitor (LVV).
LVV: Business Superhero
The more a visitor to my website is worth to me, the more I can spend on AdWords to get them to my site.
The more I can spend, the more traffic I can get.
The more traffic I can get, the faster I can split test that traffic.
The more I split test, the higher my profits.
The higher my profits, the more I can spend on AdWords.
And the virtuous cycle repeats.
How to Grow Your LVV
There are three ways to increase LVV:
- Increase profit per sale
- Increase the number of sales (conversion rate)
- Increase the number of recurring transactions
As you can see, none of these strategies can be implemented within the AdWords dashboard. Instead, they rely on your ability to deeply understand and communicate with your ideal customer.
I’ve developed a tool that you can use to assess your own online business, and find out the best strategy for winning in your market. You can find it at http://askhowie.com/tools/searches.htm.
Here’s a short video showing how to use the tool: