Is Google Ads Worth It For Small-Margin Services?

Today’s question comes from Michael.

I’ll read the question, but I think he means something a little different than what he’s asking. So let me just read what he said first, and then I think I need to edit it a little bit. 

Michael says:

“Great show. But smaller margins, no one talks about. For example, cleaning services. Keyword Planner forecast is telling me I can achieve 80 clicks for £100 for position 1.3. The average profit on jobs is £60 to £70, would ads still be worth it?”

So I assume he means that the forecast is saying he can achieve 80 conversions at £100 per conversion. Cost per click on cleaning services would be higher than £1 or something. So you wouldn’t be able to get 80 clicks for £100. 

It also wouldn’t be £100 per click, that would definitely be too high. So I think he means that what Google’s forecast is predicting is that he’d be able to get conversions for about £100, but his average profit on jobs is £60 to £70. So that’s how I’ll go ahead and answer this. 

First off, Google’s forecasting tool is great. It can be helpful, but it’s certainly not accurate. We can’t really know how much your cost per conversion is going to be until you start running your campaign. 

There are tons of factors that Google can’t even take into consideration, such as:

• Your landing page
• Who’s answering your phone?
• Are they able to book jobs for you? 
• Are they able to close those leads or customers? 

Google’s forecasting tool obviously has no idea about any of that. They’re just kind of going off of different averages. So it could very well be that, even though Google is predicting you’re going to get leads for $100 each, maybe you’re going to get them for $50 each, or $30 each, or $200 each. You have to just take Google’s prediction here with a grain of salt, use it as a guide, but don’t put too much trust in it. Don’t rely on it as gospel. 

What you really need to do is start running your ads, and then actually see how your numbers work out.

And if your cost per conversion is higher than you’d like, see about doing things that can bring that number down, right? It’s not going to always be the same. There are things that you’ll be able to improve to decrease your cost per conversion. So that’s the first thing. 

But let’s assume that Google’s forecast is correct. And let’s assume that you are going to be getting conversions for £100 each. And then like (Michael) said, your average profit on jobs is £60 to £70.

Well, then we need to know: what is the actual lifetime average profit of a customer? As a cleaning service, I assume they’ll use you more than once. At least that should be the goal. I don’t know if you’re setting up weekly cleanings, monthly cleanings, or whatever. But of course, if that’s the goal, and if let’s say just 10% of customers are setting up twice a month cleanings with you, and you’re profiting £60 to £70 each time you do that cleaning. If you do the math there,  that’s over £1000 profit per customer per year. 

So you need to take that into account. It’s not just about the profit on the first job. If you’re getting repeat customers, you need to take that into account.

You might actually lose money on the first couple of jobs.

But if that turns into long term business for you, that could be huge. Not only are you going to get business from those people, but you might also get referrals from those people. 

So I’d never have the fear of losing money on the first transaction. If it’s something that is going to prompt multiple transactions over that customer’s lifetime, I think it’s actually worth it to go in the hole right away. Because that means you can get more customers.

You can bid more, you can get higher on the page, you can get a larger percentage of traffic, and you can get more customers. And if you’re willing to pay more per customer, you can get more customers on Google Ads. 

So there’s a lot of math here, you’re going to have to work out on your end. But really, I wouldn’t be afraid about paying more for a customer, then you would actually profit from them on the first transaction, focus more on lifetime value. And I think you’ll have a clear understanding of how much you can really afford per conversion once you’re focusing on that. 

Hopefully that answers your question.

Again, I don’t think you were asking about clicks. I think you were asking about conversions. So hopefully I answered the right question for you. If not, send an email and I’ll try to answer that again, Michael, but thanks for your question.

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