How the Heavy Hitters do Adwords…Part II
January 21st, 2008 by 
Amit
Last time I talked about how to use Adwords Editor to make bulk changes across your Adwords campaign, making the task of managing a large Adwords account virtually effortless.
This time I want to talk about how to properly build & structure an Adwords campaign for long term profitability.
First, let me ask you a question…
Would you rather make $5k/month profit or $1k/month profit from an affiliate offer running on Adwords??
$5k/month right? That’s a no brainer.
Now wait, what if I told you that that the $5k/month profit would require 10/hr a week of logging into your Adwords account, constantly messing with your bids, constantly checking your stats to see if you have positive ROI.
On the other, the $1k/month profit would require ONLY 1/hr a month of your time.
Now which would you choose? Do you see where I’m getting at here?
There are a lot of affiliates with high maintenance $5k/month because they fail to see the HUGE opportunity cost that they’re incurring.
Frankly, I would much rather have 20 of the $1k campaigns that require 20 hours of my time a month (5 hours/week) VERSES 4 $5k/month campaigns that would require a FULL 40/hrs a week to maintain.
In each scenario you’re making the same amount of money but your per hour time value for managing 20 of the $1k/month campaigns is $1,000/hr, while your per hour time value for managing the 4 of the $5k/month campaigns is $125/hr.
What would you rather make an hour?
Actually, have you even calculated what you’re making an hour effectively as an affiliate?
Now imagine this : you have an Adwords account running affiliate offers that are cranking out MASSIVE profit month after month, after month, with no more than a few hour A MONTH of maintenance?
I don’t have to imagine it, it’s a reality for me! 
How is that possible?
Here’s How…
#1 Don’t Put all Your Sales in One ‘Keyword Basket’
A lot of affiliates try to focus all their energy on a small group of closely related converting keywords they find for a particular niche. They constantly monitor these keywords, spending hours a day seeing what their ad position is, what their competitors are doing, what their ROI is, etc, etc.
If you’re doing that (you know who you are) you’ve got a BAD job!
My objective with ppc affilaite marketing has always been to create a online money machine that requires a very MINIMUM amount of monthly maintenance (i.e. no more than a few hours a month).
The best way to create your online money machine is to first bid on a large broad keywords list, if you’re not sure what broad keywords are check out this post, which explains my philosophy of keyword research.
As your campaign runs (with your large broad list of keywords) and you determine which keywords are producing the most sales and traffic, expand these keywords out with a tool such as Google Keywords Tool, this will add depth to your keyword list and most definitely increase your sales since you’re focused on finding long tails of keywords that already convert.
Ultimately you want your affiliate sales coming from a LONG TAIL of broad keywords and not just one small pocket of closely related profitable keywords. This will produce much more stable and long terms profits for you.
What do I mean by a long tail of broad keywords?
When I log into one of my top Adwords campaigns I have literally HUNDREDS of adgroups, each targeting uniquely different keywords, that consistently produce sales and profits.
In other words, my sales are not dependent on the performance of 2 or 3 high traffic keywords, but rather come from a long tail of broad keywords. Almost all of these keywords only produce a small to medium amount of traffic, but trust me, it all ADDS UP!
#2 Don’t Operate on Slim Margins
Often times I hear other affiliates tell me that’s I’m crazy for shotting for high ROI, that I should be concerned with maximizing my profit and not worry about ROI.
If your goal is to bid your keywords to a position where you’re maximizing your profit you’re making a serious mistake.
Think about it, you could have an affiliate campaign generating 10% margins and be making a HUGE amount of money due to the shear volume of traffic you’re buying. But guess what, if you’re operating on thin margins like that your profits can disappear with a small market down turn.
The fact is with a small profit margin you’re going to have to constantly monitor your campaign, and deal with a ton of stress and anxiety.
Instead of maximizing profit, your goal should be to maximizes your per hour time value. That is your profit divided by the number of hours of monthly campaign maintenance required.
For my experience to maximize per hour time value (in most cases) you need to shoot for 100% ROI, that is for every $1 you spend on Adwords you should get $2 back.
That should be your goal. And that means bidding low even if it means sacrificing net profit. So NO it doesn’t matter if you’ll only make $1k/month from your campaign instead of $5k/month.
Come on, do you want to live the super affiliate lifestyle or create another job for yourself?
Not only do I live a lifestyle most people can only dream of, my income continues to explode because I DON’T have to constantly monitor and manage my existing campaigns, which frees up my time to work on bigger & more exciting projects!
Next time I going to talk about how to setup your website, and setup systems to continually improve your website to assure long term profitability and immunity from infamous Google Slaps.
So stay tuned!
Posted in Google™ AdWords, Super Affiliate Mindset | 
I’m starting to see the light…..Thx
Amit, I know it’s unlikely, but is there any chance you can share just ONE of your niches? Maybe my problem is that I’m going after stuff that is too competitive. My experience so far has been that I *have* to constantly monitor my adwords account like a hawk because the stuff I’m doing is so competitive that even the long tail keywords are not “low hanging fruit”.
@John: I know this is not what you want to hear, but anyway: No Niche is to competitive.
You just have to think about your keywords which are still targeted but less searched, then just add them up. That is what Amit is doing and it seems he is doing it pretty well
@Amit: I have a nice broad campaign, but I got some problems with QS. My QS was great first, then after 1-2 weeks it went to OK and the bids went up.
What would you suggest to improve QS? Do I have to update the site regulary? Build links? Would be nice if you could help me out.
@steffen
build links, update the site, blog, hire a writer to blog, target your adgroups more .. read google thoughts on that
http://www.quityourdayjob.com/blog/2007/08/30/google-quality-score-guide/
Amit,
I have no problem building out massive keyword list, where I get dinged is QS and relevancy the more obscure the adwords are. are you building out pages for each of the keywords?
Excellent post Amit, I think your philosophy of not creating another job for yourself is right on the money! To be self employed is nice but if it comes at a price of working like a dog, then what’s the point? The closer I get to starting my first real Adwords campaign, the more relevant your posts become. Keep up the great work of providing advice that very few blogs in this industry provide.
Steffen - All I meant was it seems my niches are too competitive to use the “hands off” approach Amit seems to be suggesting. If you are in a competitive niche you have to watch and manage even the long tail keywords, and you also have to deal with QS as others have said. Amit says he only spends a few hours a month or whatever managing a campaign … I just don’t see that being possible in a competitive niche.
Wonderful post Amit. I’m starting to reflect and think about where i am heading in my online business.
100% ROI sounds quite far to me. But i know its possible because i know you have done it. Will make that one of my goals in my online business.
Thanks for the inspiration Amit. You have been really generous in your tips and advise.
Regards,
Ivan Ong
http://ivan-ong.com
A Dream To Make A Full Time Income Online
Amit:
Awesome post. I especially appreciate your willingness to share…
I have to admit that I’m having a hard time conceptualizing your take on profit maximization (my background is economics, so you can imagine my surprise at the latter part of your post). Let me see if I got this right:
Your strategy is based upon high quality/high return campaigns (by “high quality”, I mean that you have put a great of effort into researching the target market on the “front end”). You carefully monitor your metrics and literally split-test your way to a high 200% ROI.
By contrast, your competition’s strategy is based upon high quantity/low return campaigns. This means that they emphasize “churning out” as many campaigns (and as many keywords in those many campaigns)that they can and continue to operate those campaigns so long as they’re “north of” the break-even point…
Basically, you go deep, they go wide. Your thinking is that you can insulate yourself from market variability by deeply entrenching yourself in your target market. They’re thinking is that they can insulate themselves from market variability by diversifying themselves across as many niches as possible.
The problem is that when people start talking about “profit max”, they are really talking about maxing “total revenue” when the “profit max” problem is really about setting the netprofit curve’s derivative to zero…
which in the real world is total BS because this stuff is not linear (GEEK for: real life does not organize itself along nice straight lines)…
The bottom line is that you see “Amit’s time” as your company’s product whereas your competition’s product is keeping their campaigns in the black…
sound right?
Thanks for sharing your experience. I would like to know how exactly does this campaign maintenance looks like? Can you please go into more detail?
Leo, the way I understand it, I think you have it backwards.
Many people focus on trying to get as high a position as possible while still being profitable so as to maximize the traffic for a particular keyword. The problem is that while positions 1-3 get a lot more traffic, they also have a MUCH lower conversion rate. So in order to stay profitable you have to watch and optimize your biding, landing pages, ads, etc like a hawk to keep your margins from going negative.
Amit’s advice is to stay out of the top positions - try to have your ads show up in positions 4-8. You won’t get nearly the traffic for each keyword, but conversions (and ROI) will be higher and you can spend less time tweaking your campaign to keep it profitable, and have more time to set up new campaigns in different niches.
Hi Amit,
You mentioned running affiliate websites. I have a feed driven website with thousands of SID’s to track. the problem is that unlike direct linking which allows you to easily find out what keyword gave you the sale, when you have a website the keywords bring the visitors but there is no way to know which keywords are the converting ones as the sid only tells you which products were sold. if the product is a blue widget, for all i know the keyword could be “blue widget”, bluewidget, widget blue, cheap widget etc’. Do you know of any software or tracking system that allows you to keep the tracking between the keyword and the end product?
Great Post Amit I think these 2 point can clear many doubts of newbies to this field. thanks and keep posting
It’s funny, everything so far you’ve mentioned in your posts that “we could be doing wrong,” I am doing wrong
Awesome blog, informative posts, actually seems you know what’s up. Love it!
I just started PPC, and losing money, haha, great learning experience though, I feel good things coming