February 10, 2012

A $31,000 Lesson on Paid Search

September 9, 2009 By Joshua Kennon Leave a Comment

I’m sitting in a Brooks Brothers bathrobe in a seventh floor suite in St. Louis working on the company MacBook.

For the past few weeks, I’ve been toying with paid search at our e-commerce businesses. We’ve always had great success with organic search and, in many cases, dominate our keywords leading to terrific sales at a very low cost. However, with paid search, our staff wasn’t as familiar with the mechanics and the best way to get a high conversion rate.

We approved a budget to test out the process and learn in a trial-by-error format. It took us some time, and in the beginning, we were spending a lot of cash without seeing any conversions, but toward the end of the period, it started to make sense to everyone. Our overall conversion rate for the trial was terrible, but when broken down on a time-line, it was steadily better, allowing us to start making quite a bit of money toward to the end. The result: We are now going to either launch a full paid search campaign or hire a paid search specialist to run our campaign.

Anyway, here are the results of our efforts … the good news is, even though we spent just shy of $31,000, our profit margins are sufficiently high that we were able to break-even on the expense despite the low conversion rate. In essence, when the taxes are calculated this year, the cost of the advertising will be offset by the profit on the sales it generated so there wasn’t a lot of downside.

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Filed Under: My Businesses Tagged With: Brooks Brothers, paid search, profit margins, taxes

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