Shocking
Intellectual Property in an AdWords
Account
If
you set up your AdWords campaign well you will know that
certain keywords deliver highly profitable traffic to your
website. You will also know that most keywords do not. But
finding out which keywords are good can take time and the
process of uncovering the profitable niches requires analysis
and thought, testing and measurement.
I
run one campaign that relies on just three keywords to deliver
a very steady flow of cash into my bank account. I advertise a
particular service using these keywords and get paid a
commission by the service provider whenever I deliver a new
customer to them. I don't get involved in lead capture or
anything like that for this campaign. I just drive targeted
traffic to the service provider's website via my affiliate
link.
The same three keywords have been highly
profitable for over 18 months and generally generate in
commissions 3 to 4 times what I spend on
clicks.
So
would I be prepared to disclose these keywords to you? Only for
a price.
These keywords are responsible for producing
an automatic income stream for me and will probably continue to
do so for years to come. They are obscure. They took a lot of
research and ingenuity to find and I am now benefiting
essentially from the intellectual property I have tied up in my
AdWords account.
Many companies have a huge intellectual
property investment in their Pay Per Click campaigns without
realizing it. So I thought it would be interesting to try and
put some value on this just so that advertisers became more
aware of the true value that a well-run campaign
delivers.
I'll keep the mathematics very simple and so
inevitably there is some inaccuracy in my calculations. The
point is to demonstrate the principle rather than perform an
accurate assessment, something which would require actuarial
skills.
So
here goes.
Suppose I spend $500 a month on a particular
campaign and that it produces $1500 a month in income. My
profit, which is automatically generated, is then $1000 a month
or $12000 a year.
If
this income stream was going to carry on for ever (which it
won't) then we could give it a capital value of the annual
income divided by the current interest rates. If interest rates
are 5%, then the capital value is $12000 divided by 0.05 =
$240000. This is the amount of capital you would need to place
on deposit with a safe institution to receive the equivalent
annual income.
Realistically I know that my income from this
campaign is much less secure than money in the bank but that
doesn't stop me making an estimate of its capital
value.
Suppose I give my campaign a life-expectancy
of just 2 more years. That is 24 months of $1000 a month profit
or $24000. (I am not bothering to calculate the time value of
money here which takes into account the fact that money now is
worth more than money later. It is the magnitude I am after
rather than precision.)
If
these figures applied to my campaign, each keyword would be
worth an average of $8000 to me. If the campaign had a
life-expectancy of 3 years instead of 2, the value would be
$12000 per keyword instead.
These are shockingly large
figures.
So
the questions you should take away from this article
are:
-
Have
you ever stopped to work out what some of your
keywords are really worth to you?
-
Have
you ever stopped to think carefully who you are
disclosing your campaign details to when you ask
someone else to manage your AdWords
account?
Further reading
Extreme AdWords bid
prices
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