Can solo and small firms afford to pay to play when it comes to search engine marketing? We’ve seen a significant amount of press recently regarding the high cost associated with running SEM search campaigns promoting legal services on Google (where ‘attorney’ and ‘lawyer’ are the fourth and sixth most expensive keywords, respectively) and Bing (where they ranked first and second.) While the dollar amounts in the links above are somewhat sensationalized, the costs associated with bidding for a single click around legal terms are still often in excess of $10. What’s spoken about less frequently is why.
The Google and Bing based auction systems are based on supply and demand. The truth of the matter is the reason the costs associated are so high is because many legal professionals can afford to pay that much (and are inflating the costs for others as a result.) To illustrate this point, look at an industry like commercial electronics, where the cost per click (CPC) is relatively low—on average, in the $1 range. This is because advertisers take into account the margin on any given product before determining their CPC bid.
Let’s look at an example. Say you’re selling Bose headphones. The headphones cost $100 and you know that the margin on this item is 20%. Paying anything more than $20 to sell a pair of headphones means that the return on ad spend (ROAS) is negative because the advertising costs now exceed the 25% markup. Campaigns are therefore priced with this margin factored in—using simple math.
A reasonable conversion rate based on industry standards is 3% so for every 100 clicks we will sell three sets of headphones. If you reverse-engineer this and create a formula for your ad spend, you should pay no more than $20 for every 33 clicks (or $0.60 per click.) Although you’ll find a spread of actual bids in the pricing of our keywords we want the average to be in the $0.60 range, otherwise the campaigns will not even break even.
In the legal realm, where margins are much higher and a single new client can result in thousands of dollars of profit for the firm, this ceiling does not exist. Using the same formula, and assuming a 3% conversion rate, $10 per click results in $330 cost per client, a reasonable amount taking into account the potential upside of landing a $20,000 (or even a $2,000) matter. So next time you worry about the high cost of running Google ad campaigns for your law firm, be thankful that you are not in the insurance industry where a single click will cost you $50.
Of course, the greatest way for you to increase your profit margins on your services is to reduce your client acquisition costs. With that in mind, let’s look at four ways you can reduce your Google ad spend:
1. Increase your account quality score
Quality score is the single most important factor in determining the cost of a single click. The components of Quality Score (expected clickthrough rate, ad relevance, and landing page experience) are determined every time your keyword matches a customer’s search.
Expected click through rate
This is based off of historic ad and keyword performance as well as the bid for the keyword. For example, if Google is saying that your first page bid for a given keyword is $5 and you bid $0.20 your expected click through rate will be very low as your ad will not be showing on the first page.
Landing page experience
High quality content on your landing pages that relate to the keywords that you are bidding on. Simply put, don’t try running a campaign where you promote personal injury defense and then send your traffic to a landing page where you talk about your work in IP law (or worse, your law firm’s general home page.) Be specific and Google will reward you.
You might not be Don Draper, but you can still write compelling ad copy! If you preview your ad and compare it to the ads that your competition is running, does it stand out?
4 tips to reduce your Google Ad spend
The advertisers above are bidding on the relevant and expensive keyword “get a lawyer”:
- They repeat the name of the firm (Saiontz & Kirk) in the first line of the body of the ad copy. This is not best practice because there is only 70 characters in the body of any given Google ad and this should not be squandered by repeating text already covered in the headline.
- They are using call out extensions (something that none of the other ads have—so this should be a win). However the ad now reads strangely Get the Expert Legal Help . You Need . Call us 24/7.
- The first of the site links: No fees unless we win. This would be helpful in the body copy of the ad as this is a huge selling point.
- The body of this ad: “Save Time – Describe Your Case Now!” is a terrible call to action. Someone looking for a lawyer is not looking to save time, they want the best lawyer to defend them, not the fastest one.
By following these search marketing tips for lawyers, which allows attorneys managing their own SEM will be able to optimize their ads, convert more clients, and reduce ad spend—which is a win for everyone.
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