Giving your market a stress test to determine future health

If Oprah ever reads my hilarious yet touching and wise essay, Manifesto of an Average Ultimate Frisbee Player, surely she will invite me to be a guest on her show. For several weeks after this, many people will search online for Oprah Frisbee guy and a few variations. But would it be wise to build a business based on that keyword family?

Probably not, since my fame (and it is coming, I tell you) is likely to be fleeting. If your business success depends on shortlived trends or fads, you’ll never turn your AdWords campaigns into business assets. They won’t be reliable. Similarly, if your market is trending downward (Ken McCarthy discovered that very few people in the 21st century are searching for buggy whips anymore, even though they had been all the rage 100 years earlier), you can’t rely on past data.

Luckily, Google publicly shares a tool that allows you to view trends in your market to help you decide whether it’s stable, growing, or declining. Visit Google Trends (www.google.com/trends) and search for the major keywords in your market. Is the traffic stable over the past few years? Trending upward? Good. If it’s trending downward, beware. You’ll see seasonal cycles in the Google Trends graphs. Don’t worry about dips that occur regularly each year. Be worried if the overall graph trends downward.

Aside from being fascinating and addictive (at least for people who subscribe to American Demographics magazine), Google Trends gives you a longer-term picture of your market. Why, for example, did searches on back pain spike in July of 2005? I don’t know, but I’ll but some chiropractic market analyst has an answer. The cities, regions, and language tabs provide more useful information. For instance, the regions tab reveals that 9 of the 10 countries ranked for most back pain searches were part of the British Empire at one point in their history. Coincidence? Maybe.

Sometimes, Google superimposes news headlines on the graph. William Shatner’s hospitalization for back pain in October 2005 (point B on the graph) appears to have triggered little additional interest, but the December 2006 ABC news report on lower back pain and yoga (point C) either anticipated or sparked another explosion of interest going into the new year. I don’t know what any of this means, but if I were selling products to help your aching back, I would spend a lot of time looking at graphs like these. And whatever your market, I recommend you do the same.

Taking the Temperature of Your Market Advanced Methods

The search data described in the preceding section represents the demand side of your market. The following sections look at the supply side information about the businesses selling in that market, and how much they’re making. To continue paying homage to Ken McCarthy’s swimming-pool metaphor, it’s not enough for the Olympic diver to be able to tell that the pool contains 660,253.09 gallons of water. If the water is frozen solid, diving in is not a good idea. If the market consists of hundreds of thousands of monthly searches but no buyers, you’re diving in a frozen market and it won’t feel good when you land on your head (or your empty wallet). The average bid price, described earlier in this article, is one indicator of the responsiveness of a market. But this issue is so important that you should take some time and corroborate your first impression with several other data sources.

Number of advertisers on Google In the popular imagination, entrepreneurs get rich by creating products and services that nobody else has ever thought of. In real life, that rarely happens. Truly original products and services often languish for years until they catch on. Rather than celebrating when you discover that no one else is selling what you want to sell, you should become somber and a little nervous. Then take a deep breath, relax your shoulders, and continue with your day. (I didn’t want to leave you all nervous and tense you might get back pain, and I’m not selling anything in that market. Much better for me if you get gout.) Go to www.google.com, search for your keyword, and count the number of sponsored listings. You can do this by clicking More Sponsored Links just below the column of AdWords ads on the right. The first 10 listings appear on that page. Click the Next button at the bottom to bring up listings 11-20. Keep clicking Next on each subsequent page until you run out of Next links to click. Seven ads on Result Page 9 translates to 87 ads. For some reason, Google doesn’t always display the More Sponsored Links link the first time you search. You’ll see slightly different results depending on your geographic location a number of listings in my example were for local chiropractors but the general trend will be clear.

Glenn Livingston (of www.ultimateadwordsresearch.com) cautions AdWords beginners to avoid competing on keywords with more than 25 competitors. Once you’ve cut your teeth in less competitive markets, you can begin to assault the lofty domains of high profit. After all, if someone’s doing well there, why not you?

Bid persistence: Will you still love me tomorrow?

Beware of markets full of here-today-gone-tomorrow advertisers. After all, advertisers are trying new things all the time, thanks to Google’s no-commitment, low-cost model. Just because you can gather more market data on a Sunday afternoon than Procter & Gamble was able to amass during the entire Carter administration doesn’t mean the data is stable. Bids especially are vulnerable to sudden change, since each bid represents not an entire market segment but one merchant’s decision that day. A simple way to establish bid persistence is to print out the first two pages of the sponsored listings, and then print out the listings again at least three weeks later. To reduce your risk as much as possible, repeat this exercise again three weeks after that. If you see that the listings are stable over those six weeks, it means that these folks are either very careless or they’re making money.

Going deeper with the Adwords Keyword Tool

Earlier in this article, I describe how to use the Traffic Estimator to assess Total Market Health. Now I show you how to use another AdWords tool to figure out if you can afford to use AdWords to test your initial sales process. Google is famous for being wildly inaccurate in predicting your actual bid prices, because your actual bid depends on the quality of your Web site (as well as on the invisible hand of capitalism). The Keyword Tool, like the Traffic Estimator, gives you a dollar amount based on the history your competitors have amassed, which makes it more, not less, valuable at this point in your research.

To use the AdWords Keyword Tool, follow these steps:

1. Log in to your Standard Edition Adwords account and navigate to an individual Ad Group by entering the Campaign Management area, clicking a campaign name, and then clicking an ad group within the campaign.

2. Select the Keywords tab and click the Keyword Tool link.

3. Enter your main keyword, select Cost and Ad Position Estimates from the Choose Data to Display drop-down list, and click the Get More Keywords button.

The estimated CPC for back pain and hundreds of related keywords as well as the position you can expect for that CPC. If your default CPC for that ad group is too low, enter a higher Max CPC in the box and click the Recalculate button. You can also enter smaller CPCs and recalculate to find out how little you can expect to pay for various positions. The lower the CPC, the less profitable it has been in the past for other AdWords advertisers. You’re looking for a sweet spot, where the Max CPC is low enough that you can afford to pay for enough clicks to test and improve and high enough that you can be sure others are making money in this market.