Ascension is a term I learned from my mentor Perry Marshall. The root word ascend, is a verb meaning to rise or go up. In this situation it refers to how you, the business owner or advertiser, move customers from lower cost, less profitable products or services to higher cost, more profitable ones. If it isn’t immediately obvious why I suggested you read this post, please continue reading and I think it will become clear.
Over the years, I’ve had the opportunity to review many AdWords accounts for prospects that are in hyper-competitive markets. Markets where the profit margins are thin, competition is stiff and the products or services could be described as commodities. This is especially true when the business is acting as an online distributor for a relatively inexpensive, branded product using an e-commerce website.
In this scenario, you not only need a highly optimized AdWords account, but a website and fulfillment process that leaves no room for error. I won’t digress into the topic of conversion optimization because that isn’t the point of this post. But let me get your attention by saying you can have a highly optimized AdWords campaign, a great landing page with all the right attributes, a great fulfillment process and even a decent conversion rate, and still be significantly out-performed by the competition. And when I use the term “out-performed”, I’m not referring to things like impression share, number of visitors, CTR, conversions or even sales. Those are just leading indicators to your ultimate objective, which is profitability.
I’ve talked with several online marketers over the years, some who have been selling online longer than I have been consulting in the online space, which is over ten years. They began using their website as a way to establish an internet presence, essentially creating an online brochure. Then they began implementing e-commerce and optimizing their website for the purpose of SEO, SEO being the first form of SEM (Search Engine Marketing). Then as the internet became mainstream and in many cases being the medium of choice, they began using PPC to increase exposure and ramp-up faster than they could respond with SEO.
However, these advertisers didn’t understand that PPC is quite different from SEO. See my article titled PPC vs SEO. They didn’t understanding The PPC cost model. That’s because SEO works well for products and services where the traffic is high and conversion rates are relatively low, where a lot of shopping takes place. On the other hand, this is a formula for disaster with PPC, unless you have an ascension business model where you can afford to just break-even or perhaps even lose money on the initial sale. Where you have a longer-term view than a single sale and take into account the lifetime value of a customer.
The classic business model for this is known as the Gillette theory, where you escentially give away the razor because you actually make your profit on razorblades. Another example is the car dealership industry. Many car dealers actually lose money on the sale of a new vehicle because they make it up with profits from their service business over the life of the customer relationship.
Now let me move on to the point which is the purpose of this article. If you are promoting a product or services using PPC and you have done a good job optimizing your AdWords campaign, landing page, website and fine-tuned your offer, and still struggle to make an acceptable profit, ask yourself the following question. “Do I have an ascension model?”. “Does my competition have an ascension model?” Because if you don’t and your competitor does, PPC may not be a viable channel to promote your business.
I make this claim realizing that there is a good chance there is still room for improving your AdWords account and website. However, I’ve seen too many accounts where the advertiser was beating their head against the wall or lambasting their PPC account manager, thinking the solution to their AdWords ROI problem was simply making some feature or function change in AdWords. They were simply barking up the wrong tree.
When a PPC advertiser has a viable ascension business model, they can afford to drive the bid price up to the point where it becomes unprofitable for competitors who need to make a profit on every sale. It makes PPC an unprofitable channel for the single-sale advertiser. This is why it’s important to study your PPC competitors as part of your online advertising strategy.
Often times what I conclude from analyzing a client’s PPC account and the competitive landscape, is that a hybrid model is possible. Meaning the client can only afford to advertise certain products. The products or services that have enough profit in them to make the numbers work. A variation on this strategy is to only bid on those keywords where the competition isn’t as strong and the CPC is lower. This means they can only afford to go after prospects that are earlier in the sales cycle by using generic keywords verses those that are indicative of someone ready to buy.
The key to making all this work is to have a good handle on your key metrics. In particular, your cost per conversion. If you don’t have accurate and reliable conversion tracking and web analytics data to work with, you have an even bigger problem on your hands!