Powerful trick to sell luxury or expensive goods

luxury

$4 a click is a good way to lose money

So you want to sell luxury goods like watches, designer sunglasses, etc. Or maybe you want to sell overpriced t-shirts and novelties? Tough luck buddy, everyone else is also trying to sell these. You’ll never make it without spending an assload of cash upfront to acquire these customers. All marketing channels are overfilled with advertisers targeting this crowd. So it’s hopeless or is it?

The trick: Clever geotargeting

metro-geotargeting

Geotargeting on adwords is a powerful tool

In this post I’ll show you how to use clever geotargeting to reach wealthy potential customers on Google Adwords. First what is geotargeting? It means displaying something different on the web based on the geographic location of the viewer. For example, it makes sense to display ads in spanish to traffic from Spain instead of ads in english. This is simple basic geotargeting.

Now on Adwords you can do very low level geotargeting. You can target a single american zip code if you want. These zip codes vary in size but they usually represent a neighbourhood or small town of around 10 000 people. Rich people like to live among other rich people in posh neighbourhoods. See where this is going? You can use zip code level geotargeting on Adwords to only display your ads to people living in rich neighbourhoods! This is gold.

Why are the rich a very interesting segment

I once did a consulting gig at big Freemium firm with millions of customers. I did a regression between visitor’s income (estimated by zipcode thru ip address) , conversion rate and order size. I found that people in zip codes with an average income over $100k converted three times more and spent twice as much. This means that these visitors were worth six times more than the average visitor. These numbers will vary from business to business, but it just makes plain sense that rich people are quicker to whip out a credit card and looser with their money.  If you are selling $2000 italian espresso machines you are likely to get even more impressive numbers than I got with generic freemium games.

An unfair advantage over your competitor.

Rich people convert better, and they spend more on average. Thus it make sense to spend your advertising money on them rather than poorer demographics if you can reach them for the same cost. By using geotargeting to only show your search ads to people in rich zip codes, you are getting a big advantage over your competitors. They are spending money on clicks from trailer parks, while you only spend it on clicks from mansions. You can confidently outbid them for the top spot for this small slice of the overall impression share. You let them get the top spot most of the time, but front run them when it’s worth it. This will lower their overall return, while padding yours. This should incite them to lower their bid in the long run, making it even cheaper for you to get the top spot.

How to do it

Get the zip code and income data here. Open it in excel. Use the excel filtering tool (Learn about this feature if you don’t know about it, it’s very useful) to only get the zip codes that:

  • have a median income over $100k (You can go higher if you want)
  • Have a population over 5000

Tzipcodeexcelhis should give you roughly a 600 zip codes representing about 14 million of the richest americans. This is very powerful list that we’ll export to Google Adwords for targeting. However, first we need to fix a problem with leading zeroes being stripped away by Excel. Zip codes like 02345 become 2345 in Excel. You can use this bit of excel code to create a new column formatted correctly with the leading zeroes: =TEXT(A1,”00000″) . Replace A1 with your cell containing a zip code.

Ok so now you have nicely formatted list of the richest zip codes in America. You will need to use the Google Adwords Editor (45mb) to access the bulk import features to load these zip codes. Connect this software to your adwords account and load your campaign data. From there you can copy an existing campaign you have and call it something like “campaign abc – Rich zip codes”. Then you can edit the targeting. There is a bulk import screen for locations where you enter your zip code list by copy pasting your formatted column from excel.

The result

This should result in you getting 30 times less traffic than targeting the whole USA. If you have a small niche where you would get a few dozen click a day, this trick is useless. It’s only useful for niches with a lot of traffic like beauty, sex, money, health, common consumer goods, travel, etc. This type of geotargetting can make the difference between not using adwords because it’s a money loser,  and using adwords to generate dozens of sales daily. Go experiment with this powerful trick!

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If you liked this post you may also like my post on How I bootstrapped a dropship business.

Need help setting this up in your Adwords account? I’m available for consulting work. Email me.

6 thoughts on “Powerful trick to sell luxury or expensive goods

  1. Jena

    Very clever technique. So sad that it works only for the US, mapping manually postcodes and earnings would be a pain in the ass. However, I believe some large market research companies would have that info.

    I myself am still stuck on the niche search.

    Reply
    1. NickSid Post author

      I believe you can use a similar technique in other countries that show similar geoclustering of the rich in specific areas. I know that it works in Canada.

      Reply
  2. Pingback: SaaS Idea: geoclustering your customers using Census data | Sid's entrepreneurial blog

  3. /u/hagbardgroup on reddit.com Post author

    Interesting comment from reddit about this post from user hagbardgroup:

    I’m going to vouch for this technique (which I came across working for a luxury goods vendor, frustrated by terrible non-branded term conversions). You can also do this for different demographic groups (aside from income) using census data. Areas with high proportions of kids will buy more family related goods, for example, than those with few numbers of kids.
    You can also apply this to b2b very effectively if you know where your target companies are, physically. If you are targeting a particular college campus, get really granular about where the ads are showing up.

    Reply
  4. Doug Beney

    I found your blog from your post on reddit about 18th.me. I instantly subscribed to your email list after seeing the type of content you post. Great stuff!

    Reply
  5. Pingback: FYI: Google shopping is awesome | Sid's entrepreneurial blog

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