Smart Watches - $5.7k/mo
The maths of how you could profitably run a smart watch ecommerce store, that grows through paid channels.
Despite the number of household brands already operating in the smart watch space, there’s still room to compete with them through paid channels.
The high amounts that consumers are prepared to spend on this sort of purchase, paired with the relatively uncompetitive search ad market, makes it an attractive space for challenger brands.
As we’ll see below, there’s a fairly large amount of traffic that can be brought in very efficiently on keywords around smart watches. This is unusual for what is typically quite a high-ticket item, and presents an opportunity for less established brands in the space.
Keyword analysis
You can see the top 25 non-brand search keywords in the space here, along with an estimate of click prices at the top and bottom of each results page.
While the top of page upper bid estimates are in many cases too expensive to be able to turn a profit on this sort of item, you can reach the lower end of the top of the first page with low bids on many of those keywords. This allows you to essentially skim off a decent flow of traffic, all while paying far less than most are paying on these terms.
Campaign build
I’ve put together a typical campaign build that you might use to sell smart watches via paid search. You can find it here.
If you’re not familiar with this type of spreadsheet, it’s basically a list of keywords and ads that you can upload into a search ads platform to start bidding on relevant keywords.
Each keyword has its own tailored ad copy, meaning you can serve relevant ads on every keyword that you’re bidding on. This might cost you hundreds, or even thousands, of dollars from a marketing agency.
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Targeting strategies
My expectation is that you’ll have a very difficult time selling this sort of product via pure prospecting, going out and reaching people who haven’t expressed any sort of interest previously. This is often the case for higher-value items, and really any item where there aren’t obvious targeting segments available.
It’s tempting to think that you could go after groups which might have a predisposition to use smart watches (runners, early tech adopters), but I still don’t expect that you’d be able to convert these audiences effectively enough to generate a profit.
Because of this, I’d focus on using paid search as the primary channel, not just to bring in direct conversions, but also to grow your retargeting pools, which you can then hit on social and display.
Given the high margin on each product, I’d also experiment with running offer ads on Facebook; offering a small discount to people who’ve already been on/initiated a checkout on your site.
Profit forecasting
So, what sort of profit and ROI could you expect to see if you built a brand around smart watches?
I’ve put together an interactive dashboard here which lets you forecast the profit you could make from running paid search campaigns in this niche.
You can adjust the inputs along the top of the dashboard to see how different conversion rates, margins, and bids would affect your results. If you’re unsure, you can enter ranges for the inputs, and your outputs will be displayed as probability distributions.
The numbers in the dashboard rely on forecasting data from Google for the relevant keywords. They’re also just projecting profits on Google search ads, not including any other channels, so are really a lower estimate of the volume you could generate.
In summary
That’s a quick roundup of how you could grow a brand selling smart watches online.
While it might seem like a crowded space, this doesn’t mean that there isn’t room to grow a challenger brand in it. The relatively uncompetitive ad space surrounding it, combined with high potential AOVs, opens up the possibility of growing a brand here via paid search.
If you have questions on anything above, drop me an email here and I’ll see if I can help. Also get in touch if you have any ideas or requests for what to analyse in future weeks.
Thanks for reading.