Services: Pay-Per-Click Marketing Strategies

Understanding Pay-Per-Click

There are two primary ways to improve your ranking with the search engines: A.) “Organically” which is fine-tuning your web site for maximum rankings and then submitting it to the search engines and waiting for results; or B.) Pay-Per-Click - Bidding on select key words and “Pay-Per-Click throughs” to your site. If they click on your sponsored listing and go to your site, you pay whatever your bid is for that particular phrase. This can ‘guarantee’ top placement with the search engines. You chose a monthly budget and when your budget runs out your sponsored listing comes down. You will see these sponsored listings along the top and right side of search engine results pages. Both systems are quite a bit more complicated than they sound to implement.

Pay-Per-Click (PPC)

Pay-Per-Click advertising (PPC) is where you bid on select key word phrases and brief text ads appear in the sponsored sections of the search results page (see above picture). If someone clicks on that ad link, you pay the search engine the amount you bid for that keyword phrase. The more you bid, the higher your ranking.

Pay-Per-Click (PPC) requires a bit more analysis and strategy: all of the above plus... review of your key word strategy, competitive spending/bids, search counts, conversion rates (visitors who come to your site and turn into buyers), profit per conversion and return on investment calculations. All of this leads to a PPC strategy and budget that will give you an action plan to control your spending and results. PPC gets faster results but requires a dedicated monthly budget. This budget and strategy can then be modified on the fly to optimize your results.

The Basics

For instance, let’s say you wanted to appear in the top listings for “toy airplanes”. You might agree to pay 35 cents per click. If no one agrees to pay more than this, then you would be in the number one spot. If someone else later decides to pay 36 cents, then you slip into the number two position. You could then bid 37 cents, if you wanted to, and move back on top.

The Downside

Be aware though, that there is a certain point where the purchase of that ranking may be the wrong move. What if you are paying 86 cents per click (purchasing the key phrase “toy airplanes”) and you get 10,000 new visitors. Of that 10,000, 2% of those visitors ‘convert’, or buy your product. (Barnes and Nobles and Amazon usually get about 12-14% conversion.) So you have just made 200 new sales… of $5.00 toy airplanes and made $1,000 or $900 after your cost of goods sold (COGS). But, it cost you $8,600 in “click-throughs” to do that. You got 10,000 new visitors and increased your sales, but you are $7,700 in the hole!

Other downsides include... This is an ongoing expense. You set a monthly (actually daily) budget of what you want to spend on a given search engine and you may pay UP TO that amount each month. It may be less. Once you have hit your daily budget, your ads are removed until the next day. But to maintain that constant flow of clicks, you continue to pay monthly for your traffic.

How To Fix It

Take that same scenario and change it slightly. Instead, purchase the key phrase “plastic toy airplanes” for $0.25 and direct those clicks directly to your Premium Plastic Plane that you sell for $15.00. You get 10,000 visitors and maybe increase your conversions to 3% since you are going directly to the Premium Plastic Plane page. Now you have sold 300 Premium Planes for a total of $4,500 in sales (with a COGS of $3.00 each or $900). You made a gross profit, before advertising costs, of $3,600 and a net profit of $1,100 for the same amount of traffic.

What changed between a loss of $7,700 and a profit of $1,100? The amount of visitors was the same. Your conversation rate of those visitors increased, the price of the product you featured increased and had a higher margin and cost of the keyword phrase decreased. Finding the right bidding/marketing mix is critical to having a successful Pay-Per-Click strategy.

Upsides to PPC:
There are substantial Pro's for PPC. You get nearly guaranteed placement with the right budget. In other words, you will almost always be at the top or right of the page. You know approximately how many clicks you will get with your maximum budget. It is easy to calculate your ROI with some basic facts, so you know how much money you are making with your PPC investment. You have more control over PPC than SEO since your ads, bids and keywords can be adjusted on the fly versus “submit and wait”. The rankings are instantaneous. Once activated, your ads are live that minute. You can be getting clicks and possible leads today.

Excerpts from an article Paul Metheney wrote for Pros Communication. See the full article here.