Pay per click search engines can give you instant traffic and allow you to test new business models in real time. The pay per click market is competitive though. It is worth spending an extensive period of time learning how to write and target ads, tracking your competitors, and doing deep keyword research before jumping in.
Metrics Based Marketing:
PPC search engines provide a highly trackable marketing medium. Frequently people begin marketing without any idea as to the approximate value of a click. If you do not set up a value range and track the results you have no way to distinguish good marketing from bad marketing.
To know the value of a click, you need to decide what the goal of your marketing is. If you are just branding, then you should expect to lose money to gain mindshare or reinforce your brand, and tracking may not be that important. If you are using pay-per-click search engines for direct product marketing, you need to know how much each click is worth.
Typical Conversion Rates:
Lead generation sites typically have a conversion rate around 10 to 12%, but can go as high as 30% + if they are properly targeted and exceptionally appealing to visitors.
Since little investment is needed to arrive at your website and many other sites are just a click away, selling stuff on the web has a conversion rate similar to direct mail advertising. High ticket items have a lower conversion rate and unique cheap items tend to have higher conversion rates. Many stores find typical conversion rates might be anywhere from .3 to 5%.
Doing the Math:
There are a ton of factors that go into click price. It is somewhat hard to measure branding, but ad distribution can help with that. Most other things are tangible.
If you know your average order size, profit per order, and estimated conversion rate you can get a good idea what clicks are worth. Some people also factor in lifetime value of a customer, but it is harder to measure and there is still enough opportunity in many markets to do your math primarily based on direct return.
Before You Start:
It is a good idea to look at the various ads which are displayed in which order over time. The top guy might be an idiot losing tons of money or a person who is paying an extreme premium for branding.
If ads from affiliate marketers or smaller sites are ranking around the same ad position over the course of a few weeks to a month then they are probably doing something right (generating profits). It is worth it to take a couple weeks to do deep keyword research and market analysis before jumping into pay per click search engine marketing.
You Will Lose Money:
Most clicks end up being failures. Even if you have a 30% conversion rate that means that 7 out of 10 clicks did nothing for you. When you dip your toes into the pay per click market there stands a good chance you will lose money before you start making money. The main reasons are:
- You need to learn how the systems work, learning:
- what terms are important and what ones are not.
- how to target the ads
- how to write the ad copy
- how to bid
- where to rank
- what terms are overpriced
- You are competing against the best accounts.
- Some competing advertisers may have other intangible assets which give them an unfair advantage.
- If you are brand new your competitors have more experience than you do.
- Some ad campaigns have been fine tuned for months or years.
- Search engines are building trust factors into ad accounts. Some advertisers may get quality boosts and cheaper ads just for being long-term advertisers.
Search engines try to sell the concept of pay per click marketing saying that it is so targeted that everyone makes money, but in the real world that is not how things work. Some markets are competitive and will require learning, sound strategy, and tracking to generate profits.
Why Pay Per Click is Important:
I was working to raise the rankings of one client for a few competitive phrases. It was taking a decent investment in time and money. I then started a pay per click campaign to test a ton of terms. As it turns out the conversion rate for the words we thought we needed were not great. There were a couple other terms with lower search frequency and less competition which converted exceptionally well.
Had we not done pay per click marketing we may have never properly focused our SEO efforts. In less than a month on about $300 we increased the productivity of the site ten fold.
The only way to be certain of anything in marketing is to test it. Pay per click marketing allows you to test real time with the fastest feedback loop of any marketing medium in the world.
In 1998 Overture pioneered the idea of selling search ads. You could buy search results for as low as a penny or two per click. This system has quickly evolved into one of the worlds most competitive marketplaces.
Why Use Pay Per Click?
Sometime you can not afford to…or simply do not want to wait. Pay per click search engines allow you to list atop search results quickly. This will allow you to:
- Prototype ideas to track demand before you invest into a new business model or are stuck footing the bill for a new site.
- Quickly gather feedback on market conditions.
- Split test to a live audience and gather results in real time.
You can use Google AdWords to offer a free white paper about some topic from a one page website. If nobody is interested in downloading your white paper or you can not seem to get enough clickthroughs then odds are:
- the market is not yet ready for your product
- or you are marketing it from the wrong angle
- or you are marketing it to the wrong people
Who Should I Trust in Pay Per Click?
There are a few major players in the pay per click arena. Overture (as of writing this) currently has network partnerships that span Yahoo!, InfoSpace, AltaVista, AllTheWeb and many other partners. Google AdWords has a larger distribution network across Google, AOL, About, Earthlink, and many others sites…even a few of my own. Microsoft is a new player in the market, but their limited syndication network means their traffic quality is high.
For the sake of this report I am only going to cover Google AdWords, Yahoo! Search Marketing, and Microsoft AdCenter.
Amazon.com allows you to advertise contextual ads on their site via ClickRiver. There are also a few other pay per click search engines (Ask, Business.com, Miva, Kanoodle, Enhance Interactive, 7Search, Findology, Search123, Epilot) that may be well worth a look after trying Google, Yahoo! and MSN. While beginning pay-per-click advertising, I would recommend only using Google AdWords, Yahoo! Search Marketing, and Microsoft AdCenter.
Why Use Large Pay Per Click Search Engines?
- The results will be scaleable.
- The feedback will be quicker.
- They offer many great tracking and targeting features free.
- Larger pay-per-click search engines generally present higher quality traffic and are less susceptible to fraud.
- It is less complex managing two or three accounts versus 100 accounts.
- It’s easier to track the ROI on 2 accounts than on 100 accounts.
- Many of the extremely small search enginesnever have real traffic. You are wasting your time registering with them.
- Even some of the better second tier search engines may waste a big hunk of change. In early November 2004 I tried using LookSmart. It sent me twice the traffic as Yahoo! Search Marketing and traffic from LookSmart had a 95% bounce rate. That means that 19 of 20 site visitors from LookSmart immediately left and I paid for garbage traffic. The quality of traffic from smaller engines will vary from term to term, but its best to go with the biggest guys off the start, and then, if you have spare time, try some of the smaller engines.
Case Study: the Ignorant Bidder
If a term does not convert well for you then it may not be worth it to rank near the top for that term.
Not too long ago a person was bidding on an eBay ad for “SEO Book” at over $1 a click. Assuming I can get a 1.5% conversion rate I can afford to pay that much, but this person was just throwing away their money.
Just to test the waters I placed my ebook on eBay and it did not go for anywhere near what I usually sell them for.
I find it hard to believe the person who was bidding a dollar a click was making any money. They later lowered that bid to 21 cents. In some markets there will be dumb companies that rotate in, lose money, and then go bankrupt. By the time they go bankrupt others may soon take their money wasting market position.
Some terms are not worth buying at the price the keywords go for. And if they are valuable they may have more value at a lower position.
Landing Page Tips:
Conversion is a large part of how successful a pay per click campaign is. A few tips to improve landing pages:
- Remove navigation: unless it is necessary remove other options. Let people do what you want them to do, and don’t give them many other options.
- Make link text appealing:people tend to glance over copy instead of deeply reading every word. Since links are action points people tend to pay more attention to link text. Make sure link text is appealing since it is far more likely to get read than most of the page copy.
- Give them a clue they have found the correct page:Place the words they searched for in large text at the top of the page to show them they are in the right location. If you are a large merchant with many products maybe use something like ‘search results for: their search term’. Typically it is best to point people at a landing page instead of the home page.
- Other ideas:some of the other concepts listed throughout this ebook (such as using short paragraphs and concise subheaders) also apply to landing pages. Corey Rudl constantly retested his landing pages. You can learn a good amount by seeing how he changed his landing pages over time, by looking through how they changed in Archive.org. MarketingSherpa also has a landing page handbook for sale.
Pay Per Click for Landing Page
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