PPC marketing has other benefits than just increasing your brand awareness and/or building your customer base and generating sales.
What is Pay-Per-Click?
In 1998, GoTo 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 world's most competitive marketplaces.
Pay-per-click (PPC) search engines can give you instant traffic and allow you to test new business models in real time. However, the pay-per-click market is competitive. 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 you start.
Why Use Pay-Per-Click?
Sometime you cannot afford to—or simply do not want to—wait. Pay-per-click search engines allow you to be listed at the top of search results quickly, which allows you to:
- Quickly gather feedback on market conditions.
- Split test a live audience and gather ad test results in real time.
- Prototype ideas to track demand before you invest into a new business model or are stuck footing the bill for a new site.
As an example of the power of PPC, you can use Google AdWords to offer a free white paper about a topic from a one-page website.
If nobody is interested in downloading your white paper, or you cannot seem to get enough click-throughs, then that could indicate one or several things:
- You are not bidding high enough to get exposure.
- The market is not yet ready for your product.
- You are marketing it from the wrong angle.
- Your landing page is not making a compelling offer.
- You are marketing it to the wrong people.
Getting Feedback from Your Account
When opening up a PPC accounts, many people are hesitant to spend a lot of money. However, if you spend a small amount, the business is essentially ignoring the feedback loops search engines have set up.
Is it better to lose £100 today, or to lose it over several months and then come to the conclusion that you need to change? Not all industries or business models will make money from AdWords. Indeed, some are not out to make money but to simply raise brand awareness.
If you spend on targeted keywords, your site should have a chance for success. Any marketed, Internet-based business should leverage fast feedback loops to help it improve. At the start, you should spend a greater proportion of your budget on your ads so you can see which ones are effective and which do not work. After awhile, you can then regroup your ads by price, and then slash your bid price. The ineffective ad groups or keywords can then be disabled due to quality-based minimum bids and the winners will keep displaying.
If you are an affiliate, lead generation may be a smarter way to dive into Google AdWords than trying to sell affiliate products. Since it is common to have a lead generation rate of 10-20%, the feedback loop is about ten times as fast as selling a product that may convert at a much lower 1-2%.
If you run a business selling high end services it is better to send traffic to a trust building offer in the first instance to get potential customers to register with you. You can then use these initial sales/leads to generate repeat business.
Whom Should I Trust in Pay-Per-Click?
There are now again only two major players in the pay-per-click arena - for a while there were three.
Google AdWords has a larger distribution network across Google, AOL, Ask, About, Earthlink, and many others' sites.
Yahoo! Search Marketing had network partnerships that span Yahoo, InfoSpace, AltaVista, AllTheWeb, and many other partners. However, see Microsoft AdCentre below.
Microsoft AdCenter Microsoft was the last of the "Big Three" search engines to develop its own system for deliveringPPC ads. Initially, they had a limited syndication network. However, in January 2010 they announced a take over of Yahoo! and the combination of Bing, to form the Microsoft Search Alliance. The transition of all Yahoo! sponsored ad clients to Microsoft adCenter was completed in October 2010 and you now have to use adCenter to manage your campaigns.
When beginning pay-per-click advertising, focusing on Google AdWords and Microsoft adCenter is recommended before thinking about some of the other less welknown ones, which may be a source of dirtier traffic and provide you with slower market feedback.
Before You Start
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 first decide on your marketing goal. If you are just wanting to raise or reinforce your branding awarenesss then you should expect to lose money and tracking direct results may not be as important a goal. 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 products on the web has a conversion rate similar to direct mail advertising. High value items usually have a lower conversion rate while cheaper 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 many factors that go into click price. It is somewhat hard to measure branding, but ad distribution can help build brand awareness. However, branding aside, most other things are tangible.
Some companies may decide to factor in the lifetime value of a customer, although this can be harder to measure. Depending on your market there may be enough opportunity to do your math based mainly on direct return.
Survey the Competition
It is a good idea to look at the various ads that are displayed and in which order they appear over time. The top company could be losing a lot of money or it could be that the top company is simply paying a premium to increase brand awareness.
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 worthwhile taking time to undertake keyword research and market analysis before embarking on any pay-per-click search engine marketing.
You Will Lose Money Learning
Most clicks end up being failures. Even if you have a 30% conversion rate, it means that seven out of ten clicks did nothing for you. When you dip your toes into the pay-per-click market, there is a good chance you will lose money before you start making money. There are several reasons for this:
1. You need to learn how the systems work.
- Learn what terms are important and what ones are not
- Learn how to target the ads
- Learn how to write the ad copy
- Learn how to bid, where to rank, and what terms are overpriced
There is a lot of information out there including some valuable free downloads/tutorials that can be accessed, not only via the main search engine sites but also on other sites. So it is worthwhile spending time reading through some of this freely available material before embarking on your ad campaign.
2. You are competing against the best accounts.
- Some competing advertisers may have other intangible assets that give them an unfair advantage.
- If you are brand new, your competitors have more experience than you do.
- Some competing advertisers may have thrown considerable resources, including manhours, at fine tuning their ad campaigns.
Search engines are building trust factors into ad accounts. Some advertisers may get quality boosts and cheaper ads just for being long-term advertisers, or for advertising trusted websites.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, practice, sound strategy, and tracking to generate profits.
Why Pay-Per-Click is Important
PPC marketing has other benefits to just increasing your brand awareness and/or building your customer base and generating sales. By making you focus on what does and what does not work in terms of your ad campaigns, you can use this valuable information to increase your SEO performance.
The only way to be certain of anything in marketing is to test it. Pay-per-click marketing allows you to test in real time with the fastest feedback loop of any marketing medium in the world.
PPC versus SEO in Small Paid Niche Markets
The more expensive the associated PPC ads are, the more value there is in performing SEO on a site in a paid niche. If the average cost-per-click is £3, then a £750 SEO campaign pays for itself after only a few hundred targeted visitors.
If you are unsure whether an SEO campaign would justify its fees, you could always run a test PPC account in the first instance to see what level of demand there is for your products/services.