If any of your marketing budget goes to internet ads you undoubtedly know a little something about Pay-Per-Click or PPC advertising. From reading blog and forum posts it would appear that this is a very costly advertising technique with little pay off. Most people claim that the ROI is beyond insufficient. I have to question these people however. When used correctly PPC advertising can be a great way to spread the word about your business.
How PPC Works
Pay-Per-Click advertising allows business owners to appear in the top search results under the “Sponsored Listings” area of most search engines. Some companies now offer PPC ads that appear in websites relating to your site. Most PPC prices start at $.05 per click and you can choose the exact term that you would like your hand typed ad to appear under. Technically you “bid” for ad space however you can typically set all your own price barriers.
Why Effective PPC Works
Say you select five search terms for your PPC ad to appear under. These terms relate well to the items you sell on your website and each of these terms expect to see 100 hits per day at the rate of $.05 per day. Now let’s say your website has a typical conversion rate of 2% and an average sale price of only $25. Now let’s do the math: you’ve paid a mere $25 in advertising costs and you reaped $250 in sales. I would say that that is a fairly decent ROI.
What’s the Trick
The reason many PPC campaigns fail is the fact that business owners neglect their research, choose poor search terms, and spend too much on these campaigns.
If you perform adequate research you should have no problem finding great keywords that will lead to conversion rates. The more relevant the terms the higher the likelihood of making a sale. To figure out a great list for your business visit SEOBook.com. Under the tools section they have a Keyword Locator powered by WorkTracker. This is a free program but it can really help get you started in the right direction.
TIP: Don’t lead every customer to your main page, occasionally use a search term that will lead them to specific item pages.
To keep costs low you have several options. Clearly, the less you pay per click the lower your overall costs will be. However, bidding the minimum amount may not always work. The more hits you want the more you will likely have to pay for them. As long as you keep your expected conversion rate and average sale amount in mind you should be able to deduce what you can pay. Google AdWords is a great way to test out the different possibilities here.
TIP: Run several test campaigns. Limit the amount you are willing to spend each day to test out which keywords really sell. Set a daily limit of a couple of dollars and see which words really pay off.
Where to Start
To start out you should try several different keywords, at several different price ranges, on several different websites. An effective PPC ad is developed over time. Most people expect to stumble on great results right away and give up easily. As long as you utilize the daily budget features and track your results carefully (Google Analytics is a free tool to help with this) you should be able to finesse your way to profit.
Remember that PPC advertising is very simple to set up and run yourself. If you are on a budget don’t waste your time on the websites that offer to run your PPC campaigns for you. It takes a couple of hours to set up several campaigns at once and there is very little to do after you have discovered a successful ad and keyword set. Take your time, be stingy and you will be a success.