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Pay Per Click Advertising

Pay Per Click advertising works well as long as you know what you are doing. Success also depends on the product or service you have and the competitiveness of the target market. It’s even possible to know within a week of launching your campaign, if it is profitable or not, thereby allowing you to make decisions quickly to minimize any losses you may incur on an unsuccessful campaign.  It allows you to measure your advertising spending versus sales revenue so you can make sure you profit or know when to quit. Pay per click can generate instant traffic and sales, but can also spell disaster if you aren’t careful.

Pay Per Click Advertising refers to services such as Google Adwords, (These are the ads that appear on the right side of Google’s search results, and on websites with Google Adsense) Yahoo Search Marketing, etc.  For this article, we will focus on Google Adwords. Once you are successful here, its easy to duplicate the campaign on other networks.

First, if you already have some sales data, you want to try to determine what your conversion rate is from user visit  to purchase.  With this rate, you can determine what you can afford to pay per click and still be profitable.

Basic Math…

  • Lets say your are a software vendor, you get 200 visits a day to your website, 100 downloads a day and 5% of the downloaders purchase your software. That’s about 150 sales a month. Your software costs $67. That’s $10,050/month.
  • You then work out how many visits converted into sales. 200 visits a day x 30 days = 6000 visits a month. 150 sales a month x 100 downloads / 6000 visits a month = 2.5% conversion rate of visits into sales.

You want to make a 50% GM on your software and spend only $5025 per month on advertising to make total sales of $10050/month. You need to divide the advertising expenditure you have by the number of visits you currently receive per month, which will show you the cost per click you can pay to reach your target. In this case $5025 / 6000 visits = $0.8375 per click. This may be a reasonable amount in some niches and impossible in other more competitive niches.

If you don’t have this sales data yet, you can use Adwords to send traffic and start tracking your conversion rate to obtain the data you need.

You can sign up free for google adwords. Then proceed to (https://www.google.com/adsense/adsense-resources ). This will allow you to go through the free tutorials and training that Google provides. This is almost enough to start a successful campaign. After all, Google wants you to succeed and continue spending with them. Go ahead and sign up to start familiarizing yourself with the service.

Google wants your ads to be relevant. Since Google’s business is providing quality search results for its users, it does not want irrelevant ads cluttering its search results. They have therefore introduced the “Quality Score”, which scores your ad, keywords you bid on, and the page your ad links to, based on relevance to each other.

Simply put; If you bid on the “Video Conversion Software” keyword phrase, then your ad should include this phrase in its title and description, and the page that it points to should be information about this exact topic (at least 500 words of text).  This will generally get you a good quality score. Sounds simple? You’d be surprised how many people get it wrong!

Your quality score will also be influenced by the click through rate that you get in relation to the number of times your ad appears in a search result for users (called impressions). The assumption is that if nobody is clicking on your ad, then its not relevant to what the user is searching for. Keeping above 2.0% click through rate will generally keep your quality score high.

A good quality score allows your ad to rank higher in the search results while maintaining a low cost per click. It’s possible to rank better than a competitor at a fifth of the cost per click, simply because his ad and landing page text may be less relevant to the chosen keywords than your ad. This can be the difference between profitability and failure.

Below is a link to a free report on how to run a successful pay per click campaign, recommended by many of the top Internet marketing “gurus”.  http://www.creativedigitalmedia.com/dominate/frank/    By the way, these guys run a very successful PPC management company,  so if you are thinking about outsourcing your pay per click marketing, give them a call. They will review the market for your product or service, and won’t take on any projects they don’t think will be successful.

If you are a beginner, you may want to sign up for Hexatrack. A free membership is available that will allow you to track 4 groups of 10 keywords for free, before you need to register. This can be more then enough for a single product or service. If you need to, they offer a paid membership, which allows you unlimited access. Go through all their tutorials to maximize the value you receive from the service.

In summary, pay per click is competitive, but viable, sometimes hugely successful and other times disastrous. Fortunately, in almost any market, there is a path to take to a successful campaign. If you have the budget, I’d recommend leaving it to professionals who have proven track records over the years.

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