What is Pay-Per-Click?
The idea of selling search ads was initiated by GoTo in 1998. Search results could be bought at a very cheap rate of one or two pennies per ads click. Presently, this type of system has become one of the most competitive marketplaces across the globe.
Search engines operating pay-per-click (PPC) can generate instant and real traffic, and also allow testing your new business models in real time. Although, the market of PPC is competitive. Spending extra time to learn how ads can be written and targeted, carrying out deep keyword research, and tracking your competitors are essential before going into the PPC market.
Why Use Pay-Per-Click?
There can be occasions where you can’t afford waiting. PPC search engines enable you to get listed at the top of their search results very fast, thus you’re able to:
- Get feedback on market conditions without delay
- A/B test a live audience and get the test results of the ad live.
- Model ideas so as to track demand before investing into a new business model or paying a new website bill.
For instance, you can make use of Google AdWords to give out a white paper about any topic from a single-page site for free. If there is no interest in downloading the white paper or the click-throughs are few, then that is an indication that:
- There is no market for your product.
- You are marketing your product to the wrong people.
- Your bidding is not high enough for better exposure.
- Your do not have a compelling landing page.
- Your marketing is not done from the right perspective.
Getting Feedback from Your Account
A lot of people dither in spending much money when creating a PPC account. When a small amount of money is spent, the business is overlooking the feedback loops set up by search engines.
Which one is better between losing $100 today and losing $100 over three months, and you eventually realize the need to change? For me, I prefer knowing if change is needed now. It is a fact that not all industries or businesses will earn money from Google AdWords.
There is a possibility for success if you can spend money on targeted keywords. An Internet marketing business of any sort should pull a quick feedback loops for better improvement. At the beginning, you want to spend excessively on your ads for easy identification of effective ones. At long last, you’ll be able to carry out ads regrouping based on price, and you can then reduce your bid price. The ineffective keywords or ad groups will be deactivated because of the minimum bids that were based on quality, and those that gets displayed.
A smarter way to go into Google AdWords if you are an affiliate is through lead generation, rather than making efforts to sell your affiliate products. As it is not uncommon to get 10-20% lead generation rate, the feedback loop is ten times faster than selling an affiliate product with conversion rate of 1-2%. It is more advisable to send traffic to an offer that is meant to build client’s trust than to a sales letter if your business entails selling high end services.
Whom Should I Trust in Pay-Per-Click?
Few popular and major players in the PPC market exists. Google AdWords is known for its very large distribution network which cuts across Google, About, Ask, AOL, Earthlink, and several other websites.
Yahoo! Search Marketing possesses network partners spreading across to Yahoo, AltaVista, InfoSpace, AllTheWeb, and so on.
Microsoft adCenter is very new in the market but the limited syndication network they have, characterizes high traffic quality.
On starting PPC advertising, majoring on Google Adwords, Microsoft adCenter, and Yahoo! Search Marketing is recommended. I wrote an article on some of these networks, but it is not advisable to begin with some of them because their traffic sources are very dirty and getting market feedback is slower.
Pay-per-click search engines offer a marketing medium that is highly trackable. Often times, people start marketing with no idea of the rough value of ad click. You will not be able to differentiate good marketing from bad one if the value range and result tracking are not set up.
It is important to decide the marketing goal before click value can be determined. If your goal is branding, be prepared to lose money to strengthen your brand or gain mindshare, and it is less important to track direct results. However, it is important for you to know the worth of each click if your goal is product marketing.
Typical Conversion Rates
The typical conversion rate for lead generation websites is around 10%-20% but can be as high as 30%+ based on proper targeting and if they are attractive to visitors.
Arriving at your website involve little investment, and there are several other websites that are one click away. Therefore, selling any product on the web converts just as direct mail advertising. Products with high tickets are unique and have a lower conversion rate while cheap products converts higher. The conversion rates of many stores could be from .3-5%.
Carrying out the Arithmetic
Many factors determine click price. It is a bit difficult to measure branding, but brand awareness can be built through the help of ad distribution. Majority of things outside branding are easy to measure.
It is easy to get a good idea of clicks’ worth if you have an idea of your average order size, profit per order, and the expected conversion rate. Yahoo! Search Marketing has a free ROI estimation calculator which allows you to estimate your budget per click for different scenarios.
We have people who factor in a customer’s lifetime value. However, it is harder to quantify, and enough chance is still available in many markets to carry out your arithmetic, which is majorly based on the return you get directly.
Study the Competition
Some people also factor in lifetime value of a customer, but that is harder to measure, and there is still enough opportunity in many markets to do your math based on direct return.
Survey the Competition
It is better to have a look at the ads that are being displayed and the order in which they are displayed. The top competitor might be an individual who pays a premium or an idiot losing lot of money for branding.
If smaller websites’ or affiliate marketers’ ads are ranking on or around the same position for some weeks or one month, then it shows they are getting something right, thus making profits. Taking enough time to carry out deep keyword research and analyzing the market worth it before diving into PPC search engine marketing.
You Will Lose Money Learning
Most ad clicks eventually becomes failures. Even if you get a conversion rate of 30%, it indicates that out of ten clicks, seven clicks convert nothing. There is possibility that you will lose money before you start earning money when you enter PPC market. These could be because:
There is need for you to learn how PPC systems work
- Learn important and non-important terms
- Learn how ad copy are written
- Learn how ads are targeted
- Learn how bidding and ranking are done, and identifying overpriced terms.
The best PPC accounts are your competitors.
- Some of your competitors may have other intangible assets giving them an unfair advantage.
- If you are very new to the system, then your competitors surely have more experience than you.
- Some ad campaigns have been fine-tuned for months.
- Trust factors are been built into ad accounts by search engines. As a result of this, you may see some long-term advertisers getting cheaper ads and quality boosts. It could also be due to their advertising of trusted sites.
Search engines attempt selling the PPC marketing concept by referring to it as a concept that everyone will make money from. However, it does not work that way in the real sense. We have competitive markets where learning, practicing, good strategy, and adequate tracking are required to make profits.
Why Pay-Per-Click is Important
I was working for a client to raise a few competitive phrases rankings which took time and money. To test some number of terms, I started a PPC campaign. The result we had, showed discouraging conversion rate for the words we intended to use. Surprisingly, there were a number of terms having less competition and lower search frequency that had excellent conversion. Assuming we did not do PPC marketing, our SEO efforts wouldn’t have yielded good result. We had an increased (in tenfold) productivity on the website in less than a month with about $300 worth of investment.
The best way to be sure of anything relating to marketing is testing it. PPC marketing enables real-time testing with quick feedback loop of any means across the globe.
PPC versus SEO in Small Paid Niches
The costlier the related pay-per-click ads are, the more the importance of carrying out SEO on a website in a paid niche. If the mean cost-per-click (CPC) is $5, then a SEO campaign worth $1000 will pay itself with only few hundred targeted visitors.
Microsoft and Yahoo are a bit slacker than Google at niche advertisement monetization. One thing about Google is that, it advertiser base is larger and it uses quality based minimum bids to brace up the costs of ads.
If you doubt the justification of an SEO campaign for its fees, you can operate a test pay-per-click account have a preview of the type of demand in your target market.