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Posted: 2006-09-11 / Author: John Dow Does Pay Per Click Advertising Still Pay?Does Pay Per click advertising still pay?:In theory, using the search engines sponsored Pay Per Clickadvertising is a quick and easy way to provide instant and targeted traffic to your web site. And historically this has always been a good option for new web sites that don’t have any other way to get traffic. Buying traffic via a Pay Per Click can be a viable way to get instant-targeted traffic. And a few years ago it was quite cost effective. It was fairly easy to hit a 4-6 times pay through (spend R100, sell R4-600) on a well-designed campaign. Now it’s tough to get 2 or 3 times your investment back. Why is it so difficult to get a good payback now? There are several factors that can have a huge impact on results. Competition – There are many more advertisers and web sites now vying for the same keywords Google Arbitrage – This is mainly an Adsense ploy to buy clicks to create higher paying Adsense clicks Affiliate Sales – These are folks who advertise products for others and make a commission on the sales Google Crack Down – Google has realigned their algorithms to insure more accuracy in search results Google CTR Factor – If you don’t get a good ratio of clicks verses views, your cost goes up Also throw in the fact that you need to write a short ad (25 characters for the headline, 35 for the two lines of copy) that gets clicks, and find keywords that are very target driven before you even get to the cost. These factors have all caused the price of a keyword to skyrocket. If you look at a basic R35 digital product and below price level, it’s getting pretty tough to make a profit on high cost keywords. And consider the fact that many web sites sell a physical product that may only have a 50% markup, this can get real ugly if your campaign is tight (low return). Just so we all are on the same page, let’s look at the basic goal of PPC campaign. It’s all about the conversion rate. That’s how many products you sell per the number of visitors (200 visitors and 4 sales gives you a 2% conversion rate). You need to determine if the keyword cost will pay through on the revenue generated by the sales (example: if each click costs you .35, and your product sells for R35.00, and you only convert 1 in 100 - you will lose money). Keep in mind that you will normally pay 2-6% to your payment processor so even though R35 is paid you only net R33 or less. So if you spent R35 on 100 clicks, you just went backwards. Which means if you have a R35 product, you need to convert at least 2 out of 100 to make a profit on the campaign. Several years ago it was very possible to stay around .05-.25 per keyword click cost. Now it is much more difficult to find keywords below the .30 and many times it’s much higher than that. There are other means to improve your conversion rate. A well-written and effective sales pitch can increase sales. Running promotions, offering special incentives, and offering solid value helps too. I know people who get a 6% conversion rate so it is possible to have a larger budget for keywords. I also know people who have no problem spending R1000 to make R2000. If you look at it in a pure business sense, you’re doubling your money. But if something goes awry, or Google makes a right turn and you still go straight ahead it can get darn expensive. I know folks who are spending R3-4,000 a day on their PPC campaigns. And they are at least doubling and more the return on investment. But the sad thing is they used to spend R1-2000 a day to make the same amount of money. So in many cases the cost has doubled, the profit remained the same. This does cut a lot of people out of the game. Between the high dollar costs and the lower return, many won’t or can’t risk that type of money. And learning how to find the right keywords, and then write an effective ad is no walk in the park for most. Pay Per Click advertising can and does work. But you really have to have a well thought out campaign from start to finish. Good products, sales pitch, incentives, keyword research, effective ad writing, and conversion rates that can pay through are necessary now more than ever with the high costs. But you should have a well-rounded marketing plan that includes PPC along with other methods to bring targeted visitors to your web site. Organic search engine traffic (basic SEO), a good linking strategy, and even offline advertising are all necessary for generating a constant stream of potential buyers. About The Author: John Dow owns http://www.jdWebWorks.com, a website that specializes in web site design tools, computer troubleshooting, and security. His WebMaster Essentials CD has helped many new and existing website owners. Go here to learn more: http://www.jdwebworks.com/Webtools/webtool.htm. Top of page | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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