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PPC – The Commercial Factor

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 23-08-2011

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It is not difficult to drive PPC traffic to your site. Properly constructed ads will do this and minimize the cost of doing so but driving traffic is of no real use unless you make money.

Sure, if you are a multinational or you have some venture capital backing and there is another agenda such as gaining market share and medium term profit is secondary thats fine but this blog is about Joe and Jill  Average who wants to earn some money from their website now.

At the end of the day its all about math and here are the components of the equation.

  1. The Conversion Rate – This is the number of sales you make of your product divided by the number of site visits from the Adwords Campaign
  2. Cost per Conversion –  This is the cost of your Adwords Campaign for the specified product divided by the number of conversions

So, lets say that your current ad costs you $2 per click and your Product Margin ( Sales Price minus cost price) = $30

If for every 100 clicks on your Ad you made 5 sales (conversion rate of 5 divided by 100 = 5%)  your Cost per conversion would be

The cost of the Google Campaign for 100 click ($2 per click) = $200

The conversion rate of 5% would give you 5 Sales

5 Sales would give you a Margin of (5 Sales X $30 per sale) = $180

This means that the cost of the Clicks was $200 and the sale margin was $180 and you just lost money.

What are the options?

The options are, lower you ad bit price, increase your conversions or increase your sales margin.

Find some of the strategies to do this in our next post.

 

PPC Advertising – Choosing Keywords

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 23-08-2011

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Certain keywords or phrases that people type into a search engine lead to hundreds and hundreds of search results that pertain to that specific keyword. Businesses that want to advertise on the net using a PPC campaign have to come up with a plethora of keywords that is associated to the business that they are running; so when potential customers type in these keywords, it will lead them to their business site.

This is pretty much the whole concept that operates behind PPC. This is how a PPC campaign brings in traffic to your site, with the selection of the right keywords that people can search through the net.

Some keywords tend to be more expensive than others, especially popular ones. It is vital to select the right keywords, in order to get your money’s worth. This is why it is important to manage you PPC campaign wisely. Sometimes you are better off opting for the less popular keywords that are not so expensive, especially if you have a limited budget. Some businesses even hire the help of a consultant to manage their PPC campaigns.

Unlike organic listings you can simply pay (if you have the budget and provided you ad isn’t very poo;y designed) to get your keyword ranking in the paid searches on Google.  However, it is not always to your advantage to adopt this strategy. Firstly. you can minimize the cost of each click by properly constructing your adds and by making sure that the ad and the landing page is relevant to the keyword you are targeting.  For example, using the ad copy strategy in earlier posts you should have created and ad which identifies the “pain” experienced by the end user, offered a solution and displayed a “Call to Action”  following this your landing page should be optimized for the target keyword. Take a look at the posts in our SEO from scratch category for some tips on this.

If you get all this right then you will guarantee that the cost per click will be as low as possible. However, a number of other factors will come into play:-

What will the cost per click be?

What will the conversion rate be?

What is the margin per sale?

Take a look at the post entitled PPC – The Commercial Factor for more detail on this.

 

 

What is PPC?

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 22-08-2011

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PPC stands for Pay-Per-Click – a popular advertising technique on the Internet. Found on websites, advertising networks, and especially on search engines, PPC advertising involves sponsored links that are typically in the form of text ads. These are usually placed close to search results, where an advertiser pays a particular amount to visitors who click on these links or banners and land on the advertiser’s web page.

In essence, PPC advertising is all about bidding for the top or leading position on search engine results and listings. Advertisers do this by buying or bidding on keyword phrases that are relevant to their products or services – the higher the bid, the higher the spot on the search results, the more the people will find the ad (and click on it) to go to their websites (this is why some people call it “keyword auctioning”). Advertisers would then pay the bidding price every time a visitor clicks through the website.

PPC advertising is also known under the following names/variations:

  • Pay per placement
  • Pay per performance
  • Pay per ranking
  • Pay per position
  • Cost per click (CPC)