Bid on Big Success
Pay-per-click (PPC) advertising is the ideal way to promote your website to as many people as possible while keeping your advertising costs to a minimum. PPC can be a smart investment for small online retailers because you only pay when someone clicks your ad and visits your website.
Here’s how it works: You bid on keywords or phrases with a main search engine (see the “Where Do You Bid?” section, below), then, when someone searches for those words, your ad will appear in the search results. The higher you bid, the better your odds of achieving prime position at, or near, the top of the list.
When skillfully managed, PPC advertising can help you attract prospects to your website and convert them into paying customers. Unfortunately, many e-commerce retailers throw money away on PPC advertising because they don’t put in the effort to learn the tricks of the trade or to track their results. A basic understanding of PPC strategy and planning could save you hundreds or thousands of dollars on your PPC campaign each year.
Where Do You Bid?
First and foremost, you need to decide where to bid. There are a number of popular options with major search engines. Start with one and see how it works or, if you have PPC experience, choose two or three to gauge the differences and maximize opportunity for exposure.
This is probably the most popular pay-per-click option for small businesses because of its ease of use and high return rate. It allows users to control expenses by setting daily maximums for each ad – a huge plus if you’re on a tight budget.
Yahoo Advertising Solutions
Yahoo has designed its search pages to cater to “sponsors,” or PPC customers. It offers all the benefits of content match and easy tutorials to get started.
Microsoft Advertising adCenter
Clicks. Leads. Sales. We’re here to help you grow your business. Pay only when someone clicks your ad.
Know Your Objectives & Budget
As with any marketing effort, determine your budget and objectives before you invest. In this particular case, your objectives may drive your budget. Set your expectations upfront so that you have some basis of measurement for decision-making as you spend, spend, spend.
Your objective may be to…
Acquire New Customers
Increasing traffic is a great idea to start because you want to encourage as many visitors as possible to get to know your website. Here, you shouldn’t expect immediate profit and instead focus on generating more and more traffic. If your budget allows, bid big. Go for the top. Break even on the first sale and you’ll likely enjoy repeat business that won’t cost you a cent over the long-term.
Achieving immediate sales requires the most PPC attention. You must track and evaluate every word that’s bid. Shut down wasteful words – those that generate traffic, but don’t convert to sales. Invest in words that convert, even if you experience less traffic. The name of the game here is quality, not quantity.
It’s estimated that the average consumer sees 3,000 promotional messages every day. The more your name appears in this mix, the more likely you’ll be remembered for a later purchase. Still, awareness building is often reserved for online retailers with an established customer base. They never stop spending with PPC, even if they’re doing well organically. It’s a smart strategy; the more they appear on the page, the more likely they’ll create a lasting and frequent impression with consumers.
As you can see from the above information, your spending is dependent on your objectives. Spend more to acquire new customers; spend less to build awareness. Again, no matter what your strategy or how successful your sales, never stop spending.
Of course, PPC can become quite expensive if you’re not smart about it. Here’s a formula to determine how to maintain a PPC plan that you can afford. Answer these questions and follow the example to keep your spending in line with your profits.
- What’s your conversion rate?
- How much does it cost to bring 100 people to the site?
Ex: $1.00 per click = $100
- What is the Cost of Acquisition (COA)?
Ex: 3% of $100 = $33
- What is your Gross Product Margin (GPM) percentage (the difference between what you pay for the product and what you sell it for)?
- What must your average order be to break even on your pay-per-click spending (COA) / (GPM%)?
Ex: $33 / .4 = $82.50
For this example: Thus, at a 3% conversion rate, you must sell an average order of $82.50 to cover your PPC costs.
Advantages to Pay-Per-Click Advertising
There’s no doubt about it. You’ll definitely see more traffic at your site with a PPC campaign. But the question is: Is it quality traffic? Are these customers willing to buy…or just window shoppers? Remember, if your objective is revenue-driven, be sure to focus on the keywords that generate conversions, not traffic.
Quick and Easy
Because this is a pay-per-performance structure, you can easily track how much business you acquired through your PPC campaign. Drill deeper into these statistics to find your cost-per-conversion rates and continually evaluate your return on investment (ROI).
Increased Exposure in Competitive Categories
If you sell in a popular product category, say digital cameras, it may be difficult to compete with large corporations. These companies spend tens of thousands on search engine optimization (SEO) efforts each year, and you’re not likely to break through on the first page of a search engine listing using SEO alone. With PPC, you can get on that page if you’re willing to bid high enough on your keywords.
Evaluation and Change
PPC allows you to experiment with your efforts and make immediate changes if you don’t see results. This comes in handy when you’re researching potential keywords and come across one that may work, but is questionable. You can try it out with little risk and change it right away if it doesn’t perform. Over time, you’ll learn what your best performing words and phrases are – both for traffic and conversion – and incorporate them into your site for enhanced SEO.
Drawbacks to Pay-Per-Click Advertising
When compared to SEO, which requires some upfront investment that can give you free traffic for years, PPC traffic lasts only as long as you continue to pay for it. On the flip side, this makes it the perfect marketing vehicle to promote a temporary sale.
Variable (and potentially expensive) Costs
You’ll pay top dollar for keywords in competitive categories, and watch out for holiday increases as well. Keywords can go up as much as 100% during December. In one study, 57% of respondents felt that their desired keywords are “too expensive” while 51% expressed concern that they are overpaying for keywords.
Consumers are growing increasingly weary of sponsored listings. Research showed that search users are up to six times more likely to click on the first few organic results than they are to choose the paid results. Why? Searchers don’t always trust paid listings and some even see them as a nuisance. Users also find organic search engine results more relevant.
Trends have shown that more sales convert through organic SEO than PPC. In fact, the overall conversion rate is 17% higher for unpaid search results than the rate for sponsored links.
Tips for a Successful Pay Per Click Advertising Campaign
Given the cost, competition and consumer behavior, it’s easy to see why PPC can be overwhelming to some inexperienced e-commerce marketers. Here are some tips to help you succeed:
A well-defined keyword strategy is key to a successful PPC campaign. Brainstorm a list of words that consumers may use when searching for your product. Then, use a keyword research tool such as the one available within Google AdWords or WordTracker (http://www.wordtracker.com/) to further target your list.
Track and Test
When you first start your testing, be sure to monitor your progress at least every 1,000 visitors. Think of testing as a series of tests that are strung together — not just one big project with a beginning and end. It’s a constant evolution that leads to slow, continuous growth.
Shoot for the Top
Obviously, the first three sponsored site listings receive the most traffic. These top spots cost more, but if you can justify the expense with increased sales, you’re bound to turn a profit. Don’t be afraid of spending high as long as your site is converting visitors into buyers.
Write an Effective Ad
If you find that your click thru rate is low (shoot for 3-5%), take a look at your ad. You only have a few words to catch your customer’s eye. Are you making the most of that message with phrases that communicate quality, value and trust? Use phrases like “100% guaranteed,” “best selection,” or “best deals on the web” to communicate your site’s advantages. If you’re at a loss for words, look at what your competitors are saying in their ads and write something better.
Start with One Platform and Grow with Experience
Sure, you can go to Google, Yahoo and Bing for maximum exposure, but if you’re new to the game, start with one. You can learn the rules and how to write effective ads (more than 25% of ads are rejected, requiring multiple revisions!) before you juggle two or three.
Evaluate Your Site
Increased traffic doesn’t always mean success, especially if you’re not making sales. If you’re generating traffic, not sales, it could be because your keyword strategy needs refined, your site isn’t optimized for conversion, your pricing is off, or your product descriptions are not comprehensive. To enhance your conversion rates, look for an upcoming eBook on how to convert window shoppers into buyers.
Pay-per-click is the easiest and most immediate way to increase traffic to your site. It should not be your sole approach to online advertising, however, PPC should be employed as an essential and continuous part of any SEO plan. Be sure to review, “Understanding the Basics Search Engine Optimization (SEO).” Because SEO can take up to six months to see results, smart e-commerce entrepreneurs use pay-per-click as a supplemental measure to garner initial interest, drive revenue and build awareness. After all, where else can you connect with potential customers at the exact moment they’re searching for products like yours, at no upfront cost?
Remember, there’s always room for improvement with a pay-per-click plan. It’s a process of experimentation that requires constant attention and assessment. Your purpose drives your plan. The more you put into it, the more you’ll get out of it. Be attentive. Track. Analyze. Evolve. Repeat. Avoid knee-jerk reactions. If you tweak your plan slightly instead of starting all over, you’re more likely to learn what works and what doesn’t. It takes time, so start slowly and spend more once you get good at it. The more money you spend, the more you’ll make — as long as you’re smart about it.
IMPress Action Checklist
- Establish your objective
- Determine your maximum PPC budget
- Define keyword strategy
- Choose a PPC platform
- Bid on keywords
- Track results: traffic & conversion
- Refine your PPC plan