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Managing a Responsible Pay-Per-Click
Campaign
© 2002
by Scott Buresh
OVERVIEW
What is Pay-Per-Click?
Pay-Per-Click (PPC) is a paid form of advertising,
popularized mostly by the "search engine" GoTo
(now called Overture). The concept is fairly simple.
Businesses bid to be placed at or near the top of the search
results for particular keyword phrases. The bidding is done
on a "per-click" basis, meaning that a company
pays a specific amount every time the engine sends them a
visitor. In addition, the top results on Overture also show
up in the results of many of the popular search engines
(usually listed as "sponsored" or
"featured" results).
Google has also recently come up with a similar version of
PPC (AdWords Select) that has taken over some of the engines
that used to display Overture results (most notably AOL
Search).
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Advantages
Pay-Per-Click campaigns have some advantages over
traditional search engine optimization. First of all, they
require no changes to a current site's content or look to
obtain top positions, just a willingness to pay. Also, the
implementation of a pay-per-click campaign is relatively
quick- it can take just a few minutes to start getting
targeted traffic, versus sometimes months for standard SEO
campaigns. Finally, unlike search engine optimization, the
implementation of a PPC campaign is relatively easy and does
not necessarily require any specialized knowledge (although
experience with search engine marketing and keyword research
is a definite advantage).
Limitations
Of course, there are limitations to this type of
advertising.
New bids can lower the positions of other firms, and many
will react by raising their bid to regain a previous
ranking.
Monitoring of positions becomes crucial. These campaigns can
also become prohibitively expensive, depending on the
competitiveness of the keyword phrases and the
aggressiveness of the competition. In addition, many of the
"savvier" search engine users have learned to
recognize PPC results as paid advertising and bypass them
without consideration.
THE PROCESS
Determining Visitor Worth
Determining how much each website visitor is worth is vital
to the success of a pay-per-click campaign. If it costs $50
in click-throughs to make a $40 sale, the campaign has
failed.
The formula is relatively simple, but some specific
historical data is necessary. In the most rudimentary form,
it is the profit from the website over a given period
divided by the number of total visitors for the same period.
If a site netted $1000 in profits from goods or services in
a given period, and there were 2,000 visitors during the
same period, each would theoretically be worth 50 cents
(profit divided by visitors).
But this is only the breakeven point. Depending on the
desired profit margin, the optimal price to pay per click
would probably be something much less than 50 cents. Popular
keyword phrases can often run more than this, so it then
makes sense to bid less money on less popular terms to pay
an acceptable amount per visitor.
Selecting Keyphrases:
As with typical search engine optimization, keyword research
is critical to the success of a PPC campaign. Unlike typical
search engine optimization, there aren't practical limits on
the number of phrases to target. Usually, there is no extra
cost to add as many keyword phrases as possible. This makes
the keyword selection process easier, since there is not a
good deal of resources committed to optimizing a site for a
particular keyword set. Under-performing keywords, while
still an annoyance, do not cost extra (except for the time
involved in setting up the account). To help identify
keyword phrases, Overture has a tool on their site that
allows advertisers to see how often particular search terms
are actually typed in their engine. It also gives out
popular suggestions based upon the terms you enter.
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Writing descriptions:
With a typical search engine description, the object is to
entice as much traffic into a site as possible in the hopes
of converting that traffic into customers. With PPC, a
different approach is mandated. It is undesirable to pay for
unlikely prospects, so the description is designed to
eliminate the "tire kickers" while attracting
highly targeted traffic. For this reason, the description
should describe exactly what the business offers- a company
wouldn't want to pay for every visitor looking for
"insurance" if they only sold renter's insurance,
for example. At the same time, proven marketing copy
techniques should be employed to insure that the description
is enticing enough to attract ideal prospects.
Monitoring and Analyzing:
It is crucial to the success of any PPC campaign that it be
monitored regularly, since positions can and do change every
day. Since the top three Overture or Google AdWords results
are what typically show up on most partner engines (some
display more), the competition for these spots can be
fierce, and bidding wars are common. If the price gets too
high, it is usually prudent to withdraw and pursue a
different keyword (the only way to really "lose" a
bidding war is to pay too much for each visitor!).
Apart from position monitoring, it is important to track and
analyze the effectiveness of individual keyword phrases on a
monthly basis. Viewing click-through rates and studying
visitor habits can lend valuable insight into their
motivations and habits, and help to further refine a
Pay-Per-Click campaign.
Conclusion-
Pay Per Click campaigns can bring large numbers of highly
targeted visitors to your website. However, these
campaigns can become prohibitively expensive (and unlike
"traditional" search engine optimization, the
costs of any PPC campaign are likely to increase in the near
future due to the increased popularity of this form of
advertising). It is crucial to the success of the
campaign that you pay a reasonable price for each visitor,
that each visitor is highly targeted, and that you monitor
your positions to maintain your exposure over time.
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ABOUT THE AUTHOR:
Scott Buresh is Co-founder and Principal of http://www.mediumblue.com
Medium Blue
Internet Marketing. For monthly tips on how to get the most
out of your internet presence, sign up for our http://www.mediumblue.com/newsletters
Internet Marketing Newsletter.
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