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managing your pay-per-click advertising
Managing Your Pay-Per-Click Advertising
By Scott Buresh
OVERVIEW
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What is Pay Per Click Advertising?
Pay-Per-Click is a paid form of advertising, popularized
mostly by the "search engine" GoTo (which has since been bought out by and incorporated into Yahoo! Search Marketing). 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 Yahoo show up in the results of
many of the popular search engines (usually listed
as "sponsored" or "featured" results).
Google has also come up with a similar version
of pay per click advertising (AdWords) that
has taken over some of the engines that used to display
Yahoo results (most notably AOL Search).
Advantages of Pay Per Click
Advertising
Pay per click advertising has some advantages over
traditional search engine optimization. First of all,
it requires 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
advertising 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 pay per click advertising 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 Pay Per
Click Advertising
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.
Pay per click advertising 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 pay per click
results as paid advertising and bypass them without
consideration.
THE PROCESS
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Determining Visitor Worth:
Determining how much each website visitor is worth
is vital to the success of your pay per click advertising
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 pay per click
advertising. 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
in pay per click advertising (except for the time
involved in setting up the account). To help identify
keyword phrases, Yahoo 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.
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 pay per click advertising, 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 your pay per click
advertising campaign that it be monitored regularly,
since positions can and do change every day. Since
the top three Yahoo 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
advertising campaign.
Conclusion
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Pay per click advertising 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 involved with pay per click
advertising 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.
© Medium Blue 2007
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