Paid Search Advertising that Delivers Maximum ROI
by: Ivana Giardi
Paid Search Advertising (also Pay-Per-Click, PPC) has gained a significant
influence in the search engine industry over past couple of years. Whilst a
traditional search engine optimisation still remains the online marketing
strategy number one, more and more e-marketers discovering the potential of
online advertising campaigns. Properly designed and managed, PPC campaign can
deliver highly qualified visitors to your online shop.
1. Quick Overview
Pay-Per-Click (PPC) Search Engines are built on the similar principle as
auctions. The difference is that you bid on keywords -- terms people use when
they search for stuff on the internet.
The concept of PPC bidding is rather simple: you buy (= bid on) keywords that
relate to your product. The highest bidder gets placed at the top of the search
results, the second highest bidder gets the next listing and so on. Every time
someone clicks through to your website, you pay the amount you bid on that
particular search term.
Advertising with PPC search engines basically gives you three key advantages:
• Cheap and Highly Targeted Traffic
With bidding on keywords that relates to your product or service, you
actually pre-qualify the type of visitors you wish to attract. You determine how
much you are willing to pay (bid) for the click and you only pay when someone
clicks on your ad. This implies that PPC search engines can cheaply direct
qualified visitors to your website.
• Fast Exposure, Immediate Profits
Traditional search engines usually take few weeks (sometimes even months) to
list your website. If you are having problems to get your website indexed by
search engines or if you would like to get a quick results from the search
engines then PPC is the best alternative. Most of PPC search engines will set
your website live within a couple of hours (maximum few days) and the impact on
your site traffic and sales is practically immediate.
• Guaranteed Top Position
Search engine optimisation is the classic method of getting your website on
the top of search results for free. Simply said, the process of optimisation
involves choosing keywords that are directly related to your website and placing
them meaningfully within your pages. However, as easy as this sounds, for an
average webmaster this is usually a quite daunting task without any guarantee on
the success. This again brings me to PPC as the best solution to gain high
rankings on the search result list. Often, by spending just few cents per click,
your website can get to the top three positions within 24 hours!
The best-known and most popular PPC Search Engines are Google AdWords (www.google.com/ads) and Overture
(www.overture.com). Advertising
with those two industry leaders will get your website lots of exposure and
traffic. Furthermore, top 3 listings in Google AdWords and Overture appear on an
extensive network of sites (including Yahoo!, MSN, AltaVista, Excite, and many
others) so you can reach up to 80% of all active Internet users. However, at the
same time be prepared that their top listings tend to be rather expensive and
you need to pay quite a bit.
Generally, the more popular keyword you choose for bidding the higher is the
price. You can start your bid from 1 cent per click and finish paying $5.00 (or
more) for very competitive keywords.
2. Designing Successful PPC Campaigns
The golden rule of PPC bidding is: “Attract highly qualified buyers and keep
your bids as low as possible”. Since you are paying for each single visitor
landing on your website obviously you wish to maximize the effectiveness of your
PPC campaign. Let’s take a look at some basic guidelines to help you optimise
your campaign and ensure your ROI:
• Determine your bid cost
The calculation of the bid cost (also cost per click) requires a rather
complicated formula. For the purpose of this article I mention just a baseline
that helps determine how much you can afford to bid:
- Firstly, you need to know the conversion rate of your web site. That means
how many unique visitors you need to close one sale. For example, if you need 50
visitors (= clicks) to close 1 sale then your conversion rate is 2%. If your bid
is 10 cents per click than one sale has $5 of bidding cost.
- Secondly, you need to know your profit margin. If your profit margin is high
enough to justify the cost you can consider increasing the bid and getting a
higher position for your ad. This way you may increase the number of clicks
through your website and acquire more sales.
- Finally, calculate if the extra sales justify the extra cost and adjust the
bid accordingly.
• Focus on highly targeted keywords
As mentioned earlier, PPC Advertising can deliver cheap and highly targeted
traffic to your website. To use this advantage to your benefit it is important
to choose wisely the keywords you wish to bid on. The key is to be specific. For
example, instead of bidding on “skin care” you can consider bid on “anti ageing
herbal treatments”. More targeted keywords attract more qualified buyers. It is
easier to convert them into paying customers because they found exactly what
they were looking for. This strategy is also a big money saver -- more specific
keywords tend to be less expensive than the general ones everybody is biding on.
• Customize your advertisements
You will attract more attention from qualified buyers by writing ads
specifically for each of keywords you bid on. Speak directly to the type of
visitor you want to serve. For example, instead of writing an ad for “pies” you
can write “home made meat pies”.
When tailoring your ads to a specific audience, be also sure that you direct
your visitors to a page on your website where it's easy for them to buy these
items.
• Use less popular PPC search engines
Overture and Google AdWords are clearly the PPC market leaders. However you
can still benefit from the less popular ones such as:
Bids on these less popular PPC search engines are much cheaper and you can
purchase your listings for as little as one cent per visitor. Even though you
may not get the same exposure as you would get with Overture and Google, you
still generate a decent amount of traffic. And while you only pay for actual
clicks to your website, you never waste your money.
• Choose the best position for your advertisement
To be listed first on the search results is not always a smart move. It
certainly helps to attract lots of visitors, but may cost you lots of money at
the same time. People usually visit first 5 top listings before making a final
decision about their purchase. Therefore, it is more profitable to have lower
ranking for highly competitive keywords.
3. Managing PPC Advertising Campaign
You have designed a killer selling ad copy, chosen highly targeted keywords,
calculated the maximum you can afford to bid on each of search terms and
determined which spot on the search results you wish to secure. Yet, there is no
guarantee that your ad always remains on your desired position.
The key to managing the desired position is to adjust your bids correctly in
accordance to the PPC market conditions. It’s like monitoring shares on the
share market -- to get the best deal you need to constantly watch prices and
react immediately to any change.
The main factor influencing the price of the bids and your position are your
competitors. Let’s make few examples of bidding strategies you can consider
using in your PPC campaign: assuming, your maximum cost per click is $1.00 and
your goal is to secure position #3 at the most effective cost.
(a) Maintain Target Position
Your aim is to target the position #3 however your ad appears on the position
#10. Knowing that the current holder of the position #3 pays $0.51 per click you
can improve your position and take over his place by bidding $0.52. This
strategy sometimes tends to drive up the keyword prices so be aware you don’t
cross the limit of spending $1.00 per click.
(b) Remove Bid Gaps
Overture defines the bid gap as “the difference between the amount you are
currently paying for a click and the minimum you could be paying to still remain
above your next highest competitor in the search results.”
For example: You pay $0.70 per click and your next highest competitor pays
$0.60 per click. You can pay just $0.61 per click and still be placed above your
competitor. By closing this bid gap you save $0.09 per click which in 1,000
clicks is saving of $90!
(c) Control your Maximum Cost per Click
As mentioned earlier in this article, the calculation of your maximum bid
cost (cost per click) requires you to collect a list of statistics about your
website. Based on our assumption, you are willing to pay maximum of $1.00 per
click. Therefore you should not pursue any positions where the bids are over
your $1.00 limit. Wait till the price falls under $1.00 to prevent any possible
losses.
To get the most accurate bidding results without having to baby-sit your
advertising campaign, I would recommend relying on one of the automated bid
management software available on the market today. In general, those tools
constantly check your bids and adjust them accordingly to maintain your desired
position so that you don’t have to be alert 24/7.
The more sophisticated tools allow you to set your daily budget to prevent
spending more than it is efficient for your business. Below I have listed the
main features you should be looking for when choosing the bid management
software for your campaign:
- The ability to create and identify targeted keywords and phrases that
convert leads in sales.
- The ability to set the maximum amount your want to bid.
- The ability to fix bid gaps so you don’t pay more money than is necessary
- The ability to set your desired position.
- the ability to compile comprehensive reports on your keywords, bidding cost,
bid position and current bid for each keywords.
- The ability to monitor competitor’s activity by checking competitors ranking
and current bids.
If you would like to download a demo version of bid management software,
there is one available for free at website http://www.keywordbidmaximizer.com/bidmaximizer. It will help you
to better understand the whole process of designing and maintaining PPC
campaigns so you always manage to cost-effectively allocate your budgets and
increase your revenue.
Paid Search Advertising presents an excellent opportunity to immediately
address your offers to the proper online audience. Focus on identifying highly
targeted keywords that convert for your website. Calculate your bids so your
sales justify the cost. This way you will maximize your return on investment and
ensure your website’s success with PPC advertising.
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