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Jun 1, 2011
by Eric Leuengerger
It should come as no surprise that in order to grow a business, you need to market that business. Marketing can and should involve multiple channels to achieve an optimal effect. One of those channels should be pay-per-click (PPC) advertising. However, too often those not familiar with the intricacies of PPC shy away from it, thinking the only thing it does is take money out of their pocket. As a result, they miss out on a channel of advertising which can lead to beneficial returns when implemented properly. Managing a PPC campaign can be an art, but you do not need to be a guru to make it work for you. Simply understanding what advice you should and should not take, and what you should focus on to give yourself the best chance at success, is often the best way to start. In this article, I will debunk five myths that surround PPC.
5 Myths Surrounding PPC
1) It costs too much to run PPC: False
I've heard it said too many times that it takes a big budget to yield results. This is untrue. In fact, I've run very successful paid search campaigns on as little as $50 per month. The competitiveness of your market and your business objective will no doubt dictate an acceptable budget and target ROI, but in short, to be successful you only need to invest an amount that you can get a return on. Sure, some products in highly competitive niches have small profit margins, and achieving a positive ROI is going to be very difficult, but not impossible.
In fact, you can run a very successful paid search campaign with just a few hundred dollars or less. Do not focus on the amount of traffic you want from the campaign, as this attitude will indeed cost you money. Or rather, focus on the quality of the traffic you receive. Also, stick to targeted keyword phrases of two to three words or more, often called "long-tailed" keywords, and set your match type to anything other than broad. You're looking for "phrase match" or "exact match" here.
2) You need an expert to succeed at paid search: False
Having an expert in your corner can certainly help, but if you have one at your disposal, you can still run a profitable paid search campaign with the right knowledge and tools. To start, if you follow the steps I have outlined in the April and May issues of Web Wholesaler magazine and pay attention to what your statistics tell you, it is possible to generate profits from your paid search efforts. Start with thorough keyword research to build your list, and lay the foundation for success. Then, set a monthly budget based on your individual marketing budget needs and traffic goal. Want to get an idea of how much traffic you can expect from your efforts? First, determine the industry average CPC (cost per click) for your niche.
To calculate your industry average CPC, simply take the reported CPC of the keywords you built into your list, given the position preference you desire, add them up and then divide by the number of keywords in that list. Now you can take that number and divide it by your marketing budget to get an estimate on the number of visitors you can expect. For example, if you have a list of ten keywords with an average CPC across all keywords of $.25 and $250 allocated toward paid search each month, you can expect somewhere in the area of 1,000 visitors (clicks) for your investment.
To make profit as your campaign moves forward, you must ensure that your own average cost per conversion is less than your average order value. The further those two are apart, the more profit you generate. For example, if your cost per conversion is $10 and your average order value is $20, you are making profit. If, on the other hand, your average order value is $8 and your cost per conversion is $10, you are losing money.
3) You need a long list of keywords in order to get results from paid search: False
This could not be further from the truth. In fact, to win at paid search you should focus your efforts into smaller, more targeted groups of keyword phrases that fit the market you are operating within. This will not only help you generate more targeted traffic, but will also help your quality scores, which several of the engines use to determine relevancy of your ads. Higher relevancy means higher search placement at a reduced CPC.
Start with the most influential list (from the buyer's perspective) of long tailed keywords and build from the knowledge you learn. If you have limited resources and time, your first attempt should not be a sweeping list of every keyword under the sun. Rather, it should include the top ten or 20 keyword phrases that you find best describe the product you are trying to sell. Keep your groupings of keywords low and for an added advantage, send the traffic from each group directly to the product page on the site that the ad references. This will be the landing page for that set.
Again, keep your keyword lists small at first. I have had great success on a number of paid search campaigns in which only one to five keywords are utilized, targeting the exact niche. Leaving the "broad targeting" to your competitors and sticking to the more focused campaigns should both reduce your monthly cost and increase the quality of the traffic you receive. Both are great strategies for success.
4) Organic search is cheaper and yields far better results than paid search: False
While natural SEO can at times cost less than paid search, it can also cost just as much, depending on the company you hire to do it for you. In this case, I have found that the old saying of, "You get what you pay for," often rings true. Pay for less, get less, pay for more, and get more. There are a few key distinctions that should be noted when comparing natural (organic) SEO and paid search. Natural SEO is a long term strategy. To do it right takes time, often many months. Paid search on the other hand can drive traffic to your site in just a few hours.
The traffic that SEO drives to a site is more general and harder to control or "prep" from the start. With paid search, you have the ability to qualify traffic from the start and alter those qualifications at any moment, by changing your ad text and landing page. The ability to more effectively measure, change course, and persuade potential buyers is a big reason I like including paid search as a key element in any ecommerce marketing plan. If you can control the mindset of the visitor starting at the very point in which they click your link, you have a far greater chance of converting them on the back end.
5) Going for that No. 1 position is best: False
Depending on your budget and purpose (brand awareness for example), the number one position may or may not suit your needs. The conversion rates from position one to, say, position four or five, vary depending on market demand and more. However, my experience has shown that shooting for a spot near position three or four tends to yield nice conversion results. Why? I suspect it is because the traffic is more qualified to buy. The theory is that if they read the first three or so and are this far down the page, they know what they are looking for and have not found it in the first few results.
You can capitalize on this by providing them with ad text that supports their need and describes your product. Winning the click at this point should result in more targeted traffic that is further along within their buying cycle. This option of targeting positions three or four also works well for those with smaller budgets, because the CPC from higher positions is often significantly more than it is at these lower positions. Keep in mind that depending on the competitiveness of your market, entering at positions three or four may even be tough, given the budget you are able to spend. Do the math to find out the magic numbers you should target. In the end, you should be careful of trying to compete for that number one spot. Shoot for positions three or four, write your ad copy according to your objective, and measure what works best for your business.
Eric Leuenberger is an ecommerce conversion marketing expert and author of a leading Ecommerce blog at, www.TheEcommerceExpert.com. He coaches store owners using his online coaching system www.EcommerceAmplifier.com, teaching them how to increase website sales using his proven six step process. He can be contacted at 1-866-602-2673.
Topic: Business Strategies
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