Introduction to Pay Per Click
Have you heard the saying, “planning is everything? For your PPC marketing company” Perhaps there is some truth in that saying so let’s discover how to successfully plan your pay-per-click campaign.
Let’s keep this simple and create a list of required tasks to successfully plan your pay-per-click campaign. These are:
- Determine your product’s Unique Selling Proposition.
- Define your pay-per-click campaign’s goals and objectives.
- Decide the starting and ending dates for the pay-per-click campaign.
- Establish the click-through rate target for your pay-per-click ads.
- Set the conversion rate target for your pay-per-click ads.
- Define your budget for the pay-per-click campaign.
- Establish your ROI or Return on Investment goal for the pay-per-click campaign.
- Determine the value of each keyword phrase.
- Plan how to measure your pay-per-click campaign results.
Task Number 1 – Pay Per Click
Task number one is determining your product or service’s Unique Selling Proposition, or USP. What is a USP? The USP clearly answers the question, “Why should I do business with you instead of your competitors?”
Your organization needs to stand out from the crowd! This could relate to the services or products provided, guarantees offered, delivery mechanisms used, complementary services provided, pricing or any attribute associated with your business.
Identify your organization’s uniqueness since it is pointless promoting cheap prices if everyone else is promoting the same.
If everyone were offering cheap prices you would be better off promoting higher prices for providing better quality and service as long as you are delivering better quality and service.
An articulate USP assists in defining the focus and selecting the keyword phrases for your pay-per-click campaign. For example, if your USP is focused on quality and service perhaps you would avoid a keyword phrase containing the word “cheap” but rather include words denoting quality.
Task Number 2 – Pay Per Click
Task number two is defining the campaign’s goals and objectives. Typical examples might be: increase web site traffic X percent, acquire X number of new business leads, obtain X number of new customers or orders per day, achieve X sales revenue dollars per time period, etc.
Whatever you set as your goals or objectives you must be certain they are quantifiable and measurable in order to determine the success of your pay-per-click campaign.
Task Number 3-Pay Per Click
Task number three is deciding the starting and ending date of the pay-per-click campaign. This is a major benefit to pay-per-click campaigns since you have the ability to turn a campaign on and off at your discretion.
As an example, you could create a campaign promoting National Nurse’s Week or something similar to discounted sale prices supported by advertising coop funds provided by the product’s manufacturer.
Task Number 4-Pay Per Click
Task number four is establishing the click-through rate target or goal for your pay-per-click ads. The click-through rate is the number of times the ad is clicked versus the total number of impressions.
One impression is one display of the ad. In general, click-through rates range from 1% to 5% of the number of impressions. The formula is:
Click-Through Rate % = Total Number of Ad Clicks / Total Number of Ad Impressions * 100
Task Number 5 – Pay Per Click
Task number five is setting the conversion rate target or goal for your pay-per-click ads. A conversion is a measure of searchers clicking on the ad and taking the next step or call to action such as a purchase, registration, subscription, etc.
The conversion rate can be measured versus the total number of ad impressions or total ad click-throughs. It’s your choice; but, most organizations measure it versus the ad click-throughs.
Conversion rates range to all extremes but a good target might be from 5% to 20% of the number of ad click-through. A quick view of the formula is:
Conversion Rate % = Total Number of Conversion Actions / Total Number of Ad Impressions * 100
Conversion Rate % = Total Number of Conversion Actions / Total Number of Ad Click-Through * 100
Task Number 6
Task number six is defining your budget for the pay-per-click campaign. How much do you desire to budget or spend per time period or for the total cost of the pay-per-click campaign?
Many of the pay-per-click search engines offer automated budgeting mechanisms that can be initiated to control the cost of your campaign. If you do nothing else in the planning process, set a campaign budget, and stick to it!
Task Number 7
Task number seven is establishing your ROI or Return on Investment goal. The ROI is based on the tangible benefits, bottom-line revenue increase, or expense decrease, versus the cost to obtain tangible benefits.
In general, each organization defines ROI objectives for company investments and these should be applied to the pay-per-click campaign.
Task Number 8
Task number eight, and perhaps the most important, is determining the value of each keyword phrase and, in turn, each visitor.
The simple formula works like this. Divide the average number of new customers each month by the average number of monthly website visitors to get the percentage of visitors who actually become customers.
If you multiply this percentage times your average profit margin on sales to new customers, you obtain a good estimate of how much a visitor is worth on the first visit.
In other words, let’s assume you’re selling an item with a $25 profit margin. If 10% of the website visitors buy your product, then each visitor is worth $2.50 to you ($25.00 X 10% = $2.50).
If you can bid $2.50 or less for each click-through of the keyword phrase, then you are profiting on each conversion or sale.
Another way to look at this is in terms of your click-through and conversion rates. Let’s suppose we have a click-through rate of 5% and a conversion rate of 10% versus the ad click-throughs. We will use the same $25.00 profit margin.
1,000 impressions X 5% click-through = 50 potential customers
50 potential customers X 10% conversion = 5 actual customers
5 actual customers X $25.00 profit margin = $125.00 profit
$125.00 profit / 50 potential customers = $2.50 per click (maximum bid)
Have you noticed how important it is to know the value you of a keyword phrase or visitor? Without these guidelines, you are bidding in the dark and asking for trouble.
It is imperative that you be able to estimate your maximum bid prices to be successful in your pay-per-click campaign!
Task Number 9
Task number nine, the final task, is planning how you will measure your campaign results versus the goals, objectives, and targets you established.
You should review if you have the proper structure and tools on your website to capture the information for the measurements.
For example, do you have access to your weblogs? Do you have web analytic tools? What types of data do they capture and analyze?
Do you have a web site page that will define a conversion? It might be the order confirmation page from your web site shopping cart or the e-mail subscription confirmation page.
Perhaps this seems like a substantial amount of work for planning your pay-per-click campaign. But, look at the results of good and poor projects in any personal or business environment.
At the foundation of their success or failure was a well or poorly conceived plan in google ads management. Take the extra steps.
Make additional effort. Your success will be rewarded with a cost-effective, high ROI pay-per-click promotion campaign without breaking your bank account!