Pay Per Click

Pay per click search engines can give you instant traffic and allow you to test
new business models in real time. The pay per click market is competitive
though. It is worth spending an extensive period of time learning how to
write and target ads, tracking your competitors, and doing deep keyword
research before jumping in.

Before You Start

Metrics Based Marketing:

PPC search engines provide a highly trackable marketing medium. Frequently
people begin marketing without any idea as to the approximate value of a click. If
you do not set up a value range and track the results you have no way to distinguish
good marketing from bad marketing.
To know the value of a click you need to decide what the goal of your marketing is.
If you are just branding then you should expect to lose money and tracking may not
be that important.

If you are using pay per click search engines for direct product marketing you need
to know how much each click is worth.
Typical Conversion Rates:

Lead generation sites typically have a conversion rate around 10 to 12%, but can go
as high as 30% + if they are properly targeted and exceptionally appealing to
visitors. Since little investment is needed to arrive at your website and so many
others are just a click away selling stuff the web has a conversion rate similar to
direct mail advertising. High ticket items have a lower conversion rate and unique
cheap items tend to have higher conversion rates. Many stores find typical
conversion rates might be anywhere from .3 to 4%.
Doing the Math:

There are a ton of factors that go into click price. It is somewhat hard to measure
branding, but ad distribution can help with that. Most other things are tangible.
If you know your average order size, profit per order, and estimated conversion rate
you can get a good idea what clicks are worth. Some people also factor in lifetime
cost of a customer, but it is harder to measure and there is still enough opportunity
in many markets to do your math primarily based on direct return.
Chapter 1


Before You Start:

It is a good idea to look at the various ads which are displayed in which order over
time. The top guy might be an idiot losing tons of money or a person who is paying
an extreme premium for branding.
If ads from affiliate marketers or smaller sites are ranking around the same ad
position over the course of a few weeks to a month then they are probably doing
something right (generating profits). It is worth it to take a couple weeks to do deep
keyword research and market analysis before jumping into pay per click search
engine marketing.

You Will Lose Money:

Most clicks end up being failures. Even if you have a 30% conversion rate that
means that 7 out of 10 clicks did nothing for you. When you dip your toes into the
pay per click market there stands a good chance you will lose money before you
start making money. The main reasons are:

• You need to learn how the systems work, learning:

o what terms are important and what ones are not.
o how to target the ads
o how to write the ad copy
o how to bid and what terms are overprice.

• You are competing against the best accounts.

o Some competing advertisers may have other intangible assets
which give them an unfair advantage.
o If you are brand new your competitors have more experience than
you do.
o Some ad campaigns have been fine tuned for months or years.
Search engines try to sell the concept of pay per click marketing saying that it is so
targeted that everyone makes money, but in the real world that is not how things
work. Some markets are competitive and will require learning, sound strategy, and
tracking.

Why Pay Per Click is Important:

I was working to raise the rankings of one client for a few competitive phrases. It
was taking a decent investment in time and money. I then started a pay per click
campaign to test a ton of terms. As it turns out his conversion rate for the words
we thought we needed were not great. There were a couple other terms with lower
search frequency and less competition which converted exceptionally well.


Had we not done pay per click marketing we may have never properly focused his
SEO efforts. In less than a month on about $300 we increased the productivity of
his site ten fold.

The only way to be certain of anything in marketing is to test it. Pay per click
marketing allows you to test real time with the fastest feedback loop of any
marketing medium in the world.