Why PPC ROI Is More Important Than CTR
Are you hovering over your pay-per-click marketing CTR numbers daily, expecting them to change – maybe even go up? If so, you could be wasting your time.
It’s not that CTR isn’t important. Rather, it’s just that ROI is more important. After all, what difference does it make if your click-through rate is sky high if your conversion rate is below the floor? Return on investment is the measure of your success. It’s how much money you put in your pocket.
There are two ways to affect your ROI. Pay less or make more. Do both and you increase your ROI.
But the key is to do all the right things with the money that you do invest in PPC marketing. Simply writing ads and turning them on isn’t enough. You have to manage them, and that includes logging into your PPC accounts daily. There’s tweaking that needs to be done.
Bidding on your keywords is good, but are you bidding on keywords that you shouldn’t even be targeting? Prune your keyword list down to target only the most important keywords – the ones that will return a profit.
And something else that many PPC advertisers overlook is the value of a good landing page. Does your landing page need to be optimized? Are there elements on your page that don’t need to be there? If it isn’t closing sales from the traffic your ads are sending, then it isn’t doing its job and it’s costing you in terms of ROI. Optimize that landing page.
Instead of focusing on CTR, turn your eye toward ROI and improve your PPC marketing.
Using PPC To Brand Your Company
Advertising has always been about multiple points of action. On one hand, advertisers expect to earn a return on investment. But they also want to brand themselves in the marketplace. Sometimes you can do one or the other but not both.
The first step to using PPC advertising as a branding tool is to set your goals. Determine what your point of ROI is for each click price point. Can you achieve branding effects by limiting your ad spend to a maximum so that you can also realize an ROI? If not, then you have a choice to make.
Is branding more important or is that ROI more important?
The key to using PPC as a branding tool is to plant your company name or product brand in the top of your prospect’s mind. You want them to think of your company when they think of the benefits of using your service. To do that, you’ve got to establish your brand as a top brand through psychological condition. That may require throwing out your advertising budget and just focusing on being No. 1.
Large corporations have been making these decisions for years. Online, with PPC particularly, it’s a decision that even small companies can make.
High Dollar PPC Ads
Does it matter how much you spend on advertising? Does it matter how much you spend on pay per click advertising? I’d say it only matters if you are not achieving an ROI on your investment. Or, rather, it doesn’t matter if you are achieving a positive ROI.
It seems that Google is making hand over fist on the top 20 PPC ad keywords.
No wonder. Look at the top 5:
- Insurance
- Loans
- Mortgage
- Attorney
- Credit
If you are in the banking, mortgage, credit, or legal business, then you have to pay top dollar for your PPC ads or risk big chances that you won’t get much traffic from your advertising. But the bottom line for any advertiser is, How much ROI do you realize based on your ad spend?
If you are a small insurance company, for instance, and you target your PPC advertising toward a specific niche within the industry or a geographic location, then you can cut your ad spend down based on a narrower market definition. You are also more likely to realize an ROI.
The key is to target your advertising to the specific niche you want to do business with. Narrow your market down as far as you can before you advertise. Long tail keywords are much more profitable for smaller budgets than general keyword phrases.
If ROI Is Important, Then Why Is Your Marketing Strategy Wrong?
There has always been a sad truth about marketers – they care little for ROI. This has always been the realm of managers, particularly finance managers. Their mantra is always – ‘how much will it cost and what sort of return will we get’? When it comes to marketers, they are always interested in how far and how well they have delivered their message.
Is there a meeting place? There should be. There is one startling fact that business managers and marketers should always have at the back of their minds – it is easier to sell to existing customers than it is to acquire new customers. So my question to you is simple – what are you doing with your existing customers?
For many businesses, a customer comes to their website, buys, and disappears, often never to be seen again. Online marketing has one special difference to offline marketing, a website is not in your face everyday. Offline, your store front is there. People walk past it everyday. A website is different. If your customer has not bookmarked your website, and can’t quite remember the URL, they will visit whichever website catches their eye the next time they want to purchase.
So I ask again. What are you doing with your existing customers? Are you capturing their email addresses for email marketing? Are you inviting them to follow you on any of the social media sites? If you are not maintaining contact with your existing customers, then perhaps your internet marketing strategy needs a review. Existing customers can be pure gold so if ROI is important to you, make sure you get the maximum return from every one of them.
Is CTR More Important Than ROI?
A lot of pay per click marketers place too much important on click-through rates. Yes, it’s true, click-throughs (CTR) are important and you want to measure your CTR, but at the end of the day what is really important is ROI.
Let’s assume that you spend $1 per click on a PPC campaign. In one day you get 10 clicks so you’ve spent $10. How many of those resulted in a sale? If you got no sales then you had no ROI. You’ve spent $10 and made no money.
But let’s suppose that you are paying $2 per click and you got the same number of clicks. Now you’ve spent $20; but suppose that one of those clicks resulted in the sale of a widget that resulted in a net profit of $22. Now you’ve got an ROI of $2.
That’s not much, I know, but it’s better than $0, right?
It’s great that you’ve got an ad that can draw clicks, but you have to look beyond your ad and see your landing page for what it is. If it isn’t converting your traffic then you’re just throwing good money after bad. We’ve discovered that sometimes a simple tweak of a landing page can result in more conversions.
Now imagine in that second scenario above that you got 2 conversions instead of 1. Your ROI moved from $2 to $24. Now imagine doing that every day. Isn’t ROI a lot more attractive then CTR now?
Why PPC Is A Good Place To Start
If you have a new website that you are trying to promote and believe that a targeted SEO or social media campaign is going to help you reach your desired ROI sooner then you are in for a disappointment. It’s not search engine optimization and social media campaigns don’t have value. They do. But they usually take a while before the value starts to show.
With an SEO campaign, it really depends on the competitive playing field. But if the competition is average then you are likely to wait a year before a hard-hitting SEO campaign really starts to pay off. You might get some results within that first year, but it takes a while before you achieve respectable rankings for competitive keywords. In some industries that one year becomes two or three.
With social media, it might not take that long or it might take longer. There are a lot of variable factors that can influence the success of your marketing campaigns. One of those is your choice of social media platforms. If you show up at the wrong place then you’ll find the wrong party. Plain and simple.
With PPC you have a lot more control over the outcome than you do with social media and you can achieve much quicker results than you can with SEO. The biggest problem for many advertisers is budget. But if you can get a handle on that, running a PPC campaign right out of the starting gate should get you a quicker ROI. Are you in a hurry?
Search Engine Marketing Management: The Real SEM
Search engine marketing (SEM) has only been around for about a decade, or just a little bit short of it. Online journalist Danny Sullivan first introduced the term in 2001. Since then, search engine marketing has grown by leaps and bounds.
At its core, SEM consists of paid search and SEO – search engine optimization. Early SEM professionals spent most of their time focusing on driving traffic to websites and increasing the number of site visitors. That, however, has proved to be an unprofitable venture as high numbers of traffic do not necessarily lead to conversions. That’s why search engine marketing management, or SEMM, has started taking hold.
SEMM professionals focus more on increasing ROI through search engine marketing efforts. If you can increase your ROI by decreasing traffic, would you?
That’s not to say that decreasing traffic is always a necessity, but sometimes you can increase profits by decreasing traffic to your website. This is done by focusing on a narrower niche or topic or by writing about your niche in such a way that it appeals to a certain subset – i.e. specialization. If you reach the right target market with increased specialization then you can increase your ROI. You may lose some traffic from people not interested in your specialty, but they weren’t likely to buy from you anyway.
SEMM involves a tighter focus on profits and ROI instead of vague concepts like traffic an site visitors.
Pay-Per-Click Basics
It occurred to me that a lot of the content on our blog assumes a lot about our readers. I’ve decided to skim the surface of Pay Per Click, or PPC, for those that are new to the concept. Whether an interested individual, PPC professional, or a potential client, the following is something we all should know. These are not the official definitions, necessarily, but rather a brief overview of the terms are commonly used in the world of Pay Per Click.
- Pay Per Click- A service provided by a number of search engines, but most predominantly by Google, Yahoo, MSN and many more, and even social media sites like Myspace and Facebook offer PPC services. Pay Per Click services are a more controlled environment than natural searches, which focus on page content and external linking structure, in which one can reach potential customers or clients using keywords and key phrases relavant to their business or service. These keywords are setup to display various ads based on search queries and are intended to connect users with results that match their searches.
- Return on Investment – This sums up the overall effectiveness of a given PPC campaign. The return on the investment put into PPC can depend on many factors, but a properly orchestrated campaign, as the sum of the elements of a well optimized campaign, is the best use of that investment.
- Cost Per Conversion - Conversions are commonly measured by sales on product oriented sites, leads on sites which provide services, and can be measured by a number of other “goals”, many of which can be assigned to a single account. With the use of tracking codes attached to various pages, links, etc., a given PPC campaign can track numerous values, which are then measured against spend.
- Spend – This is generally gauged monthly, and very simply put, it is how much money you spend on the sum of all ad clicks.
- Cost Per Click - This is how much you pay when a user clicks on one of your ads. This also sums up the basic concept behind PPC, where by you only pay when a user actually visits your site via an ad you design to appear for the user’s search query, and therefore giving you a lot of control over your spend. Cost per click, or CPC, will be different for every keyword in your campaign, and the price you pay depends on many things, but is highly dependant on the competition for that keyword. The more specific the keyword, the less competition there will be, and the less you will pay when users click your ad. For example, a click on your ad for the search “personal injury lawyers in Philadelphia” will cost much less than a click on an ad for the search “lawyers”.
- Clicks and Impressions – These numbers will more than likely be very far apart, as the number of people that actually click on your ads is bound to be far less than the number of people whos searched display your ad.
- Click-Through Rate – This number is simply the percentage of people who click on your ads, based on how many see your ads. This number will generally be quite low for keywords that are far too specific or not commonly searched for, and high for more common keywords for which your ads show up closer to the first position. Average click-through rates change often and are different for every niche, and depend greatly on the ads you choose to display for certain keywords. Ads that are more relavant to your keywords will generally have a higher click-through rate.
- Conversion Rate – This number sums up the success of your ads and their ability to attract customers that will buy your product or use your service. For a given number of people, this percentage converts – and remember that a conversion is predetermined to be a return on your investment. A higher conversion rate usually means that you are spending less on each conversion, but this is not always the case. Over-bidding can lead to unnecessary spend.
When it comes down to it, no one statistic will tell you how well your campaign is doing. It is the sum of all these values and the careful orchestration of your PPC campaign that will give yo the upper-hand on your competition. A lot of people make the mistake of thinking that they can run a PPC campaign themself, and end up wasting a whole lot of money doing so. Others find what they think is a great deal, but end up handing their online success over to amateurs that know little to nothing about PPC and have very little experience.
It is important to know your Internet marketing firm before you trust them with your business – ask questions, and get answers. At Reciprocal Consulting, we like to get our clients involved in their own campaigns, because you know your business and we know how to get results.
Several Misconceptions Concerning Google Adwords
Most people know that Adwords is a valuable marketing tool, but some are still concerned about using it, based solely on misconceptions of how it works, or what it actually does. Here are some of the more common misconceptions concerning Google Adwords.
Believe it or not, many people think that Adwords is an auction, and that top bids get top spots. This would mean that only the top businesses in each niche would have a change to make an impression, let alone a sale. This line of thinking would be sure to scare away small businesses, but lucky for them, Google Adwords cares more about providing relevant search results than awarding higher bids. Sure, most cases will require you to bid a bit higher on more competitive keywords, but there is more factored in to the price you pay per click. The relevance of the keyword to your ad and the destination page, to name a few. The key here is to focus on you keyword list, and worry about adjusting bids later. There is no need to create a massive list of keywords just to direct a large amount of traffic to your site – this will actually lower your quality score and force you to pay more per click on these keywords, most of which will not render any sales.
We’ve had a lot of clients that ask us to bid whatever is necessary to keep them in the #1 spot, and some times, this is the best strategy. However, you may be surprised at how often #2 or #3 spots will render more conversions than #1. This will be true more often for eCommerce sites, or sites in niches within which people will tend to shop around. If your target audience is the type to visit a few websites before settling on a purchase, being the 3rd or 4th result may be to your advantage, and chances are, you are paying much less for clicks, and therefore paying a lower cost per conversion.
Smaller businesses tend to shy away from Google Adwords, in particular, because the research they have done has shown that they cannot afford the cost per click of Adwords, versus competing PPC services. Usually, this is not the case, but there is a possibility that your niche would not benefit as well from PPC as it would from SEO or traditional marketing. The main things to consider are the average conversion rate within your niche, your maximum cost per conversion and your monthly budget. Sometimes, certain niches will prove to be a pointless investment, but consider this: Even if your research shows that you will break even, your campaign will generally improve, and it may be possible to achieve your desired ROI. The problem with most Adwords PPC campaigns that do not improve are those that are managed by the inexperienced.
This leads me to the final misconception, that most people think Adwords is easy to use. In all honesty, the interface and the concept are a piece of cake, but when it comes down to micro-management, bid adjustments, split-ad-testing, and so on, the best result will normally come from hiring an Internet Marketing Firm like Reciprocal Consulting to do manage the campaign for you. Unfortunately, many find out too late that Adwords is not a cakewalk.
For more information on an Internet Marketing Firm that can provide your Google Adwords Pay-Per-Click services, please visit ReciprocalConsulting.com.
Speak Like an Internet Marketing Guru
Internet marketing takes years of experience to master and is constantly changing, therefore requiring dedication to continually grasp in full. However, there are a few basics that anyone interested in internet marketing should know. When it comes to understanding the fundamentals, it’s all in the terms. ROI, SEO, SMO, RM, CI, PPC, etc. These acronyms may mean nothing to most people but to us as an internet marketing firm they are our bread and butter.
Here is a basic rundown of our services and how they can help our clients:
- ROI (Return on Investment) – the key to any campaign in a simple question: is it worth it? The ROI is the net of what is spent on a campaign verses the increase of leads, sales, customers, etc. Depending on your niche, certain marketing campaigns may not be best suited for you.
- PPC (Pay Per Click) – refers to the use of AdWords campaigns on Google, MSN, Yahoo, etc. A PPC AdWords Campaign is the sum of keywords relevant to the client’s website, which are used to target potential customers through bidding for sponsored ads, reaching them on searches, as well as high-ranking sites relevant to the site.
- SEM (Search Engine Marketing) – encompasses nearly every end of internet marketing, more specifically as pertaining to a campaign utilizing search engines such as Google, Yahoo and MSN to reach a targeted audience.
- SEO (Search Engine Optimization) – process of optimizing on-site and off-site specifics in order to increase the relevance of the website to specific keywords and search terms, therefore increasing page rank and ultimately increasing online visibility in searches, essentially, making your site more popular.
- SMO (Social Media Optimization) – targeting non-search groups on social networking sites, such as Technorati, Digg, Squidoo and various blog sites. SMO targets those that may not necessarily search for your keywords because they already belong to an online community which shares information on those search terms.
- RM (Reputation Management) – various augmented forms of SEO and SMO which populate remaining ranking positions on searches for a site’s keyword set. While SEO and SMO may independently secure a top-ranking position, RM will help to populate the remaining positions in order to protect the site itself from high-ranking blogs or review sites slandering your good name.
- CI (Competitive Intelligence) – utilizing various resources and databases in order to compare your site to your competition. By pitting your site against other sites, we get a better idea of which branches of a given campaign are excelling and which need a boost.
These are just the basics. For more information about these services and others, please visit ReciprocalConsulting.com.