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Pay per click advertising has become one of the most complex and convoluted arenas of online marketing, and even though the use and competition in this space has ramped up dramatically throughout the past several years. Despite this extreme growth and the level of professional aptitude and resources applied in this arena, there is still an incredible amount of potential to drive a predictable stream of profit and revenue. Opportunities in this space exist in a game of cat and mouse between your competition, what consumers are looking for, and the value of what you are presenting. The possibilities are endless, and as long as the math works out, you can still very much achieve the ideal result – a stream of positive ROI that you can turn on and off like a faucet based on the marketing and capacity objectives of your company.
A PPC campaign (also referred to as SEM – Search Engine Marketing – the two terms are essentially interchangeable) allows an advertiser to enter an auction to have their ad placed on the top of a Search Engine Results Page (SERP) for a given set of keywords. Essentially, you are trying to buy space from Google on the SERP whenever someone searches a term that you think means they might like to buy your product or engage in your services. For the scope of these articles, we’re going to focus specifically on Google AdWords – the system that serves keyword driven ads where approximately 70% of searches take place.
While the next closest competitor to Google (Bing) is worth taking a look at, the best practices on Google are often carried over to Bing. In fact, they’ve made it extremely simple to “port over” Google campaigns in an effort to be more attractive to advertisers and decrease the resources needed to play in both spaces. The competition and costs are often less than those seen on Google, so it’s worth a shot if your budget allows.
This is probably my favorite way to explain how successful PPC campaigns different from ones that hemorrhage money without producing ROI. Entering into a campaign with a proper strategy is essential to seeing success. Several businesses in the early 2000’s found a great return through AdWords without trying very hard – the level of competition was comparatively very low to the amount of traffic running through the search engine, and it wasn’t uncommon to see a cost per click under 50 cents for what are now much more expensive keywords. The game and competition have changed exponentially as campaigns became more refined, targeting became more exact, and companies large and small began to see the advertising potential of this service. Because of this, designing a strategy that has a possibility of success before a dollar is spent is critical to ever seeing any kind of return. This article will guide you through what makes up a proper strategy, how these points differentiate from the tactics that you often read about, and how all of this meshes together to put more money in your pocket.
Using this mentality as our guide, we define strategy as the “what you’re trying to achieve and how you’ll achieve it” and tactics as “how do I implement and improve upon our plan”. I always recommend beginning your strategy with the end in mind, and any conversation we start with a client begins with defining our goals and establishing the parameters for success. Working backwards from there, we can begin to flesh out an action plan for reaching those goals, rather than looking at available opportunities in the network and hoping that they “just work out”. Start with establishing the value of the action you want a user to take, and what that means to you from a financial standpoint. This value depends on what you’re trying to accomplish, and usually takes one of these two forms:
There are other scenarios which fall into a hybrid category, but 99% of what you’re doing are going to fall into one of these two buckets, and establishing a Cost Per Acquisition (CPA) is required to figure out what you’re willing to pay to create the conversion. For products, this is easy, you essentially take your net profit per sale for a given product, and that’s that. For lead generation, this becomes a bit more convoluted, as you need to take into account the perceived value of an action, balance your expected close rate, and understand the value of your service to determine a target CPA. The formula below is some sample napkin math used to quickly determine a target CPA for lead generation:
Desired Revenue / Average yearly revenue per client = Desired Clients
Desired Clients x Close rate from Acquisition Point = # of required acquisitions
Marketing budget / # of acquisitions = Target CPA
Once you’ve established your target CPA and desired volume, you can start to predict what achieving these numbers will mean to you from a revenue and profit standpoint. You now can use some of the PPC prospecting tools to start to look at the cost of advertising and determine if your ideas make financial sense. As we explore creating these types of profitable PPC environments, we focus our efforts into these areas (we’ll link the additional blogs below as we create deeper dives into each section):
Remember, no matter what your objective is with PPC advertising, you always want to develop a financial definition of the action you want your audience to take. Even if your goals wrap around engagement and brand recognition, there is still an inherent cost of ongoing advertising that needs to produce an ROI. Avoiding these calculations makes it difficult, if not impossible, to determine the ultimate financial success of a campaign. The ability to track everything in a PPC campaign is what sets this apart from traditional advertising, and failing to utilize this ability is choosing to ignore one of the key advantages to online marketing.