PPC advertising - minimizing the cost
If you've ever been turned off participating in PPC
(Pay Per Click) campaigns, it's quite understandable.
It's not unusual to pay several dollars for each click
depending on the industry involved. If you're new to
the world of pay to play, read my introductory article
on pay per click.
Why do companies pay such high PPC prices?
If you examine PPC prices, you'd be left thinking that
everyone involved has squillions to invest. It's not
the case. There are plenty of little guys who, out of
ignorance, take the plunge only to drop out shortly
afterwards - and it would appear that there's always
someone waiting to take their place.
The high cost of PPC usually boils down to a few
reasons:
Auction fever
*
Advertiser 1 makes a bid
*
Advertiser 2 outbids him
*
Advertiser 1 outbids Advertiser 1 to get top
ranking back
*
Advertiser 3 comes on the scene and outbids them
both
*
Advertiser 1 & 2 rise to the challenge
While everyone is getting caught up with the bidding
process, many advertisers wouldn't have researched
their COA (Cost of Acquisition) for each new client..
they are spending more than they are bringing in terms
of profit.
At the end of the cycle, advertisers 1,2 & 3 run out
of cash - but there are plenty more of these kinds of
advertisers out there... they get auction fever.
Brand awareness
Many large organizations are willing to spend
megabucks just to get their brand name in front of
people - sales are just a bonus. A good example
organization such as Coca Cola.. one of the best know
brand names in the world - yet they still pump huge
amounts into advertising each year.
The acquisition boys
In a town I lived in, there was an independent grocery
store. A couple of executives from a large supermarket
chain gave him a check and told him that this was the
amount their company was going to pay him to sell up.
If the grocer refused, they threatened to open up a
store across the road from him, run it at a loss until
they sent him bankrupt - and they made good on this
threat. The same sort of strategy can be used in the
pay per click game.. the bigger companies try to
starve out the smaller ones.
Large quantities at small profits
Business owners have an increasing tendency to pursue
turnover at the expense of profit margins. They are
prepared to have very narrow markup, sometimes none at
all - with the aim of acquiring customers in bulk in
order to hopefully push other products onto them at a
later stage. It doesn't always always work out this
way. Many companies end up with a huge client base and
then don't have the resources to properly resource
their services. Meanwhile, they've "polluted" PPC
bidding with outlandishly high bids that have a
negative affect on all advertisers.
How to avoid paying high PPC prices.
PPC advertising for highly competitive keywords isn't
for the those who are faint hearted and on tight
budgets. Advertisers should carefully calculate their
COA before they step into this arena and start bidding
against the big boys for choice terms.
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Bidding on popular keywords
The experienced and those advertisers who don't
monitor their PPC listings can be easily spotted. As
an example, the following is a sample bid listing on a
keyphrase that I saw recently:
Position
1: $10
2: $8.50
3: $8.49
4: $5.50
Advertiser 3 has fallen asleep at the wheel, he could
have that position for only $5.51 - even if he bid $6,
that may sufficient to prevent advertiser 4 trying to
outbid him. Because he isn't monitoring this also
forces Merchant 1 & 2 to maintain their high bids in
order to stay in their respective positions - this
happens *very regularly* - it's totally insane.
If you are determined to bid on high value, popular
keywords, ensure you monitor bids very closely, you
can save a heap of money.
Bid on less popular keywords/targeting
While "flombles" may be the most popular keyword in
your industry, why not try for "red flombles" instead
- you may not get as many visitors, but more
descriptive, multiple keyword terms can cost a packet
less and bring you more targeted traffic. Then all you
need to do is to have multiple listings on different
keyphrases to give you the level of traffic you
require. Here's a real-life example from a popular PPC
network:
Keyphrase: ringtones
No.1 ranking cost: 48c
No. of times searched in the last month: 928588
Keyphrase: siemens ringtones
No.1 ranking cost: 11c
No. of times searched in the last month: 3221
Keyphrase: mobile phone ringtones
No.1 ranking cost: 29c
No. of times searched in the last month: 3331
Keyphrase: motorola v60 ringtones
No.1 ranking cost: 12c
No. of times searched in the last month: 4776
If you average out the cost of the 3 less popular
keywords, it comes out to around 17.6c per click.
That's nearly 2/3 cheaper. Over 1000 clicks, using
minor keywords and phrases in this example would save
the advertiser around $300 and these less popular
keywords/phrases can generate better targeted traffic;
driving down the cost of acquisition for each new
client.
Don't aim for a no.1 ranking
So may advertisers unnecessarily give themselves
ulcers over a no.1 ranking. A number of studies have
shown that as long as you're within the first 5, your
chances of a successful campaign are still very good.
Think about your own shopping habits - do you buy the
first thing you see, or do you tend to compare prices?
Perhaps by dropping the level of your bid and
therefore your ranking, you can give prospective
clients a more compelling reason to buy from you by
offering them a discount via the money you save on
your PPC campaign!
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Effective fraud monitoring and filtering
Each time engages in click fraud in relation to your
campaign, it drives up the real PPC price for you. One
or two clicks probably doesn't matter, but what if
it's hundreds? Fraudulent clicks happen more regularly
than you may think. Read my article on click fraud for
a more detailed discussion and strategies, including
information on the use of filters and other tools
supplied by PPC companies.
Create custom landing pages
Bear in mind that anything that helps you to convert
visitors into customers effectively reduces your COA,
making each click "cheaper". Instead of directing
visitors straight to your home page, create special
pages that focus on the keywords you used to direct
them to your site.
Watch for special offers
Most PPC companies run special offers quite regularly
e.g, deposit $50, get an extra $50 in credits. Read
the newsletters sent to you regularly and take
advantage of these kinds of savings.
If you're just starting out in PPC, try a few
companies that offer signup credits and discounts so
that you can experiment. A listing of some of these
companies and other valuable tips can be found in my
introductory guide to PPC advertising.
PPC is not for everyone, but don't be scared to give
it a whirl. Treat it as 50% strategy and 50% gambling
- i.e. don't invest more than you can afford to lose.
Related learning resources
PPC - Introduction, tips and resources
PPC fraud - detection and prevention strategies
Minimizing shopping cart abandonment
Michael Bloch
Taming the Beast
http://www.tamingthebeast.net
Tutorials, web content, tools and software.
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