Should I Use PPC?

Your products or services may be excellent candidates for pay-per-click. It depends however on your profit margin. If it’s large enough then PPC will work nicely, if it tends to be small and you tend to make money on volume instead then probably not. So, you’d have to decide how much you’re comfortable with each order placed through PPC costing you. For example, if you paid on average $70.00 in advertising for every one order you got through PPC would that still allow you a very reasonable profit. You’d then target your PPC campaign to spend $70 or less per order.The basic idea is that you need to make more than you spend.

How Do I Measure PPC Success?

The way you measure what people are buying is by putting some tracking code on the thank you page of your site’s order form or lead generation form. Google then tracks the conversions. So for example you may get 100 clicks to your site from your PPC ads, and each click costs you .70 cents. So, say that for every 100 clicks you get about 1 sale (which is tracked when someone orders). So 100 clicks cost you about $70.00. And so for that $70 you have net 1 sale in our example.

$70 dollars is just an example though. One of the company’s I manage a PPC campaign for has a $50 dollar limit, so we shoot to make it below that. That is the CPC or average "cost per conversion". And that’s a pretty realistic one.

What Should I Expect in the First Month of Doing PPC?

The first month of PPC advertising is usually a trial period to see how well things work. If it’s working it can work great. For example if your company services a major metro area and gets 50  to 100 leads a month, and then you may be perfectly happy spending $50 per lead. If you’re a national or international company then you could stand to get much more traffic because you have a much larger geographic area you can target.

For your PPC campaign you don’t have to target just one metro area but as many as you want. Then you can set whatever budget limit you want. For example you can limit to your budget to spending only $50 a day on ads, and you’d never go over that. However if those clicks are profitable and you’re recouping the money, then we can raise that limit and get more clicks. As long as you’re always recouping the money. If your business is seasonal that will be reflected in the amount of traffic from PPC too.

What’s a Good Starting Budget for PPC?

I don’t recommend you start with anything less than a $1,000.00 ad budget for a month because you need enough clicks to optimize the campaign and get it rolling. If you’re using a PPC management service like I provide then in the first month there is usually a setup fee which includes setting up the campaign with 100s of target keyword phrases, and creating ads to test. Each month there is also a management fee for the ad budget which includes the ongoing optimization of the campaign, testing, working at lowering your cost per click, and reporting.

So here’s a realistic example break down of minimum costs you might have with a $1000 a month budget:
Month 1: $1000 ad budget + $300 campaign setup + $300 campaign management (30%).
Month 2: $1000 ad budget + $300 campaign management (30%).
Month 3: $1000 ad budget + $300 campaign management (30%).
Month 4: $1000 ad budget + $300 campaign management (30%).
Etc…

When your PPC campaign is profitable you’ll probably raise your budget to meet demand and make more money.

If you’re new to PPC I hope this information helps you make a smarter decision about using PPC. Feel free to leave your comments below or contact me with questions.

Tags: Pay-Per-Click, ppc

This entry was posted on Saturday, July 11th, 2009 at 9:12 am and is filed under Pay-Per-Click. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.