Pay Per Click Advertising in 2012

By John Eberhard

Pay per click advertising (PPC) refers to advertising on Google AdWords, MSN Ad Center, Facebook or LinkedIn. It is so called because you create ads that are then displayed online to people under certain circumstances, and then if the viewer clicks on your ad, you get charged.

Pay per click advertising is extremely effective in generating leads on a regular basis, and you can get them going fairly quickly.

Google and MSN

Google Adwords and MSN Ad Center function very similarly. Both allow you to put up ads that appear when people enter certain specific keywords. You can also select the geographical area where your ads will be seen, so if you have a local business that only services people in a certain geographical area, you can have your ads only appear to people in that area. You can select what your budget is going to be per day and thus control your expenses.

With both services you decide what your bid is going to be, i.e. how much money you will are willing to pay whenever someone clicks on your ad. Your bid, along with some other factors, will determine how high up on the page your ad appears. So if there is a lot of competition for the keywords you have selected, you may have to bid higher to have your ads appear near the top.

Google AdWords is the largest service, meaning they have the most traffic, and so in using them you will have the potential of generating a lot of traffic to your site. MSN, which merged a couple of years ago with Yahoo’s PPC program, has quite a bit less. And strangely the merger with Yahoo doesn’t seem to have raised their traffic much. The advantage with MSN is that you will not have to bid as high and so the overall cost of the leads you produce will be a lot less. You will just get fewer of them per given period of time.

Facebook

Facebook has a PPC program. These appear as small display ads with a little bit of text in the right hand column.

With Facebook you can select who sees your ads according to geography, age, sex, and according to who has certain keywords on their info page. So for instance, if you have a local dance studio, you can select a certain geographical area, then select girls between certain ages, who have the word “dance” or “ballet” on their info page. Once again you set your bid, and your budget.

I have found that Facebook’s PPC program works pretty well. It’s especially good if their demographic targeting factors work well for your business. You won’t get as much traffic as on Google, but you’ll probably get more than with MSN.

LinkedIn

LinkedIn has a relatively new PPC program. Once again you can select geography, bid and budget. But here you can target people according to membership in certain groups on LinkedIn, by job title, by working at certain companies, and by age and gender.

I have had only one client on LinkedIn’s PPC program so far, and it has been low in volume but the cost per lead has been very good, because we are able to really tightly target people who would be interested in his services.

Conversions

As I said earlier PPC is great for generating a regular flow of leads for your business. In my opinion it works better for generating leads than for generating actual online sales.

So you want to get people to click on your ads, but beyond that you want them to fill out your form on your web site and become a lead, or specifically in PPC what we call a “conversion.” A lot of this has to do with what you have on your landing page, how effective your sales copy is, and what your offer is.

Only a certain percentage of people who click your ad and come to your site will actually fill out the form and become a conversion. Supposedly nationally this works out to 3%. So if you are paying $1.00 for each click (not unusual today) and for every 100 clicks you get 3 people to become a conversion, then your cost per conversion will be $33.

Who Should Use PPC?

Because of the amount of competition in PPC today, which drives higher bids and higher cost per conversion, PPC does not work for low ticket items. If you are selling a CD or book, PPC will not work for you, because the cost per sale will be higher than the price of your product.

You could possible make PPC work for a low ticket item on MSN, Facebook or LinkedIn, but definitely not on Google.

I find that PPC works extremely well for home improvement companies, because the cost of their services is high enough to be viable with the cost per conversion on Google AdWords and the other providers. Those types of companies need leads and PPC provides a steady stream.

It’s difficult to give a hard and fast rule, but in general, high ticket items of say over $500 will do really well with PPC.

In 2012

I have noticed what appears to be a lessening of interest in PPC over the last year. I cannot personally see any lessening of effectiveness in PPC overall during that time period in generating a regular flow of leads for my clients. But I have noticed that there is a lot of competition, which in some cases leads to higher bids, and higher cost per conversion.

I also notice quite a few players in the market who are making many elementary mistakes in running their campaigns, which will cause them to get poor results and eventually drop out of the PPC market and conclude that “pay per click doesn’t work.” Just as one example, I see many PPC advertisers having the visitor land on their home page. This makes the visitor have to spend time figuring out your navigational scheme and find what they are looking for on your site. The correct action is to have the person land on a detail page for the specific product you are promoting with your ad, or even better, have them land on a custom page that is specifically for that ad.

PPC does work, but there are some basic rules that you have to know and apply. I believe it works best if you have a consultant manage your campaign.

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