The Truth About Pay-Per-Click
There are a lot of half-truths and “no-truths” about Paid Search, or “PPC”, or “Pay-Per-Click” or “AdWords” advertising floating around in the Online Marketing space.
There are also a bunch of guides written by high-priced Ad Agency types and Academics, written for other Ad Agency types, filled with jargon and very high-level tactics that make no sense at all for most business owners. Especially at the prices the fancy ad agencies charge.
I suppose you could say that the world doesn’t need another PPC guide.
We actually think it does.
This one will won’t deal so much with the detail of how you actually put together a high-performing PPC campaign. Nor will we give you a bunch of broad generalizations that aren’t very useful.
What we will try to do is get you thinking about the overview and strategy pieces of the overall marketing puzzle as it relates to PPC advertising in your quest for more traffic.
First of all, you need to know that Pay-Per-Click is the most powerful and important marketing innovation in history.
There, I said it. If you disagree, or even if you don’t, talk back in the comments below!
The ability to put your ad in front of literally millions of people interested in exactly what you have to offer, and to have to pay for that ad only if someone expresses enough interest in it to click on it makes a lot of things possible that were never economically feasible before the Internet and before PPC.
Despite what horror stories you may have heard, we firmly believe that without a smart and well-executed PPC strategy you don’t have a complete online marketing plan, and if you don’t have a complete online marketing plan, you’re very likely not to have a business at all for very long.
Yes, there are some very rare situations where the costs of PPC advertising exceed the profits that can be generated by that advertising.
However, even in the rare case when PPC won’t work, you are just about guaranteed to learn things about your prospects/customers/clients, at a very small cost, that will help you in your other efforts to get more traffic.
So let’s get started!
One media research firm predicts that spending on local PPC advertising will rise to about $38 billion in 2015, from about $23 billion in 2011. (“Local” generally refers to ads that are targeted to a specific locale in one way or another.) That’s a big number, and a big jump in spending.
What that probably means is that your competitors are using PPC, or they will be, and that as time goes by, if you don’t have a well-planned and well-executed PPC plan in place, you’re going to be losing business to firms that do.
Remember that no matter how loyal you think your customers are, your existing customer base degrades fairly rapidly. People move, or find a new favorite company, or even pass away. If you aren’t replenishing your customers, you’re soon going to be in trouble. More and more, your prospects and customers are on the web, so you had better be there, too, doing the right things in the right way.
PPC and SEO and SEM
Many people are confused about the jargon. What’s SEM? What’s SEO? What’s PPC, exactly?
SEM is “Search Engine Marketing.” It’s getting visitors to a website by SEO or PPC (to keep it simple.)
SEO is “Search Engine Optimization.” It’s persuading the search engines that they should show your site high in the search results. It’s done in two ways:
- On-Page Optimization–Making your site search engine-friendly by seeing that a bunch of technical factors on your site are done in a way that makes it easy for the search engine to understand what your site is about. (That’s way over-simplified, but close enough for this discussion.)
- Off-Page Optimization—Again, this is way, way over-simplified, but the more other sites that you can get to link to your site, the more important the search engines will think your site is, and the higher position you’ll get in the search results.
PPC is Pay-Per-Click Advertising. It’s bidding on keyword phrases that people might use to find what you have to sell so that the search engine will show your ad. The beauty of PPC is that you don’t pay when your ad is shown, you only pay if the searcher clicks on your ad.
“AdWords” is Google’s version of PPC. Yahoo and Bing are the other two major search engines, and there are lots of others. All of them have paid advertising available, although Yahoo and Bing are connected. Google has over 60% of the search market, and rising.
Why The Fear with PPC?
It’s very easy to set up an AdWords account and write and publish an ad, and people do it all the time, without understanding that PPC is much more complicated than it looks, and without understanding the massive volumes of clicks available. It’s a perfect recipe for getting into trouble.
If you bid on the term “auto insurance”, and write an ad with a headline that says “Low Cost Auto Insurance,” you could get thousands of clicks in a matter of hours. If those clickers don’t buy, and if you didn’t set a budget, you could spend thousands of dollars very quickly for a very small return.
It happens all the time, and Google doesn’t give you your money back when you tell them that you made a mistake.
On The Other Hand . . .
It doesn’t have to be that way, of course.
An experienced AdWords consultant won’t let you make mistakes like that. He’ll have you start very small, and you’ll gradually find out what keywords make you money, and which don’t.
You’ll refine your bidding techniques, and where your ad shows, and your headline, and your body copy, and your landing page, and your “match types”, and lots of other things.
For example, you’ll add negative keywords so your ad doesn’t show for ambiguous search terms that are unlikely to lead to a purchase.
We recently chuckled when we saw a slew of ads for the companies that come in and dry out your carpet and house after a flood or a plumbing leak.
The problem was that the search phrase was “water damage iphone.”
Now, it’s true that the guy who dropped his iPhone in the pool isn’t likely to click on the carpet dryer’s ad, so the carpet guy isn’t going to pay for a lot of clicks that don’t lead to sales.
It’s still bad, because every time an ad shows and doesn’t get clicks, the advertiser’s “clickthrough ratio” or “CTR” goes down, which can cause his quality score to go down and his costs to go up.
In this instance, the advertisers would have been smart to set words such as “cell phone” and “iPhone” and “watch” and “computer” and “keyboard” as negative keywords. In that way, any search that contained any of those words wouldn’t cause their ads to show.
If you sell widgets, you probably don’t want your ad to show when a search query contains the words “free” or “sample” or “career” or “book.” (In those examples, you are likely to pay for useless clicks.)
Those are just a couple of uses of negative keywords. By the way, Google reports that more than half of all advertisers haven’t used a single negative keyword in the past 90 days, so you’ll be a step ahead of your competition if you do.
An Overview of PPC Marketing (With an Emphasis on “Marketing”)
Now that we have set a bit of a background, let’s talk about how paid search really works.
There are three primary parts of a PPC campaign—keywords, ads, and landing pages.
- You create a list of search terms. This instructs Google to show your ad when someone types one of those terms into his search box.
- You design an ad that you hope will appeal to someone searching on that term.
- You design a landing page (the page where the searcher lands when he clicks your ad) that persuades your visitor that you have the right product or service, at the right price, and that you’re the kind of people he should buy from.
Pretty simple, right?
Actually it’s not at all simple.
It’s actually quite complicated.
As a simple example, if you sell hamster food, you don’t want someone writing a term paper on hamsters to click on your ad. That person isn’t a buyer.
So you don’t bid on the term “hamsters”, you bid on “buy food for dwarf winter white Russian hamster.” The person searching on that term has an itch he wants to scratch. That person is a buyer.
And your ad should be designed to capture the attention of people looking for hamster food, and not for hamsters or cages or litter.
The landing page should rarely be your home page. Almost always, it should be a specially-designed page that that instantly tells the person who clicked your ad that he’s in the right place (the dwarf winter white Russian hamster food place, not just the hamster place).
After your visitor sees what he expected to see right off the bat, you lead him through your sales process.
Or maybe you don’t.
Maybe, since most people (95% or even more) won’t buy on the first visit, you would be smarter to give away a free, high-quality and valuable guide to hamster food and hamster health in exchange for your visitor’s email address, rather than going for the immediate sale.
Now you can market repeatedly, on autopilot, to that visitor, and be much more likely to eventually make a sale.
PPC Isn’t Just for Advertising
I said above that I would talk about PPC in the context of marketing, not just advertising.
Here’s a PPC application that goes way beyond what most people think of when they are just trying to get more traffic:
Aside from pure advertising, you can even use PPC to do market research and get immediate and very accurate feedback.
You simply write an ad for a product or service you think you might want to offer. When people click your ad, you send them to a landing page where you ask them some questions in return for a free or discounted product/service. You can find out more in a few hours than you might otherwise learn in months of research and focus groups.
If nobody clicks your ad, maybe your great idea doesn’t resonate in the real world.
Or you might get your ad clicked, but the answers to your survey questions might give you a whole different slant on your product and how to market it.
PPC Tells You How to Do Your SEO
Doing good search engine optimization, the off-page part, can require that you expend considerable resources in both money and time, and the results can take a long time to show up.
The thing is, you don’t know how to do your SEO, at least not efficiently and cost-effectively, unless you know what search terms lead not only to traffic, but more importantly, to conversions.
You find those terms by running PPC campaigns, and tracking the responses all the way through to the conversion—the sale, the opt-in, the sign-up, or whatever your desired action is.
One of the beauties of PPC is that you can do all this in a matter of days, so that you can do your SEO smartly.
When you find good-converting phrases, you integrate them into your Autoresponder series.
You write articles based on the phrase, and post them on your website, and then distribute them more widely.
You do some press releases.
You do some blog commenting. You look for opportunities to do guest blogging.
You even use the terms in any offline advertising and marketing you’re doing.
Yes, that stuff above can be a bunch of work. Would you rather be doing all that work using proven profitable keywords and language and offers? Or would you rather spend 6 months doing something that “sounds good” and “makes sense” but ultimately doesn’t help your bottom line?
What’s the Truth About PPC?
The truth is that while PPC is extraordinarily powerful, it can also be extraordinarily tricky to get right, and it’s just part of the overall marketing equation.
I could write a hundred pages on keywords, or writing ads, or landing pages, or bidding strategies, or the Display Network, or Remarketing, or any of a number of other facets of Pay-Per-Click Advertising. Some of it, maybe most of it, is basic marketing and advertising principles that go back more than 100 years.
Some of it is tactics that apply those principles to the online marketing universe.
For example, once you know that a particular search phrase leads to conversions, you can write new ads that use that phrase in the headline or the body. As you write better ads that get clicked on more often, Google will reward you with higher position on the page at lower cost. The higher position gets you even more clicks, which gets you still better position and still lower costs.
Also, now you can write better landing pages that are specific to that phrase. Google looks at landing pages, too. It wants to see that your landing page is relevant to your ad. The more Google likes your ad and your landing page, the better Quality Score you’ll get, which gets you better positioning and lower ad costs.
Now you can increase your bids and get even better positioning, and eventually dominate the space, even against competitors with more money to spend, but who don’t run their PPC campaigns as smartly as you do.
Another example would be “Retargeting”, or “Remarketing.”
It’s been available for a couple of years now, but it’s not widely used, except by the very large national advertisers. Briefly, it is possible to keep track of people who come to your site, but don’t buy, or opt in or subscribe. You can tag those visitors, and at appropriate times and on appropriate sites, you can show those people your ad, or a series of ads.
That visitor was interested enough in what you have to come to your site, and now he sees your ad and your name multiple times. It reminds him of you, and it reinforces your position as a player, because he sees your name all over the place. Very powerful!
Like many good things, it can be overdone, and your visitor can feel “stalked,” so you have to do it right, which is where a PPC expert can help.
What I hope you’ll take away from this discussion is that if you’re doing any online marketing, PPC has a place, no matter what kind of business you’re in, how big you are, or what else you’re doing in the marketing arena.
PPC Return on Investment
A properly conceived and properly run PPC campaign can bring you visitors so targeted and so likely to buy, that for every dollar you spend on ads, you get a return of $2.00, or $5.00, or $15.00. Or more.
Of course, in a very competitive and mature market with giant competitors with unlimited budgets, you might only get back $1.50 for every $1.00 of ad spend. But in that kind of market you might be able to spend $1,000 a day on ads and do $4,000 in sales on which you net $1,500.
Obviously, you don’t start off spending $1,000 a day. You start off spending $10 a day, and you methodically refine your campaign as described above.
When you consistently get back $15 (or $20, or $50, or $150) a day, you ramp it up and budget $50 a day for PPC ads, and then $100, and then $500, and then $1,000.
I hope this part is obvious, but I’m not telling you that you’ll be instantly profitable with Pay-Per-Click. If that was guaranteed, Google would be a Trillion dollar company.
I just want to make sure, again, that you understand the potential when PPC is done correctly.
“If All You Have is a Hammer, Everything Looks Like a Nail”
PPC shouldn’t be the only tool in your bag – we don’t want you relying only on Pay-Per-Click Advertising to get more traffic. As we stated above, PPC should be considered a part of your overall marketing strategy. (And just so you know, it’s not the only tool in our bag. We’re pretty good at SEO, and all the other aspects of online marketing.)
In fact, I wrote a book “Make The Phone Ring . . . Secrets of Cost Effective Online Marketing,” which covers many things besides PPC. You can download it for free, or you can get the hard copy version on Amazon. But don’t get distracted. Finish reading this first
Back to PPC
OK, you understand a bit more about PPC now, and how it fits into an overall marketing strategy, and what kind of ROI it can get you. But I’ve implied above that it can be a fiendishly complex beast to master. How and where do you start?
If you Google PPC or AdWords, you’ll find hundreds of real books and e-books and courses on the subject. For our money, two of the very best books were written by Perry Marshall. Perry was one of the very first to realize the power of PPC. He has a technical background, as well as a marketing and sales background. When you read his books, you don’t just learn PPC; you learn it in the context of an overall marketing strategy.
But those are 300 page books that delve deeply and in great detail into the world of PPC and Internet marketing.
We think you will be better-served by leaving books like that, and the study and practice and trial and error involved, to guys like us. You run your business, and let PPC experts run your PPC. You’ll save time and money.
We recognize the paradox.
If you’re reading this, you’re very likely an entrepreneur, and you’ve noticed (sometimes at great cost) that mostly when you have someone else do something you can do, it doesn’t get done as well as you would do it.
On the other hand, taking your time to do stuff you could offload to someone else keeps you from being able to do the things only you can do. You may be foregoing the $1000 an hour work because you’re busy doing $100 an hour work. Or $20 an hour work.
PPC is a perfect example. During the time you’re learning PPC, you might have been able to enter a new market, or create a profitable joint venture, or acquire a competitor, or do any one of a number of things with a high payoff.
Not to mention that the PPC expert you hire might very well pay his fee with a combination of savings from the clicks you don’t pay for, and the increased sales he’ll get you while you would still be reading and learning and trying things that don’t work.
If you really want to learn the nuts and bolts of PPC on your own, you can’t go wrong at Perry Marshall’s site. That is not an affiliate link for now, but in the future it will be – which means we’ll make a few bucks if you buy using our link in the future.
By the way, once we do that, we’ll talk more about how and why you should do it as well – another stream of income that makes for a more stable business.
Here are a few more things to think about, no matter whether you decide to learn it yourself or hire a certified expert (hint, hint.)
Tracking, Measuring, Evaluating
I talked above about tracking the responses all the way through to the conversion.
It’s really important, and it’s one of things that many people don’t do, which will give you a big edge if you do do it.
Let’s say you sell hiking boots.
You set your PPC campaign running.
Among hundreds of phrases you might bid on, you’ve narrowed it down to
“Hiking boots for men”
“Hiking boots for women”
“Waterproof hiking boots”
“Lightweight hiking boots”
“Mountain hiking boots”
We’ll ignore all the considerations about adgroups and match types and landing page relevance and a bunch of other things for the moment.
You’re finding that you’re selling enough boots so that the profits are just slightly more than enough to pay for the click costs.
You can also see from looking at your AdWords account, the ratio between the number of times your ad is being shown for a phrase, and the number of times the ad is getting clicked.
You can see that “hiking boots” gets shown 10,000 times a day, while “lightweight hiking boots” only gets shown 1,000 times a day.
You also see that “hiking boots” gets clicked on 200 times a day, for a “clickthrough ratio,” or “CTR” of 2%. You see that “lightweight hiking boots” gets clicked on 45 times, for a CTR of 4.5%. And there is a smattering of clicks from all the other terms.
What you don’t know, unless you use a special analytics program, is how many of those clicks from which search terms lead to sales. You would expect that “lightweight hiking boots” searchers would buy more often, because they’re further down the “marketing funnel,” as we marketers like to say. They’re probably closer to a buying decision because their search term was more specific.
Using an analytics program, you might find that “lightweight hiking boots” clicks turn into sales 3.5% of the time, while “hiking boots” clicks turn into sales 2% of the time.
But what if you find that “lightweight hiking boots” clicks only convert 1.5% of the time?
Something’s wrong. So you start looking around, and you realize that you’re sending your “lightweight hiking boot” clicks to your home page instead of to the landing page you had specifically built for the “lightweight hiking boot” clicker. (Stuff happens, right?)
So you fix the link, and your conversions jump. Knowing that your conversions for that term are good, you raise your bid and get better positioning and get more clicks, which increases your CTR, which is already better because the match between the ad and the landing page is better, so your click costs go down.
Another example—you get lots of clicks on “mountain hiking boots,” with a good CTR and an acceptable cost (you think) but your analytics tell you that those clicks almost never turn into sales. There are several things you might try to do about that, but the point is that you wouldn’t know you have the problem without an analytics program.
So if you’re going it alone, don’t neglect the importance of a good analytics program. There are several available, and Google has a very good free one. Of course there’s a whole manual and learning curve associated with that, but without it, you’re really flying blind.
Your AdWords campaigns aren’t something you can “Set & Forget”, as nice as that would be.
For example Google has just recently changed how they treat match types. I won’t go into it in much detail here, because you can find plenty of discussions of match types on the Internet.
Briefly, though, you can set it up so that your ad only shows if the searcher types in exactly the phrase you’re interested in. For example, if you bid on “guinea pig,” your ad wouldn’t show if the searcher typed in “guinea pigs.”
Now, however, Google will show your ad for either search.
You might think it doesn’t matter, but it does. A lot. Someone searching on “guinea pigs” is just researching. Someone searching on “guinea pig” is ready to buy a guinea pig.
Seems strange that the difference between singular and plural is so important, but it’s been demonstrated over and over again, in lots of markets. (Seemingly small differences like that are why most business owners are smart to let an expert manage their AdWords campaigns.)
Google, in their wisdom, is opting everyone into that change. (The cynics among us think that it’s simply an attempt to show more ads and sell more clicks and increase their earnings.)
Fortunately, it is possible to opt out. It’s not terribly difficult to do, but if you aren’t paying attention, you’ll pay what Perry Marshall calls a “Stupid Tax,” by paying for a lot of non-productive clicks.
Google has made a number of changes to AdWords over the years. They’re not all bad, of course, but the point is to pay attention to the changes, analyze the potential effect on your campaigns, and take appropriate action.
PPC (Paid Traffic) vs. SEO (Free Traffic)
Free traffic sounds like a good thing, right?
And there’s no doubt that it is. But . . . it shouldn’t be the foundation of your business.
Let’s step back a minute. Some people compare “Real” businesses to “Internet” businesses. What they mostly mean is physical, “Brick and Mortar” businesses as compared to “Online” businesses.
What do “real” businesses do to get customers and grow?
They advertise, that’s what they do. They don’t rely only on word-of-mouth, although that may be a very powerful part of their success. They “buy traffic” by buying advertising – direct mail, magazine ads, ValPak, radio, TV, etc. It’s the “real world” version of online “paid traffic.”
Your online business, or the online marketing part of your business, should be no different. If you can’t get traffic by buying advertising, you don’t have a real business.
Your success in getting more traffic through Search Engine Optimization is completely dependent on how Google chooses to rank your website, and those of your competitors.
The problem is that they are constantly fiddling with the algorithms they use to make those rankings.
You may have heard of the “Farmer/Panda Update” a while back, but even though regular updates to that continue to spill out, it is old news and people aren’t whining about that as much any longer.
Just recently, (April, 2012) Google made another huge change known as the “Penguin Update”, which has caused the rankings of well established and legitimate businesses to fall from high on the first page of the search results, to so far down on page who knows what, that their traffic has vanished.
You don’t want that, right?
You want to be able to do what real businesses do, which is to crank up your advertising and crank up your visitors, ON DEMAND. Profitably, of course.
That’s what PPC is all about.
As I mentioned above, PPC won’t work for every business, every time. It will work for almost every business, and almost every time – yes, after some work and thinking and optimization.
But you cannot guarantee online results any more than you can guarantee that a $100,000 television campaign will work.
When Pay-Per-Click does not work, the data gathered during that process (remember, a slow, controlled, non- “bet the farm” process) is extremely important to any other online advertising that you consider.
So now it’s your turn.
Tell me about good or bad experiences you’ve had with PPC. If you’ve never used it, tell me what you’ve heard – and don’t worry, I’ve heard it all.
Not sure how long I can do this, but what the heck. If you’ve got an existing PPC account and you’d like some free strategy, let’s get on a screensharing session and I’ll give you the very best tips I can in 15 – 20 minutes.
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