Do you approach pay-per-click (PPC) as a flat-rate line item in your budget? Then you’re setting yourself up for draining instead of filling your bank account. Cost-per-click (CPC) isn’t the key consideration. Return on investment (ROI) must control your PPC decisions.
In his article “How to get your AdWords bids and budget right, Torels Kjems says, “With Google AdWords you can quantify your returns and fairly accurately gauge how much revenue and profit you’re getting from your ads. He contends; it’s time to drop housekeeping budget’ thinking, “and any idea you have of setting aside a fixed monthly amount for AdWords.
How do you ensure “the highest possible balance in your bank account at the end of the month with this approach to PPC? Kjems says you do it by setting a price on conversion. Determine how much you’re willing to risk to get the sale, subscription, customer inquiry or whatever your ad is designed to secure for your business. Use that figure to set your PPC ceiling.
When you take this approach, it’s possible to have an AdWords budget that’s quite large. Yet, because you’ve tied it to solid ROI statistics, your income from PPC grows your bank account. Your goal is to identify your threshold’—the point at which ROI dips below acceptable levels. When your cost to convert exceeds this ceiling, you also know it’s time to look at your AdWords analytics. As Kjems says, “You simply freeze the poorly performing keywords, ad groups and campaigns and use less money on AdWords for that month.
All this is counter intuitive, especially when you look at Google’s help tips. Google tells you to set a budget, in much the same way you would plan a holiday. Then it focuses on setting daily spending limits. The problem is this. It’s not the spending limits that should concern you. It’s whether you’re focusing your ads correctly. You can choose a relatively high budget if your conversion rates are high.
So how do you up your conversion rates? How do you ensure costs usually generate revenue?
There are two primary strategies recommended by Sarah Kicinski, CMO of PostcardMania. Get rid of dead-end leads. Maximize revenue with performance tracking analytics.
This strategy focuses on lowering your PPC costs by eliminating low-converting clicks. Kicinski warns that dead-end leads “can sneak into your PPC advertising easily if you aren't careful, and they'll deplete your ROI by driving up costs without bringing in revenue. She shares the example of a user who typed in a search query that contained two words related to her PPC keyword list. They clicked on her ad, even though what her company offered was not what this person sought.
Kicinski had failed to use the right negative keywords to prevent her ad from showing up on that person’s search page results. Negative keywords are just as important as the positive keywords you choose. With them, you control where Google displays your ads—so they only appear when your prospects for conversion are at their highest.
How do you find negative keywords when you’re just starting out? Look for phrases people have used for past searches using your target keywords. Look for anything that isn’t related to your products or services. Once identified, non-relevant keywords go into your list of negative keywords for your ad.
Learn from experienced PPC marketers. Review your PPC tracking reports. Look for searches that resulted in clicks that are obvious poor fits. Eliminating dead-end keywords pays dividends through cost reduction.
Google may encourage you to group related keywords into a single ad group. However, this leaves you vulnerable to search-to-ad mismatches. Keep the focus of keywords within a group targeted. Better yet, use single keyword ad groups (aka SKAGs).
Yes, you’ll need to write more ads, yet you increase your ROI by only attracting the clicks you really want.
SKAGs offer one major benefit. They improve your quality score with Google. This can raise your ad’s position and lower your PPC cost per click. That translates into a positive correlation to higher ROIs.
As Johnathan Dane says, “Higher relevancy = higher click-through rate = higher Quality Score = lower cost per click = lower cost per conversion.
You’ll boost your ROI if you use performance tracking analytics to evaluate whether your clicks are leading to revenue. Have fun experimenting, while watching the results persistently.
When you see something that needs to change, act quickly. Your analytics tracking points toward money-making trends. Follow them. You’ll see your revenues go up in response.
Make sure the landing page linked to your ad is highly relevant to the promise of your ad. It’s a key factor in high converting advertising results.
If you’re limiting your budget out of fear, it could be you’re also saying, “No, I don’t want to make money. Be proactive instead. Focus on uncovering the keywords you know will yield a good return. Put together ads that include the keyword in the headline and focus on benefits in the description. When you get that click, you’ll be positioned to earn revenue.
There you have it. It’s not difficult to protect your bank account from PPC drain. In fact, PPC could be the best way to pump your bank account full of dollars.
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