To PPC or Not to PPC - When to Pay Per Clicks for Traffic

To PPC or Not to PPC? - Ask Your Marketing Agency This Question

Don't be fooled. 10 Years ago Pay Per Click advertising was a fairly easy-to-manage and profitable form of advertising. Contrast that with 2015 and buying website traffic is as competitive of a market as any. There are many downsides and potential risks to paying for clicks for business growth. In today's world of widespread PPC and Digital Marketing firms  out there selling small businesses on this approach there are many things they may not know and are not telling you! They sell accounts, build up campaigns and spend your money en masse. They may start generating sales but remember these are at lower margins for the business owner with the new costs. You, the business owner, are faced with buying clicks at an all time high. Clicks are not a place to gamble and financial mistakes by an inexperienced PPC firm or running an overzealous PPC campaign can cost a business....well their business!

We do not guide every customer into paid traffic campaigns - and almost never is PPC the first web marketing service we implement. We have done successful PPC campaigns for companies like NASCAR and PURE NIGHTCLUB and the lessons we learned along the way help us know when to PPC and when to NOT PPC.

 

Know The Customer

You have to know people to keep them happy. For PPC customers, we have to know their capacity/inventory, their reach, their margins, their closing rates, their budget and their goals.

And they have to know our goal. They have to know we are there working on finding the key insights that are going to turn PPC traffic into sales. To us the leads and sales we generate are lifeblood of our efforts. We make sure each one is accounted for. Customer expect traffic. They count on us to turn it into sales. 

 

Pre-Campaign Analysis For Your Business

We do intense ROAS/ROI research before launching. In-House, have created tool that helps us forecast costs and revenues and use it religiously to do our pre-campaign analysis. We live off what this business calculator tells us and do not get overly excited even when the financial numbers look fantastic. We use it to estimate available traffic, keyword costs, traffic volume, CPA (Cost Per Acquisition/Lead each business segment),  Sales Closing Percentage, Return on Ad Spend (at Different Spend Levels), Customer Profit Margins (for each product or service), and Return on Investment (ROI).  Once we understand the business and get numbers in order we still tread carefully. Before we touch a campaign or enter a credit card into PPC/Adwords account, we take time to take a hard look at the numbers for our customer. 

Yes, Quality of Traffic and Quality of Leads is very important to us. A change of 1% or 2% in conversion rates can make a big the difference. This is why having experience and not rounding the numbers is very important - we need to know the costs and the expected income to have confidence to spend our customers money. Each click cuts into the overall margin of the business and we don't take that lightly! We basically need to know how much the customer can afford on each lead and still realize a profit.  Increasing the Closing rate for the customer is something we stress. 

Being able to give these costs and income breakdowns to the account managers and customers can help manage expectations with the customer and work with the customer to implement systems to be sure we convert as many leads to sales.

 

Knowing Your Costs

Keyword Click Cost  $1

Conversion Rate 5%

500 clicks / 25 Leads 

20% Closing Rate on Leads =   5 Sales

$500 Ad Spend = $100 Cost per Sale


So if those are numbers for something like Roofing Jobs, Wedding Catering or Boat Storage you are going to make this customer money. If this on the other hand is for Window Cleaning. That's not necessarily great math. So we'd need to work to increase the Conversion rate. Maybe even up 2X or 3X with on-page development and get those conversions up. Doubling the Conversion Rate cuts the Cost Per Sale in half. Doubling the Conversion Rate cuts the Cost Per Sale in half. This is where it becomes tricky to sell PPC to everyone that walks in the Door. For us to increase conversions with Conversion Rate Optimizations (CRO) we may have to utilize more developer and set more testing budgets and resources. 

But the good news most of those developments - we create and re-use the valuable assets and data we create. A PPC company that has not done at least 100 large PPC Campaigns probably has no expertise in your or a related field or type of business. If they specialize in this they should still have dozens of campaigns under their belt. In 2006 into 2007 we built over 100 PPC Campaigns and the Websites and Landing Pages.and consider it our Breakout year for PPC as we discovered that the data exists and we must run the numbers. In order to be successful, a PPC company must RUN THE NUMBERS ON YOUR BUSINESS' PRODUCTS AND SERVICES.

 

Managing PPC Campaigns at Scale

We look to find new ways to analyze our client accounts and proactively approach our accounts with the best way to grow their business. We care about our customers business success. Monitoring Daily Numbers like Return on Ad Spend and the Health of the Campaign CTR. We are very agressive on turning off bad or low performing ads and creating ad copy samples and looking for every increase we can!

Analyzing things on a weekly basis like Conversions Per Impressions (more on that in a minute) and Working with building symmetry in our Ad Groups sizes and scopes. We have built in monitoring protocols so our team is trained to be proactive. We say “Hey – this is about to happen, let’s make sure we’re ready.”  This step is crucial to advanced campaign management and will keep the long term relationship growing with our PPC Customers. A Key for us is Never letting any Key Performance Indicator (KPI) get into the Red. We work on catching them when they are in the Yellow and learning why it got there in the first place. 

The good news is PPC is performance based so the customer is either getting results at a good ROI or not.  There at least 20 items to measure and we have controls for them, but at the end of the day we pride ourselves on taking PPC campaigns we can make a profit on. Then aggressively completing the job. 

 

Bidding on Local and Dayparting

Let's say this is your PPC ad:

Auto Repair Phoenix
Award Winning Mechanics
We Fix All Models - Call Today!
www.autorepairphoenix.com

It's often easy to forget PPC in this case is a local marketplace for traffic, there is only so many searches for say "Tempe Auto Repair" in the next 4 hours. What we do is ask ourselves. "How are we going to monopolize this category for our customers?" One strategy we endlessly employ is Ad Scheduling for local campaigns. Timely bidding is important. Business often have capacity restraints and having 1 more customer vs 1 less is the difference between a successful day or not for our customers.

With Local marketing you are often looking to achieve maximum capacity at the best price (not always the lowest price) at a given time of day. For National accounts there is little market constraint. It's more about reaching capacity. Which relates to our next point about understanding the costs of a lead from a given ad campaign, and finding ways to reduce the cost of a each business lead.

 

Conversions Per Impression Analysis

We learned this over many campaigns and how to really find the winning ads and campaigns.

To calculate your conversions per impression for ads you take a sample number of impressions, for examples use 100,000, and then you multiply that number by the CTR of the ads you want to compare. That will give you a clicks number that you then multiply clicks by the conversion rate, which gives you the number of conversions you would get for every 100,000 impressions. 

You end up with number of conversions for 100,000 ad impressions. So this goes beyond the CTR of a certain ad.  What this metric you end of keeping ads with lower CTR but higher Conversion per Impression and move them into new Ad Groups and so on and so forth.

Again, this means that exploring new ways to combine ad text and calls to action can improve gross conversions for our customers. Which increases profitable revenue which is the name of the PPC game!

Furthermore, SWM's goal is to grow you business with traffic that leads to sales, so our PPC strategists are constantly look for ways to increase your conversions and reduce your costs. But not before we do a thorough and honest examination of the financial formulas to build you a winner! The cost of making sure we are launching PPC campaigns that can sustain our customers may seem intense upfront but in the long term it puts us on a path together as Marketing Partners for years to come.