Pay Per Click: It`s Full of Math

So you’re starting to do some organic SEO on your website. You know it takes some time before you get results, so you want to start a pay-per-click campaign with Google to tide you over. Think carefully; it could be a very expensive mistake.

The topic of when one should try a pay-per-click marketing campaign comes up on SEO Chat from time to time; you can check out the most recent thread on the subject. It’s not an easy question to answer. Forum regular Crimson Penguin notes that, with Google AdWords, you can get increased traffic and sales from a good PPC campaign – and just as importantly, from an SEO’s perspective, “you get a large amount of data that is also highly measurable.”

Crimson Penguin goes on to state that “I would always suggest using PPC advertising if it makes sense financially for a business. If a company can afford to allocate a set amount of money per month for PPC then why not use it? The key then is optimizing PPC campaigns to fully maximize the ads’ efficiency. If done correctly, the money spent on PPC can more than pay for itself through sales conversions.”

So he’s mostly positive about the idea of using PPC – but notice all the caveats. For PPC to work, it has to make financial sense for the company; they need to be able afford to allocate a set amount of money per month; and the campaigns need to be optimized correctly. If any of those three points don’t hold true, PPC could turn into a nightmare.

So what kind of monetary numbers are we talking about with PPC? Obviously it’s going to vary with the competitiveness of the keyword(s) on which you’re bidding and where you hope to position your ad. But one small business owner shared his  experience on the SEO Chat forum. Speaking with a Google representative about his situation and keywords, he learned that “our cost will vary from $1 to $3 per click depending on the word that will be targeted in the Google search. If we assume an average of $2 per click and there’s fifteen clicks per day, that amounts to over $1000 per month (including tax).”

Most small companies can’t afford to invest that much. But wait, it gets worse. Just because someone has clicked through a search ad to your website doesn’t mean they’re going to buy something from you. You’re probably familiar with the concept of conversion rates, or what percentage of leads actually make a purchase. Let’s use some simple numbers here. Say 100 people click on your PPC ad in one month, and out of those 100, one makes a purchase. That’s a one percent conversion rate. Now, if you paid $1 for every one of those clicks, the actual profit you make on your product from that one sale needs to be more than $100 (probably quite a bit more) for PPC to make any sense at all for you.

But wait, it gets even worse. Google looks at the quality and relevance of your PPC ads and landing pages, and comes up with what it calls a “quality score.” This score can make it more or less expensive for your ads to appear. You can get the lowdown on quality score right from the horse’s mouth. This isn’t a bad thing if you have a high quality score – but getting a high score takes work. It takes time.  And if  you don’t know what you’re doing, you could end up with a lower score. In that case, you’d be better off paying someone who does know what they’re doing. Finding that someone takes time, and paying them takes money…which comes on top of what you’d be paying for the PPC campaign itself.

I’m not saying that you should not consider doing a pay-per-click marketing campaign. Far from it! But if you decide you want to do this, you need to think carefully about what you’re getting yourself into.

Long-time respected SEO Chat forum member Egol, normally a perfect gentleman, falls back on some pretty explicit language when talking about the best way to get the education you need to do PCC for yourself properly. He notes that learning to do PPC properly is “close to a difficult math class” and that its “heavy in math and spreadsheets…Success at PPC is a math game on top of a word game.” And even if you master the math, “you will be paid back with a chance of success (no guarantee) against the smart and dedicated people who make money at PPC.”

And what will happen if you don’t educate and prepare yourself properly, but try to do PPC yourself anyway? According to Egol, “If you think ‘I can do this’ and don’t do the math and the conversion tracking then you will be pissing your money away. Lots of the pros who take money for PPC can’t do the math and don’t  have any idea if you are making money or losing money. If you do hire someone to do this for you insist on seeing the math on a regular basis as competition and bidding change over time.” So consider yourself warned…and good luck.

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