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Is Your Paid Search Advertising Generating Positive Financial

Article:

As an online business, you may be familiar with or currently

utilize "pay for performance" search engines to send visitor

traffic to your website. Also known as pay-per-click, PPC or

paid search, it has literally taken the online marketing world

by storm especially the two largest players, Overture and Google

Adwords.

A 2004 "New Methods in Search Marketing" study by Piper Jaffray

stated that "paid search constitutes more than 87% of U.S.

search market revenues." This staggering statistic begs the

question, "Are advertisers achieving a positive return on their

paid search investment?" In other words, are sales being

generated or is money just being spent?

The answer to this question may stem from understanding the role

of the two critical performance metrics generated by all paid

search campaigns (1) click-through rate and (2) website

conversion.

The click-through rate is defined as the percentage of times a

paid search ad is clicked on out of the total number of paid

search ad views within a given period of time.

Click-throughs (i.e. Total Visitors) / Impressions =

Click-through Rate (a.k.a. CTR)

For example, if your paid search ad is seen by 10 users and one

user clicks on your ad, the click-through rate is 10 percent.

Website conversion is defined as the percentage of users who

visit your website and complete your primary objective (i.e.

purchased a product) out of the total number of users who visit

your website in a given period of time.

Sales / Click-throughs (i.e. Total Visitors) = Website

Conversion (a.k.a. sales conversion)

So what role does each play in understanding the effectiveness

of a paid search campaign?

Standard practice among advertisers is to concentrate on writing

ads that achieve a high click-through rate to send more visitor

traffic to their website. Unfortunately this general assumption,

"more traffic equals greater positive results", is flawed.

Consider this. Which click-through rate is better?

* A 20% click-through rate for a paid search ad that achieves

zero sales (0% website conversion.)

OR

* A 0.2% click-through rate for a paid search ad that achieves

10 sales (10% website conversion).

The answer is obvious. The click-through rate, especially for

newly setup PPC campaigns, is relative - it is the website

conversion rate resulting from visitors clicking through a

particular paid search ad that defines success or failure.

Successful paid search advertisers take a different approach.

They start with the end in mind by asking, "what primary

objective do I want a visitor to complete on my website?" and

then they work backwards. They identify the type of visitor and

buying behavior that will most likely result in a completed

action (i.e. sale, registration, etc.)

In addition, they perceive their ads as automated salespeople

who "qualify" visitors. Regardless of a high or low

click-through rates, the focus is on generating a positive

return from the advertising dollars spent.

For instance, let's review two different ads. Ask yourself,

which ad best qualifies visitors?

A. Pride Scooters Low prices and huge selection of scooters and

other mobility equipment. B. Pride Scooters From $1850 while

stocks last. Houston, Texas, USA.

If you selected B. you are correct.

Ad B. qualifies visitors based on their buying behaviors and

customer type most likely to purchase a Pride Scooter from the

business' website.

First, the ad states a price point (i.e. from $1850) to attract

visitors seeking the website's premium product while

disqualifying ones seeking discounted or lower-priced scooters.

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A user researching scooters does not have to click-through the

ad to find out a general price range.

Second, the ad targets a geographic region since the majority of

people who buy scooters demand an actual test ride. If the

company is located in Houston, Texas then users from other

locations will not feel compelled to click-through the ad.

(Ideally a geographically-targeted PPC campaign like using

Google Adwords Regional-targeting works best in this situation).

In essence, ad B.'s goal is to pay "per click" for only visitors

most likely to purchase their product. This ad attempts to

"filter" unqualified visitors thereby increasing the return on

investment per click-through.

Ad A. instead spends money on attracting and generating

click-throughs from all visitors and relies on the website to

filter qualified versus unqualified ones. This is not a wise

economical approach especially if no "visitor exit strategies"

are pursued.

Last, successful paid search advertisers rely on testing

different ads to determine which appeal generates the best

website conversion for a particular keyword. They rely on actual

visitor feedback to help them determine which appeals are most

effective. Once a positive return is achieved then focus is

shifted to increasing the click-through rate for the best

converting keywords so more sales can be realized.

So "Are you spending money to bring just anybody to your website

or visitors ready to buy from you?" Think about ..is Your Paid

Search Advertising Generating Positive Financial Results for

your website?

About the author:

Kevin Gold is CEO of Enhanced Concepts, specializing in turning

website visitors into leads or sales, co-editor of

WebSalesability.com and published writer. Get a free report, "12

Sure-fire Ways to Increase Your Website Sales" and an exclusive

5-day website conversion email course by visiting

www.enhancedconcepts.com.