Is PPC cost-effective for your business?

It’s not uncommon for me to hear people say they’ve tried pay-per-click and have either found it to be very expensive or it didn’t work for them. I’ve also come across many people that believe it to be too expensive and have not tried it for their business at all.

On the other hand, I have come across a great many companies that have said pay-per-click has worked well for them. I find that 80% of these accounts are already working fairly well and gaining profitable results. However, when I look into the accounts, I have found them to be wired completely incorrectly, requiring a lot of work to rebuild them up to their optimum performance.

An account should focus on obtaining the highest place in terms of Quality Score and the lowest click price possible. By focusing on these, the amount of sales can generally be boosted, doubling them without affecting the cost of advertising; this will either generate more leads or save on the amount being spent, making it a much more cost-effective option.

 

How?

It’s all about the money spent: the return on ad spend and your return on investment. If you’ve found click prices to be expensive, you have to consider what your competitors are doing that you aren’t: one scenario could be that they are losing money on their advertising. By advertising, they will lose money while you don’t.

These companies lose money as they don’t monitor their return on spends; simply pumping money into AdWords doesn’t make it work – additional to not working it makes things significantly easier for the competition. They tend to be paying a lot more for their click prices than they should – if they’re losing money, they’re being outbid by somebody else.

Generally speaking, the Google ecosystem works extremely well in all industries. With click prices starting very low, the aim is for competitors to outbid one another to appear at the top of the search engine. However, this is not just a money auction: having the highest potential cost-per-click or the highest maximum bid doesn’t necessarily mean you will rank at the top of the search page. This is where the economics become more in-depth and scientific.

The very first things you need to assess are how good your Quality Score is and what you are doing to ensure you get the lowest possible click price. This is determined by Google’s indication of how people will respond to your advert: if it’s decided that there will be a bad response, or if you’re using keywords that are perhaps not in the best interests of the user, Google will lower your Quality Score and increase your click price.

 

How can I fix this?

This is a relatively easy problem to fix: firstly, by following the Quality Score guidelines, you can reverse-engineer a decent Quality Score and earn better rankings. This is either something we, as a PPC agency, can do in-house, or you can learn about how to amend it yourself by attending one of our training courses.

Secondly, you need to ensure you’re using all ad extensions and formats. Using these can increase your click-through rate, which in turn increases your Quality Score; your overall ad rank will be improved by Google based on the volume of formats being used and how well they’re being used.

I have a question: are you ensuring you have a high Quality Score and using your ad formats and extensions correctly? My guess is that about 80% of those reading this article are perplexed by this information: I urge you to view this video by Google’s Chief Economist Hal Varian, who gives an easy-to-understand and comprehensive explanation into the complicated AdWords Auction. For the remaining 20%: the rest of this article is aimed at you.

 

It’s still not working – what else can I do?

Here’s one scenario I’ve come across that baffles those seemingly ticking all the boxes. You’re taking care of your Quality Scores, putting ad formats into place, have low click prices you’re getting competitively, have a good response to adverts, click-through rates are high… On the surface, it appears as though you’re mopping the floor with your competitors. However, they seem to be flourishing in business while you’re struggling to make ends meet as a result of advertising.

Sound familiar?

You need to look at what they’re doing that you aren’t. Perhaps they source their products for less, have lower running costs, fewer members of staff, or are simply performing on a business level more efficiently than your business.

These are the things you really need to focus on. If any of this rings true, and they are both more efficient at producing sales and have a higher advertising budget, they will continue to beat your business exponentially. The gambit here is that you need to find out exactly how they’re doing it: by becoming a customer of theirs for just one sale, you can begin to understand the process they use. You could do this by buying something directly, becoming a secret shopper, or really get to know the inside of their business by calling and pretending to be a customer. Better still – get other people to do the same thing for you.

After conducting research, you will inevitably find better ways to run your business – at this point, you should return to pay-per-click advertising. By increasing your profitability and decreasing your overheads and running costs, your business will perform infinitely better.

 

Conclusion

By playing the internet marketing game with pay-per-click and website designers, and by increasing conversion rates and getting the highest volume of customers for your money spent, you can make huge improvements to your business. The curve is exponential, but it takes a time, patience and perseverance to get there.

I want to leave you with a final question to ponder over: if you’re finding that your clicks are too expensive and your competitors seems to thrive, what could you do in your business to lower your overheads and running costs, making clicks more affordable to drive up sales?