What is Pay Per Click-PPC ?

Pay per click search engines can give you instant traffic and allow you to test new business models in real time. The pay per click market is competitive though. It is worth spending an extensive period of time learning how to write and target ads, tracking your competitors, and doing deep keyword research before jumping in.

Before You Start :

Metrics Based Marketing:

PPC search engines provide a highly trackable marketing medium. Frequently people begin marketing without any idea as to the approximate value of a click. If you do not set up a value range and track the results you have no way to distinguish good marketing from bad marketing.
To know the value of a click, you need to decide what the goal of your marketing is. If you are just branding, then you should expect to lose money to gain mindshare or reinforce your brand, and tracking may not be that important. If you are using pay-per-click search engines for direct product marketing, you need to know how much each click is worth.

Typical Conversion Rates:

Lead generation sites typically have a conversion rate around 10 to 12%, but can go as high as 30% + if they are properly targeted and exceptionally appealing to visitors.
Since little investment is needed to arrive at your website and many other sites are just a click away, selling stuff on the web has a conversion rate similar to direct mail advertising. High ticket items have a lower conversion rate and unique cheap items tend to have higher conversion rates. Many stores find typical conversion rates might be anywhere from .3 to 5%.

Doing the Math:

There are a ton of factors that go into click price. It is somewhat hard to measure branding, but ad distribution can help with that. Most other things are tangible.
If you know your average order size, profit per order, and estimated conversion rate you can get a good idea what clicks are worth. Some people also factor in lifetime

value of a customer, but it is harder to measure and there is still enough opportunity in many markets to do your math primarily based on direct return.

Before You Start:

It is a good idea to look at the various ads which are displayed in which order over time. The top guy might be an idiot losing tons of money or a person who is paying an extreme premium for branding.

If ads from affiliate marketers or smaller sites are ranking around the same ad position over the course of a few weeks to a month then they are probably doing something right (generating profits). It is worth it to take a couple weeks to do deep keyword research and market analysis before jumping into pay per click search engine marketing.

You Will Lose Money:

Most clicks end up being failures. Even if you have a 30% conversion rate that means that 7 out of 10 clicks did nothing for you. When you dip your toes into the pay per click market there stands a good chance you will lose money before you start making money. The main reasons are:

• You need to learn how the systems work, learning:

o what terms are important and what ones are not.
o how to target the ads
o how to write the ad copy
o how to bid
o where to rank
o what terms are overpriced

• You are competing against the best accounts.

o Some competing advertisers may have other intangible assets which give them an unfair advantage.
o If you are brand new your competitors have more experience than you do.
o Some ad campaigns have been fine tuned for months or years.
o Search engines are building trust factors into ad accounts. Some advertisers may get quality boosts and cheaper ads just for being long-term advertisers.
Search engines try to sell the concept of pay per click marketing saying that it is so targeted that everyone makes money, but in the real world that is not how things work. Some markets are competitive and will require learning, sound strategy, and tracking to generate profits.