Pay per click (PPC is a very complex area of online marketing, but one that can have very good results. In fact, some say that it is the most effective type of internet marketing. Through PPC management, you can make sure that your website is ranked in the search engines, even if that is almost impossible to achieve through organic results. However, unless you know what you’re doing, PPC will cost you a great deal of money without a solid return on investment (ROI).
If done properly, PPC campaigns will drive traffic to your site in a cost effective manner. This is because, rather than paying for an advertisement, you bid on a keyword or keyword phrase. You only pay the amount you bid whenever someone does click on the link and is directed to your website.
Every click through, as it is called, comes at a flat fee, therefore. And this is why it is so important to manage it properly, because if you end up having to pay that flat fee left right and center for people who don’t make purchases through you, then it will cost you a lot of money. This is why you need such an excellent strategy in place that keeps your budget in mind.
Budgeting needs to look at a number of different things, including:
- How many people who click on your ad actually make a purchase.
- How much you are willing to pay for each click through.
- How much profit you make for each purchase, on average.
- How much you are willing to spend in total for a set period of time.
Let’s take a look at these issues in particular.
The Four Elements of PPC Management
First of all, you need to know how many people who actually click on your ad go on to make a purchase. These are the purchases that, at the end of the day, will pay back for your advertisement campaign.
You also need to set a budget for each click through, setting a maximum spend for yourself.
This maximum spend should be calculated by knowing how many people make purchases, and how much profit you make on them. Let’s say, for instance, that you receive one actual sale for every 10 click through, and that the average you earn in pure profits (after deduction of all your costs except the PPC ad) is $2. If you were to pay $0.20 for each click through, you would not make any profit – although also not any losses.
Last but not least, you need to think about your total budget. Sticking with the above example, you may have set your click bid at $0.10. However, you need to be able to actually pay for that. Hence, you need to set a limit, for instance one of $100, before your ad stops. Otherwise, you could end up paying and paying again, including for more customers who will never make a purchase. Setting a limit, as such, provides you with protection.