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Is Your Paid Search Advertising Generating Positive Financial
By Kevin Gold, Mon Jan 2nd

As an online business, you may be familiar with or currentlyutilize "pay for performance" search engines to send visitortraffic to your website. Also known as pay-per-click, PPC orpaid search, it has literally taken the online marketing worldby storm especially the two largest players, Overture and GoogleAdwords.

A 2004 "New Methods in Search Marketing" study by Piper Jaffraystated that "paid search constitutes more than 87% of U.S.search market revenues." This staggering statistic begs thequestion, "Are advertisers achieving a positive return on theirpaid search investment?" In other words, are sales beinggenerated or is money just being spent?

The answer to this question may stem from understanding the roleof the two critical performance metrics generated by all paidsearch campaigns (1) click-through rate and (2) websiteconversion.


The click-through rate is defined as the percentage of times apaid search ad is clicked on out of the total number of paidsearch 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 oneuser clicks on your ad, the click-through rate is 10 percent.

Website conversion is defined as the percentage of users whovisit your website and complete your primary objective (i.e.purchased a product) out of the total number of users who visityour website in a given period of time.

Sales / Click-throughs (i.e. Total Visitors) = WebsiteConversion (a.k.a. sales conversion)

So what role does each play in understanding the effectivenessof a paid search campaign?

Standard practice among advertisers is to concentrate on writingads that achieve a high click-through rate to send more visitortraffic 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 achieveszero sales (0% website conversion.)

OR

*A 0.2% click-through rate for a paid search ad that achieves10 sales (10% website conversion).

The answer is obvious. The click-through rate, especially fornewly setup PPC campaigns, is relative - it is the websiteconversion rate resulting from visitors clicking through aparticular 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 primaryobjective do I want a visitor to complete on my website?" andthen they work backwards. They identify the type of visitor andbuying behavior

that will most likely result in a completedaction (i.e. sale, registration, etc.)

In addition, they perceive their ads as automated salespeoplewho "qualify" visitors. Regardless of a high or lowclick-through rates, the focus is on generating a positivereturn 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 andother mobility equipment. B.Pride Scooters From $1850 whilestocks last. Houston, Texas, USA.

If you selected B. you are correct.

Ad B. qualifies visitors based on their buying behaviors andcustomer type most likely to purchase a Pride Scooter from thebusiness' website.

First, the ad states a price point (i.e. from $1850) to attractvisitors seeking the website's premium product whiledisqualifying ones seeking discounted or lower-priced scooters.A user researching scooters does not have to click-through thead to find out a general price range.

Second, the ad targets a geographic region since the majority ofpeople who buy scooters demand an actual test ride. If thecompany is located in Houston, Texas then users from otherlocations will not feel compelled to click-through the ad.(Ideally a geographically-targeted PPC campaign like usingGoogle Adwords Regional-targeting works best in this situation).

In essence, ad B.'s goal is to pay "per click" for only visitorsmost likely to purchase their product. This ad attempts to"filter" unqualified visitors thereby increasing the return oninvestment per click-through.

Ad A. instead spends money on attracting and generatingclick-throughs from all visitors and relies on the website tofilter qualified versus unqualified ones. This is not a wiseeconomical approach especially if no "visitor exit strategies"are pursued.

Last, successful paid search advertisers rely on testingdifferent ads to determine which appeal generates the bestwebsite conversion for a particular keyword. They rely on actualvisitor feedback to help them determine which appeals are mosteffective. Once a positive return is achieved then focus isshifted to increasing the click-through rate for the bestconverting keywords so more sales can be realized.

So "Are you spending money to bring just anybody to your websiteor visitors ready to buy from you?" Think about ..is Your PaidSearch Advertising Generating Positive Financial Results foryour website?

About the author:Kevin Gold is CEO of Enhanced Concepts, specializing in turningwebsite visitors into leads or sales, co-editor ofWebSalesability.com and published writer. Get a free report, "12Sure-fire Ways to Increase Your Website Sales" and an exclusive5-day website conversion email course by visitingwww.enhancedconcepts.com.

 
 
 
 
 
 
 
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