March 25th, 2008 - Pay-per-Click Best Practices
Get the Most from Pay-Per-Click Advertising
There are some big numbers involved when it comes to search engine advertising. Just ask Patrick Norman, Co-Founder and VP of Ridgeland, Miss.-based remote support solutions provider Bomgar Corp. Pay-per-click advertising was the break-through tactic that spurred the growth of the business when the only source of funding was the CEO’s personal debit card. In four years Bomgar has gained 2,500 customers in 30 countries, and they’re still spending on search engine marketing, these days to the tune of about $90,000 each month. “Not less than 40% of our leads come through SEM [search engine marketing] and we consistently see a 3-to-1 return on the dollars we spend on PPC [pay-per-click] advertising,” Norman says.
Big numbers indeed, but heed the warning of Karen Jensen, the Director of eBusiness at Irvine, CA.-based Printronix, a NASDAQ-listed printing solutions provider. She warns that those big numbers can as easily be outflows as inflows. “Don’t jump in, wade in slowly,” she says. “Because if you don’t understand how much it can cost you, and how to set the limits, you can waste a whole lot of money really fast.”
Such a disparity of results is possible with any form of marketing, but the wild successes and stinging failures of pay-per-click advertising deserve special attention. The contextual advertising that emerged in 2003 has quickly become an essential part of a web site marketing program. Its explosive growth has driven online advertising estimates up to the USD$80 billion mark by 2011 according to Piper Jaffray.
There are many dimensions of pay-per-click advertising that break the mould of traditional advertising:
• The range of the network is vast. It includes not just major search engines like Google and Yahoo, but a broad network of sites that have embedded their ads. The ‘Ads by Google’ banners are the most common example.
• The targeting is pinpoint precise. Before PPC, how many advertisers could say, ‘I only want to show my ad to someone interested in stainless steel bowling balls?’
• Billing is based on actions, not impressions. You only pay when a visitor clicks your ad and visits your site.
• The range of available metrics allow ROI tracking like never before. For example, a manager can track the cost-per-lead of a specific ad among visitors from a specific region that searched on a specific search phrase.
But new tools often require new methods and new approaches. Those who approached pay-per-click advertising with old media tactics have been burned the worst. If you bid on poorly targeted search phrases without appropriate budget controls, a mob of well-intentioned web browsers might click you into bankruptcy.
The first step on the road to ruin is to jump in aggressively without allowing some time for campaign planning. Plan to ratchet up slowly as you get your feet wet. It’s easy to adjust your budget – you can switch from $10 per day to $10,000 with just a few clicks. By starting small you will know what is working (or not working) with a minimal investment. Jensen says her team continuously tweaks the campaign to get the best results.
While a small start is good, be sure you get an adequate sample size before making any decisions. For a good benchmark, aim to receive at least 10,000 impressions on an ad before make any judgments about its effectiveness. PPC is very well suited to testing methods such as A/B testing and multivariate testing. “We have learned to spread the dollars across several key words or phrases to test out which ones are most effective,” Norman says.
A Word on Keywords
Perhaps the most significant element to test is the keywords you are targeting. Unlike traditional banner ads, PPC ads only appear on search engine results pages when your targeted terms are searched upon. The effectiveness of the campaign will depend largely on the quality of your keyword research.
Be prepared to deal with a surprising irony within your organization: those who profess to know the most about the industry are often the worst ones to surmise what words customers use to search for your products or services. The problem is that the jargon used by industry insiders and analysts is far-removed from the vocabulary of most customers. So while your product manager might suggest “unified messaging solution” as a great search phrase to target, you may get much more traffic from something like “affordable phone system.”
Norman says that accurate keyword targeting is the key to their PPC success. “We were effective in our ability to optimize PPC ads because we got on a psychological level and essentially approached the marketing process from reverse to reach customers via the key search terms they were already using,” he says. “It’s important to get inside their heads – know what they think of when they think of your product.”
Watching your competitors’ search engine marketing activity can be helpful. Make note of the keywords they’ve targeted and investigate the pricing of these opportunities. But because of the dynamic bidding system for PPC advertising, it’s important to have an understanding of what constitutes good value. “In everybody’s business there are keywords that cost a lot of money, and we stay away from those keywords wherever possible,” Jensen says. Her team learned this lesson early on through an imperfectly targeted campaign that brought lots of traffic but very few leads.
PPC systems like Google’s Adwords work on competitive bidding, so short, highly targeted search phrases such as “business intelligence” can cost you upwards of $15 per click. Consider moving downstream to longer search phrases where bidding is less intense. By combining a broad pool of low-traffic terms, such as “business intelligence software provider” or “business intelligence software comparison”, you’ll derive much better value from your budget.
A System for Success
There are additional steps you can take to improve the effectiveness of your campaign. It’s important to consider the entire purchase cycle for your target audience. Getting their interest through a search engine advertisement is a good first step, but what do you have waiting for them on the landing page that is designed to meet their unique information needs? Too many pay-per-click ads still dump all users to the home page of their site, missing a great opportunity to send that visitor deep within the site to the closest match to their specific search phrase.
Well targeted landing pages will help increase the chance that the visitor will become a customer. With specific landing pages in place, you can then test the page elements to see which versions result in the best metrics. Cost-per-conversion is the golden metric for pay-per-click advertising, enabling you to measure the effectiveness of the campaign and to establish a precise ROI for your budget.
Like no other form of advertising, PPC requires a collaborative effort from a number of different departments. At Bomgar, four multiple groups are involved: content writers who research relevant words to be included in ads; ad managers who manage the performance of PPC bids, and developers who implement technical details such as ad tracking codes. Few activities are more likely to bring IT and Marketing closer together, merging Marketing’s skills with customer segmentation and messaging with IT’s understanding of reporting tools and web technologies.
When these groups work together, the payoff is highly qualified pay-per-click traffic, funneled into an effective conversion process on the site, leading to low-cost business leads or online sales. But this collaboration likely won’t come naturally. As Jensen explains, it may take some education first. She has found the most effective method of getting her product managers on board is to educate with real examples by running a test campaign for a week or two. “By taking them through several of these campaigns, they start to get it,” she says. “We show them the data behind it, and they say ‘ohhh’. The light bulb starts to flicker at that point.”
Focus on your weaknesses: PPC advertising is a great way to give a lift to an area of your business that needs a boost. For example, Printronix uses campaigns to promote new services.
Wade in slowly: Start with a small and simple campaign to test and determine what works. You can scale up slowly and avoid getting burned by inexperience.
Work as a team: Never before has advertising required such an integrated effort from varied professionals. First educate the team on the medium for best results.