Pay per click advertising (PPC), allows marketers to quickly drive targeted traffic to their website. PPC also affords site owners the opportunity to test new product initiatives fairly quickly. But PPC has its pitfalls; so it is important to hire someone competent to do it for you, or to be prepared to spend a great deal of time learning how to properly organize a campaign and write compelling ad copy, not to mention how to do an exhaustive keyword analysis.

Even with a good group of keywords, several different ad creatives and a properly structured campaign, a well-executed PPC campaign requires constant monitoring and adjustment.

The Big Picture

There are several reasons why PPC advertising revenues have skyrocketed over the last several years. One of those reasons is that PPC provides marketers with an extremely measurable advertising venue. Once you decide to advertise on the search engines, the best place to begin is by determining what a click – or better yet, a conversion – is worth. Without this benchmark, it will be harder for you to determine whether this venue is indeed cost effective for your business.

B2B and lead generation sites average between 2% and 5% conversion rate. B2C e-commerce and sites have a conversion rate between 0.5% and 2% …not much different from direct mail marketing.

There are free Internet-based tools on the search engines to help you determine the average cost per click for your list of keywords. Then if you already know your average order amount, profit per order and your estimated conversion rate, you can get a pretty clear picture of what a click is worth. So be sure to place the cart behind the horse, and determine the value of a click first. Once you know this you won’t look like a dope when the CEO asks you, “Why do you need that much money for PPC advertising?” You’ll be able to provide a quantifiable answer. The CEO will appreciate that you understand what’s important – his money, or more likely his shareholders’ money.

The Metrics

The many facets that affect your PPC campaign’s success can’t be learned from a book, or a blog, but rather from constantly monitoring your results over time.  Metrics such as impressions, clicks, click through rates and average position should be recorded, especially as they relate to bid and match strategies for all of your keyword phrases. It’s also useful to make notes and record factors that you can’t control, from seasonality to weather, geo-political and economic events. “Distractions” do affect buying trends …even for B2Bs.

Employing a bid strategy can help you determine where you get the best conversion rate for the lowest possible cost. CEOs are sometimes apt to deem the #1 position most important, no matter the cost; whereas a savvy PPC professional may find that position #3 returns a much better ROI. Show those metrics to the CEO… not to prove him wrong, but to demonstrate how well you are paying attention to the bottom line.

By testing multiple match strategies for your keyword phrases, you can easily determine which phrases provide the best conversion rates for the lowest possible cost. Broad match will typically award you the greatest amount of impressions, but generally the most expensive cost per click and the lowest conversion rates.

Savvy PPC marketers also test a variety of creatives for each ad bucket. You should always be trying to beat your last best ad for click through and conversion rates. It’s also important to note that the content in your ad should also be found on your landing pages. Search engine bots will visit your landing pages and factor their quality into the cost of the click. (Reason #236 why Flash should be used sparingly, if at all.)

In closing:  know the value of a click;  keep an eye on the minutia;  record your data;  test/test/test  …and if you can’t dedicate the resources to do all of this properly, there are experienced professionals to whom you can outsource the management of your PPC.