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Making it Work: Conversions, Not clicks
How do you engineer a successful pay-per-click advertising campaign?
By paying more attention to conversion, and less to clicks. Keep
five rules in mind:
If you want to stay on budget, you have to track conversions. What's
a 'conversion'? It's any time a visitor to your web site takes a
desired action. Examples of conversions might be:
A conversion doesn't have to be a sale. But a conversion has to be
worth something to you. If you can't think of any measurable, useful
outcome of a visit to your site, do not spend money on pay-per-click
advertising - there's no point.
Google and Overture provide conversion tracking - most other
pay-per-click services do not, so you'll need to look at third party
tools such as Urchin, which is also an outstanding site traffic
reporting tool, or GoToast, or my own firm's Xed.
If the pay-per-click service you're using doesn't offer a conversion
tracker, and you can't afford to pay for a third-party tool, try
something more basic: In a spreadsheet, track the number of
conversions, total, per day. Do the conversions increase after you
start your campaign? If so, you're likely on the right track. If
not, then there's very little chance that your pay-per-click
investment is working.
Set a Sensible Budget
A lot of folks ask me how much I typically spend on clients' PPC
campaigns. My answer is always 'just a bit less than too much'.
A little glib, I know, but the there is no 'right' amount. It all
depends on your circumstances. A good formula, though, is:
cost per click is less than:
conversion rate * total clicks * profit per conversion
In other words, the amount you spend per click should always be less
than the total profit earned per click. Let's say, for example, that
I'm spending $1.00 per click to bring customers to my (totally
fictitious) bicycle shop web site. I know that 2% of those visitors
contact me regarding products, and that 30% of those potential
customers actually purchase something. I also know that I average
$10.00 profit on those purchases. Finally, I also know that I get
200 clicks per month. That puts my pay-per-click campaign in this
.6% * 200 * $10.00 = $12.00
So, I'm only earning $12.00 per month on my PPC campaign, but it's
costing me $200.00. I need to reduce my cost per click, a lot, or
cancel the campaign altogether.