Is Pay-Per-Click Advertising Cost Effective? - By: Jim Pretin
I will just come out and say it. Pay-per-click is the most frustrating, pointless, bone-headed form of internet marketing known to man . Most websites use at least some pay-per-click to attract traffic to their site. Other sites use nothing but pay-per-click to attract traffic to their site. I, on the other hand, detest it. I hate paying for clicks and I have modified my internet marketing strategy accordingly.
What is pay-per-click (PPC), you ask? Well, go to Google, and then type in a keyword or phrase that you want to search for. Then, at the top of the search results, you will see a section for what is called sponsored links or sponsored results. These sponsored links are paying a certain cost per click to be listed in this special section at the top of the listings. Each one of these websites pays a certain fee to Google each time someone clicks through to their site.
Each website that uses PPC has to place a bid on how much they are willing to spend per click for a certain keyword. The highest bidder is placed in the number one position, the second highest bidder is placed in the number two position, and so forth. Also, each bidder specifies how much they are willing to spend per day. Once their daily budget has been exhausted, the clicks stop until more money is added to the account.
Google is not the only search engine that has a PPC service available. Overture also has a service, as does Miva, and several others. Each service is tied to different search engines. If you go with Google, your website will be listed on Google, AOL Search, and Ask Jeeves. If you sign up for Overture, you will be listed on engines such as Yahoo, MSN, Netscape, and several others. Miva is tied to approximately 6 different search engines.
The costs are expensive, especially if you are bidding on a highly sought after keyword or phrase. Keywords related to auto insurance, or mortgage quotes, can cost anywhere between $1 - $20 per click or even more if you want to be ranked in the top position. If the keyword you want to advertise for is not too popular, the click costs will be much less. Usually, doing pay-per-click will boost your Google PageRank by 1 (PageRank is scored on a scale of 1 to 10), but it certainly has never actually helped me get anywhere near the first page of Google.
It is possible to spend thousands dollars on clicks and make zero sales of the product or service you are selling. Conversion rates are usually 1%-3%, meaning that only 1%-3% of the people who come to your website will actually order what you are selling. So, you need to take that into account when developing your marketing strategy.
The problem with PPC advertising is that most people using a search engine are only looking for information, and are not planning on buying any products or services. So, you can spend tons of money to get clicks, but you will likely only convert 1% - 3% of those clicks into sales, and sometimes you will get absolutely zero sales.
I am not saying that the search engines do not bring business to your site. They absolutely do. That is why it is good to achieve a high ranking on the search engines within the free part of the listings. Even though you will still only convert a small fraction of your visitors into paying customers, at least you are not wasting money on every single click. So, getting to the top of the search engine listings without having to pay for each click is paramount for your online business.
PPC advertising is not necessarily inappropriate for every online business. If you are selling an expensive item ($100 or more), you can turn a profit as long as your per-click costs are somewhat modest. But generally speaking, you will spend more than you will make.
The only time PPC is truly helpful is for businesses that sell a service where a recurring fee is involved. For example, dating websites charge their customers a recurring monthly fee to be a member of their site. So, if you own an online dating service, it makes sense to use PPC and not worry about losing money on attracting new customers, because if they stay members for the second month, you will be able to charge them again, thus making your website profitable. If they stay members for a year or more, then you really come out ahead.
You need to have a lot of cash to burn in order to compete with the bigger businesses who are spending thousands of dollars per month for their clicks. If you are operating a small business, you need to diversify your internet marketing efforts by optimizing your website and increasing your link popularity so you can climb to the top of the search engines without having to pay for every click you receive.
Also, you should consider having an affiliate program so that other websites will promote your business for free as long as you pay them a commission for any referrals they produce. The best way to approach internet marketing is to use several different methods that when put together result in an optimal cost situation for your business and attract a significant amount of targeted traffic to your website.
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Jim Pretin is the owner of http://www.forms4free.com, a service that helps programmers make an HTML form