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Is Your PPC A Towering Folly? Let's Make It Profitable!

Every so often somebody decides to build the world’s tallest skyscraper. Second tallest is no good. Gotta be the tallest. Nothing else will do.

It can involve some incredible feats of engineering. Amazing internal stabilisation systems that keep the building upright during storms and natural disasters. Inspiring stuff.

Empire-State-August-29But somewhere down the line, somebody lost perspective. Somehow the objective of being tallest for the sake of it took over from the practicalities of providing space.

Then someone else decides to build an even bigger skyscraper.

And so it is with PPC…

Clash Of The Titanic Egos

Some protagonists will go storming up to ad position 1 simply because it’s the top place. They throw caution to the wind (and money at Google) – and forget about Return on Investment (ROI).

It is most obvious when egos are involved. Arch rivals get locked in attritional bidding wars. Neither triumphs because they both pay too much for their conversions.

If they’d parked their egos, they could have both saved themselves a lot of money (and grief).

One of the best ways to reduce costs is to get great Quality Scores on your keywords. But 10 is the highest you can get. There is no ‘Spinal Tap’ setting in PPC – so after 10 you need other ways to cut costs.

Such as bidding less and accepting a lower ad position. Yes, ad position 1.0 can mean more conversions – but if you’re paying too much for them, life can get expensive.

29th empire state builderBy bidding less – and working on your landing pages to produce a better conversion rate – you can gain a much better Return on Investment.

You need a strategy (especially if your campaigns are not performing and your paid search needs an expert audit)…

Building A Firm Foundation

Calculate how much a conversion is worth to you. Whether it’s an e-commerce sale or a simple sales lead, see how much profit it will bring you.

Ask yourself the following questions (let’s assume we’re talking about a lead-based conversion):

  • How many impressions will I need to get a click (ie, what is my clickthrough rate)?
  • How many clicks will I need to get a conversion? (ie, what is my conversion rate)?
  • How many conversions/leads will I need to get a sale?
  • How much profit will that sale bring me?

You need to work out your value per click, based on your PPC conversion rate (conversions/clicks x 100) and your cost/acquisition.

Your value/click is your typical profitable cost per acquisition x your conversion rate, ie:

  • Cost per acquisition (let’s say £100) x your conversion rate (let’s say 5%) = value/click (in this case £5). That is the most you can bid and still break even.

And the higher the conversion rate, the more you can profitably bid – which should boost your ad position and potentially bring in more conversions.

Now you see why we get so excited about conversion rates – what happens after the click (i.e. what more can we do to make the searcher buy the product or fill in the contact form).

Still not quite sure where to start? Need some help with all this? Contact our Google-qualified PPC experts to see how they can assist you.

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