Pay Per Click Search Engine Bidding Strategy
Mark J. Welch, an Internet Performance Marketing Consultant who runs http://www.MarkWelch.com , wrote this post in the I-Sales Digest, Issue 1568 .
Mark writes about bidding strategy and being ranked first compared to second and third.
==> TOPIC: CONVERSION RATES FROM PPC SEARCH ENGINES
From: Mark J. Welch
Gary Salzman wrote:
>> Are there any studies, opinions or predictions on the cost difference in relationship to number of sales vs the cost of being ranked 1, 2, 3, etc on Overture? Such as Rank 1 costs 2.00/click, Rank 2 $1.99, Rank 3 $1.55, Rank 4 $1.54. <<
I'm glad you asked this question.
The Overture bidder in position #1 for a specific term, will almost always draw more clicks than any other listing. But the ROI from those #1 clicks is lower than the ROI if the same listing appeared, at the same price, as listing #2.
I call this the "idiot click" problem, although a fairer term might be the "lazy searcher" problem.
The most extreme example I can offer is someone who searches for"Lolita" because they are looking for kiddie porn. The first listing (at one time) was a one-cent-per-click bid by MovieGoods.com, which sells movie posters and stocked the movie poster for the film"Lolita." The listing title was "Buy 'Lolita' Movie Poster from MovieGoods' and the description was "MovieGoods stocks 77,000 movie posters, celebrity photos, and movie memorabilia, including movie posters from the film 'Lolita.' "
None of the kiddie-porn seekers read the title: they just went ahead and clicked on the first link, discovered it was a page selling movie posters, and abandoned the site. We drew about 100 clicks per day, at a cost of $1 per day, from this one search term, and of course nobody bought anything. We deleted that listing.
Now, move on to a more practical example: MovieGoods sells movie posters, and thus it should not surprise anyone that it bids on the search term "movie posters." When I first launched the MovieGoods campaign at Overture (in early 2000), I bid on that term at various rates from $0.05 to $0.85, and the bid needed to hold the #1 position varied from $0.29 to $0.86.
One issue is that during the course of a day, our $0.33 bid might be in the #1 position for a while, and then someone outbid us and we found ourselves in #2 and as new bids come in we might get pushed down to #2 or #3. Thus, it's hard to know what position the term was in, when it was clicked.
But over time, I was able to analyze the difference from being in position #1 vs. #2 or #3 or "lower." And because of the "idiot click" problem, I found that we could actually bid HIGHER for position #2 than for position #1.
I can't share the "actual" figures, but here are some "ballpark" numbers that show the analysis.
First and foremost, my goal was to acquire customers through Overture while spending no more than 20% of gross sales on our bids. Thus, if I bid $0.33 per click, I had to be confident that on average, each clickthrough would generate $1.66 in sales -- or as a practical matter, if we paid $0.33 per click and our average Overture-driven transaction was $38.00, we had to see one sale from every 23 clicks).
If the MovieGoods listing appeared in position #1, we drew a lot more clicks, but the conversion rate was below 4%, or about 1 in 23 clicks. At that price, assuming an average transaction size of $38, we could only afford to bid $0.33 per click to hold position #1 at Overture. At any higher bid price, we did not generate enough sales to justify the spending.
But if the MovieGoods listing appeared in position #2, our conversion rates were higher. We drew fewer clicks (and spent less money at Overture as a result), but instead of converting 1 out of 23 clickthroughs into sales, we converted about 1 in 18 clickthroughs to sales. As a result, we could profitably spend $0.43 cents per clickthrough to be in position #1, but if the #1 bidder dropped out, we had to lower our bid so we were either in position #2 again, or in #1 at $0.33 or less.
So to sum up: we could profitably pay up to 43 cents per click for ANY position other than #1, but we could only pay up to 33 cents per click for the #1 position at Overture. (The math has changed since early 2000, and since I quit as Chief Strategist at MovieGoods, I don't have access to the current numbers, but it appears that the company is bidding a little bit higher.)
Naturally, every type of search term will work differently. For example, MovieGoods sells movie posters, and sometimes bids at Overture on "movie titles" or "actor/actress names" (e.g. "Star Wars" or "Sandra Bullock"). For those terms, we almost never wanted to be in position #1 because most people who search for those terms are not looking for movie posters, and we absolutely did not want any "idiot clicks." However, when bidding on a more specific term like "Star Wars movie poster" or "Fred McMurray pictures," MovieGoods is comfortable as the #1 bidder because the search term indicates a strong interest in the stuff MovieGoods actually sells. At the opposite extreme, we found that if we bid for any position, even at one cent per click, on terms like "movie review" or "movie trailer," the bid was unprofitable.
Another way of looking at this is to admit that MovieGoods' products are "bought, not sold." If someone is looking for information about the Spider-Man movie, it's quite unlikely that we can convince them to buy the Spider-Man movie poster -- we just can't "sell" well enough to justify bidding aggressively on the movie title alone. However, is someone searches for "Spider-Man movie poster," then they are showing a strong "buying" interest and so we want to appear highly-ranked in response to that search phrase (currently I see MovieGoods is bidding $0.16 and is in position #2 for that search term at Overture).
Some people are confused because they look at traffic levels. For the same search term, a 43-cent bid for position #1 might draw 500 clicks per day, while a 42-cent bid for position #2 might draw only 220 clicks. But the real measure is the "cost per dollar of profit," which should be less than a dollar. Most of us use a surrogate, such as "cost per dollar of sales" (and at MovieGoods, my benchmark was that I could spend only 20 cents per dollar of sales generated, assuming an average 20% profit margin, which of course was unfair since some products had higher margins and some loss leaders had less margin).
Finally, when "managing" your Overture campaigns, it's important to use your titles and descriptions not only to "sell" or "encourage" clicks, but also to "pre-qualify" clicks. Including price information, or the word "buy," will discourage clicks from people looking for cheap or free stuff (but in position #1 you'll still get those "idiot clicks"). And since not all of Overture's partners display the complete title or the complete description, it's important to put that pre-qualifying language at the beginning, not the end, of your title or description.
Mark J. Welch
Internet Performance Marketing Consultant
http://www.MarkWelch.com
"Targeted Traffic For Pennies.."
By Jim Daniels
What follows is a proven, step by step formula for driving highly targeted traffic to any website; for pennies .
Recently, I've been sampling new promotions methods to drive fresh traffic to my website. I had been reading quite a bit about goto.com and how other webmasters had been getting great results with it, so I decided to give it a try.
In a nutshell, goto.com is a "pay for rank" search engine. It allows website owners to bid on keywords related to their site. When users search on any term at goto.com they are presented with a list of sites, with the highest bidders appearing closest to the top.
Based on my own experience, this site not only offers a great way to find things on the web, it offers a very inexpensive way to generate targeted traffic to any site. By following the details of my own goto advertising campaign, you should be able to emulate the excellent results I've had.
Just a few weeks into my campaign, I am now generating between 85 and 100 visitors each day from goto.com. My costs are averaging about 4 bucks a day. As I continue to tweak my advertising (I'll teach you how) I expect my numbers to double and possibly triple. But I'll get to that in a minute. Let's take things a step at a time...
Step 1: Open your own GoTo account.
The first step is to visit www.goto.com and open an account. There is a minimum investment of $25, but you get the best bang for your buck with GoTo's $99 Express Service.
The way it works is simple... As an advertiser at goto.com, you bid on search terms relevant to your site. You have complete control over how much you pay on a per- click basis on each of those search terms. The higher your "bid," on each search term, the higher in the search results your site will appear. As GoTo proudly states, "It's targeted, cost-per-click advertising and you set the cost per click!"
Step 2: Decide how much a visitor is worth to you.
You can do this by checking your current website stats. Add up your average number of monthly visitors and determine what percentage of them actually go on to become a customer. This can be tricky but it is an important step. Depending upon the average cost of your products or services, you should be able to come up with a ballpark figure as to what each visitor is worth.
Example: If I'm converting one sale from every 100 visitors and my average sale is $100, then each visitor is worth about a buck. (Keep in mind, this does not take into account the lifetime value of a site visitor or customer.)
Once you have an idea of how much each visitor is worth to you, write it down. You will use this number as a "cap" on your bids. More on this later.
Step 3: Start a file on your computer with keywords pertaining to your site.
Using any word processor, start typing anything and everything you can think of that pertains to your site. If you are selling pet supplies your list would look something like this...
dog
cat
kitten
dog bone
collar
dog food
pet
pet supply
(Don't worry about pluralizing all your words. GoTo's Search Pluralization feature analyzes your keywords and does this for you automatically.)
Now before you tackle this step, I must inform you that this can be the most time-consuming part of your goto campaign. Why? Well, in order to really get the most from your campaign you'll be making a list of at least 1000 keywords, or search terms. That's right, I said one thousand. You don't "need" that many to get started with goto, but I tried bidding on a limited number of keywords and the results were nowhere near the cost- effectiveness of using a large list. A large list allows you to bid as low as a penny on 90% of your keywords. Even if 10% of them get a single click each day, you're generating 100 visitors right there.
Goto offers a "suggested search terms tool" to help you: http://inventory.go2.com/inventory/searchInventory.mp
When you type in a word there, you get a list of related search terms that were searched on last month at goto.com. I found their suggestion tool helpful, although it can still take quite a bit of time to compile a large list with it.
Actually, I must admit I cheated on generating my own keyword list... As a registered member of Challenge, I have access to a keyword generation script that generated literally 1200 terms for me in a few minutes. This tool saved me days of thinking and typing and quite frankly is worth the price of admission to the private site. (Especially if you are planning a goto campaign.)
Step 4: Write a title and description to go along with your keywords.
When you place your bids at goto.com you will also be asked for the title of the URL you are submitting and a short description. It is important to write something brief, yet eye-catching. Remember, the main objective is to get people to click. Use of the words "free" and "you" can be very useful here. Stick to the tried and true classified advertising axioms but make an effort to stand out from the crowd. A good idea is to write something YOU would click on.
You may want to write two or three of these titles and descriptions, especially if you plan to bid on keywords that cannot be directed to the exact same URL at your site. Ex: One of my bids was on the keywords "free downloads" so I wrote a separate title and description for the software area of my site, http://bizweb2000.com/software.htm and submitted that specific URL.
You can save time if you can write a description that covers your entire site and then link all your bids to your main URL. Although your traffic may not be as targeted when you do this, it is less time consuming than trying to break your site into specific areas. It all depends on your individual site and how much time you have to spend. (Remember, you can always adjust links once your account is online and drawing traffic.)
Step 5: Place your bids.
Okay, you have a nice long list of keywords, along with titles and descriptions. Now it's time to get your bids in! You do this at goto's DirecTraffic Center. This is their account management tool, where you can add, modify, or delete your search listings, 24 hours/day, 7 days/week. You can also check your account balance, add money to your GoTo account, change your bids in real-time and view your activity reports. Once you've opened an account you just click https://secure.goto.com/s/dtc/center/ to log in.
As far as actually placing your bids, there are basically two methods to utilize --manually (by hand) or by using the Excel spreadsheet they offer. This is a no-brainer. Go for the faster and more accurate spreadsheet option. It allows you to complete one form and email it to chgorder@goto.com for their review.
Microsoft's Excel is part of the Office Suite and many PC users have it, even though they may never use it. Although I had never opened Microsoft's Excel program before, I was able to learn enough in about a half hour to get me through. Basic skills like repeating text and drag and drop of my keyword list were simple enough to figure out. Within an hour of downloading the spreadsheet they offer, I had a completed form ready with over 1200 keyword bids.
An important topic to touch on here is the pricing of your bids. I suggest you price all your bids a one cent. (0.01) Since you will undoubtedly be submitting some keywords that are not currently being bid on at goto, why pay more per click than you have to. A penny bid will put you at the top on these keywords! Once your spreadsheet has been accepted and put online, you can then start adjusting for more traffic. (More on this in the next step.)
Note: Make sure your spreadsheet does not contain off-topic keywords. Submissions are spot-checked and routinely refused if they contain keywords unrelated to your site.
Step 6: Adjust your bids.
This is where knowing what a click is worth to you comes into play. At Goto.com's DirecTraffic Center you can now adjust your bids in real-time. This area shows you your current ranking on each of the terms you've bid on and also tells you how much you need to bid to get to the #1 spot. What a tool!
While I don't recommend you go for number one with every bid I do recommend you try for a top 50 spot. As of the writing of this, each page returned on goto searches returns 40 sites. Getting your keywords on the first page or even the very top of the second can generate traffic.
What has been working for me is this: As I go through my bids I adjust only the ones that I feel are highly likely to get searched on. If I can squeeze into the top ten on any of these by adding a few cents to the bid, I do it. Then, I make sure that the real common and super-busy keywords appear at least in the top 50.
Example: The word "business" was very popular and my penny bid had me at #153. I had received zero hits from that low position. So I bid just enough to move it up to the top 50 spot and bingo- six hits the next day. While you may be thinking that six hits is nothing, remember that I'm bidding on 1200 keywords. I've had time to adjust about 35% of them so far and I'm up to 100 visitors a day from goto.com. That's over 3000 visitors a month and I'm far from done.
As I mentioned, knowing what a click is worth to you comes in handy here. If each visitor to your site is worth say, .65, then set that as your limit, or cap. Bid up to that amount on any keyword, but not over it. This will ensure that your campaign remains profitable.
As you make adjustments to your bids, you should visit the "view stats" area of the DirecTraffic Center frequently. Checking your stats at least once each week will allow you to keep on top of your adjustments and maximize your traffic.
That's it! An effective new traffic source for your site!
In closing...
While I'm not much for spending money on advertising, this new method is cheap and effective. Anytime you can get targeted traffic to your site for pennies, you need to take action.
I've managed to get some excellent results with goto.com, even with the huge amount of competition in my industry. For other webmasters who are focused on less crowded niches, goto.com could be a goldmine of targeted business.
Take this lesson plan and goto it!
A New Approach to Pay-Per-Click Marketing
The Art of PPC - A Five Step Holistic Approach
By Simon Dang
Business Online
Over the past few years I've modified my approach to Pay Per Click (PPC) Marketing in response to the popularity of PPC and all of the great technological advances in Overture and Google AdWords. Despite these changes, there still remain some basic core principles that I always focus on for a successful PPC campaign.
Measurements of Success - What are you aiming for?
At our company, a measurement of success is one of the most important questions we ask our clients. So before you begin a PPC campaign ask yourself (or your client) what are the goals for this campaign? How do you want to measure your success? In 99.99% of the time, this boils down to conversions. A conversion can be in the form of sales, a phone call, registrations, downloads, etc. Unless you are doing a pure branding campaign, conversions really should be your end goal. Note that a conversion is much different than a click.
PPC Life Cycle
Let's take a quick look at how this works and analyze what is going on in PPC Advertising.
1) Your potential web visitor/client goes to Google, Yahoo, Msn or an affiliate site and types in a keyword phrase, for example "web marketing".
2) Your ad appears alongside the results.
3) They read your ad and click.
4) They visit your site.
5) They find what they want and pick up the phone, fax, order something online, email you, etc = Conversion!
So if conversions are your end goal, how do you increase the number of conversions in PPC? The five principles for a successful PPC campaign are the same as those described in the PPC lifecycle above. It can be very simple and easy. The trick is to balance all five principles.
Step 1: Keywords
Picking the right keywords is critical to any search engine marketing project whether this is an organic SEO project or PPC. You need to pick out the words that directly apply to your product or service. How do you find these words? To start, use the Google keyword tool and the Overture tool. These tools will tell you what words are popular and what words people are bidding on. There are plenty of keyword resources available on the internet. Among my favorites is wordtracker.com as it will do a lateral search for you and then rank the words by popularity. Try various combinations of adjectives and verb stems i.e. Skateboard supplies, Skateboarding parts, etc. If you are in a specific locale, use your city name or location such as Southern California surf boards or La Jolla oceanfront real estate, etc.
Marketability / Buying Cycle Words
If you are a B2C type of company, you may want to think about categorizing your keywords into different parts of the buying cycle. For example there are purely research oriented words such as "mp3 player review" vs specific buying words for those ready to purchase such as "ipod mini". On the most part, research words are less expensive in PPC than buying words, but research words may not convert as quickly to a sale. Depending on your marketing budget you will need to find the optimal ratio to get you the sales as well as the traffic.
Pre-Qualify your visitors
Keywords are also a great place to limit and pre-qualify your visitors and prevent people from accidentally clicking on your ad. For example if you sell wholesale detergent by the gallons, you'll want to use words such as "bulk detergent", "commercial detergent supplier". The last thing you want is to have to pay for 1000 people to click on your ad for a single box of Tide.
Step 2: Bidding = Impressions
Straight out of Andrew Goodman's Google AdWords Handbook: 21 Ways to Maximize Results . When you first start a PPC campaign, don't be afraid to bid extremely high for the first few days. Bidding equates to ranking and you need to be on the top of the first page to get the exposure and the impressions for your ads. This is extremely important for step 3 - Ad Copy, because there really is no way to test your ad copy unless you have adequate exposure and impressions. The key is to bid high for at least 3 or 4 days, then bring the bids down to a more comfortable level in tune with your marketing budget. A nice trick to try out after you've optimized your ad copy is to bid for spot #2 only. There are a lot of theories out there that click happy visitors always click on spot #1 but not spot #2. You could save yourself a lot of money by getting the exposure at position #2.
Bidding Tools
If you are in a highly competitive keyword space such as real estate or B2C, you may want to look at bidding software such as Atlas OnePoint, Bid Rank, or PPC Pro to help you adjust your bids throughout the day. In most cases however, you don't really need these bidding tools. But you should monitor your PPC at least 3-4 times a day for the first month to tweak and optimize your campaign. Day-parting is also something you should look as a bidding strategy depending on your audience demographics. For example, for high school students, you'll probably want to crank up the bids during the evenings, weekends, and summers when they are out of the classroom.
Step 3: Ad Copy = Click Through Rate
Ok, so you've picked the keywords and you have the right bidding to achieve your high levels of impressions. Now you need to write effective ad copy to entice your visitor to click on your ad. You'll want to write at least 3 or 4 versions of your ad with different titles and ad copy. It has been proven in studies that you will increase your conversions if you include your keyword in the title of the ad and within your ad copy. This is especially important in Google since it automatically bolds the key word text in your ad copy and makes your ad stand out. Use Google AdWords to test your various ads since they have a built in optimizer that will rotate your ads and serve the highest performing ad. (Overture requires a 3 day editorial period so you will not get your results as quickly).
Take a look at Net Words:Creating High-Impact Online Copy by Nick Usborne . This is a great reference that goes over writing effective ad copy specifically for the web.
Differentiate yourself
The key to writing PPC ad copy is to write something that will stick out from your competition. For example, if you are a full service travel agency bidding on the words "Las Vegas hotels" and everyone is writing ads that have the title "Cheap Vegas Hotels"why not try something different like "Vegas Hotel/Air Packages"? Or retype your title as a question such as "Planning a Vegas Bachelor Party?" vs "Las Vegas Bachelor Party".
Pre-Qualify your visitors
Just like your keywords, your ad copy is also a great place to pre-qualify your visitor. For example, if you require registration for a free white paper or a web event, mention this in your ad copy. Otherwise a lot of people will click for the white paper and then exit when they are surprised to see the sign up form. If you sell industrial rolls of tape, mention this in your ad copy otherwise someone may click for office supplies of scotch tape. This pre-qualification ad copy may lower your click through rate, but you will be getting higher quality visitors which will help you on the next step for conversions on your landing pages.
Step 4: Landing Page = Conversions
This is an extremely critical step that a lot of PPC users neglect and fail. Think about it, you can have the most successful PPC Campaign at a 99% click-through rate at a cheap bid price of $.05/click, but if your landing page is not designed effectively, looks amateurish, and is difficult to navigate and read, your entire PPC budget is going to be wasted. For the landing page, ask yourself is this what the visitor expects when they click on the ad? Is it easy to recognize what your business does? Would I buy something from this website?
Website Usability
You essentially have 3 seconds to convince your visitor that your website and business is the solution to their problem. Spend some time to have someone review your site for usability. Check out http://www.useit.com/ , http://www.sitepoint.com , or http://www.alistapart.com as references or contact website usability companies such as http://www.experient.biz/ for a personal consultation. You don't need flash and animation to coax your visitor into buying your product, instead focus on simple clean navigation that will allow your visitor to find what they want in the shortest time available.
A-B testing:
As with your ad copy, be sure to have at least 3 or 4 versions of your landing page and test them to see which one produces the highest conversions. You'll be amazed how small changes can make a large difference. Just changing colors on the page, font sizes, links and navigation, simplifying your sign up form are all things you can experiment with to achieve an optimized landing page for conversions.
Step 5 - Overall website appearance & website tracking
As part of the overall marketing strategy you'll want to have a nice looking website in addition to an attractive and effective landing page. By having an easy to navigate website you can up-sell your customers on your other products and services.
Website Tracking
According to a recent report by IMediaConnection the overall average for conversions across the web is 2 percent. Are you getting these types of conversions? Website tracking is obviously very important to your testing and optimization of your PPC campaign. Begin with the free Google and Overture tracking tools which allow you to track from the click to the conversion. For a more in-depth analysis, I recommend taking a look at a client side tracking tool such as Webside Story's Hitbox Professional or Hitbox Enterprise. With Hitbox, you can accurately track all of your marketing campaigns with one system PPC, SEO organic, email campaigns, affiliate marketing campaigns, banner ad media buys, direct mail, etc.
Path to Success
PPC is a whole new type of advertising and to be successful at it you'll want to be sure to maintain a well-balanced strategy to optimize your campaigns. Remember that each of the five principles affects each of the others. If you choose the right keyword, but don't bid at the right price or do not have adequately converting ad copy or your landing page doesn't convert, then your end goal of conversions will not be met. Continue to balance and optimize all five principles and you will be on your way to a well maintained PPC campaign. Please write me directly if you have any questions. I plan to submit follow-up articles that describe in more detail each of the five principles above.
About the Author
Simon Dang is a Director of PPC Search Marketing at Business Online, http://www.BusinessOL.com . Business Online provides customized website solutions to help plan, build and grow your business online. Our solutions include Website design, Search Engine Marketing, PPC Marketing, Website Usability and more.
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