WIth PPC, as for any other media, media buyers carefully evaluate the advertising costs in relation to the initial purchase value or lifetime value they feel they will achieve from the average customer. As well as considering the cost-per-click (CPC), you need to think about the conversion rate when the visitor arrives at your site. Clearly, an ad could be effective in generating click-throughs or traffic, but not achieve the outcome required on the website such as generating lead or online sale. This could be because there is a poor-incentive call-to-action or the profile of the visitor is simply wrong. One implication of this is that it will often be more cost effective if targeted microsites or landing pages are created specifically for certain keyphrases to convert users to making an enquiry or sale. These can be part of the site structure, so clicking on ‘car insurance’ ad will take the visitor through to the car insurance page on a site rather than a home page.
Table below shows how cost-per-click can differ between different keywords that on generic (e.g. ‘car insurance’) and specific (‘women’s car insurance’). It also shows the impact of different conversion rates on the overall CPA. The table also shows the cost of PPC search in competitive categories and why companies strive to maximise their quality score to help reduce costs. The cost per customer acquisition (CPA) can be calculated as follows:
Given the range in costs, two types of strategy can be pursued in PPC search engine advertising. If budget permits, a premium strategy can be followed to compete with the major competitors who are bidding the highest amounts on popular keywords. Such a strategy is based on being able to achieve an acceptable conversion rate once the customers are driven through to the website. A lower-cost strategy involves bidding on lower-cost, less popular phrases. These will generate less traffic, so it will be necessary to devise a lot of these phrases to match the traffic from premium keywords.
Each PPC keyphase ideally needs to be managed individually in order to make sure that the bid amount (amount per click) remains competitive in order to show up in the top on the results. Experienced PPC marketers broaden the range of keyphases to include lower-volume phrases. Since each advertiser will typically manage thousands of keywords to generate click-throughs, manual bidding soon becomes impractical.
Some search engines include their own bid management tools, but if an organisation is using different pay-per-click schemes, it makes sense to use a single tool to manage them all. It also makes comparison of performance easier too. Bid management software such as Acquisio and WordStream can be used across a range of PPC services to manage keyphrases across multiple PPC ad networks and optimise the costs of search engine advertising. The current CPC is regularly reviewed and your bid is reduced or increased to maintain the position you want according to different strategies and ROI limits, with amounts capped such that advertisers do not pay more than the maximum they have deposited.
As more marketers have become aware of the benefits of PPC, competition has increased ant this has driven up the cost-per-click (CPC) and so reduced its profitability.
Although pay-per-click marketing does not initially appear as complex as search engine optimisation, in reality, there are many issues to consider. Econsultancy (2008b) guide to pay-per-click marketing identifies paid search strategy issues which paid search marketers and their agencies must address.
- Search ad network strategy. Which of the search networks mentioned above do you use? Which is used in different companies?
- Content network strategy. How do you treat the content network? Do you disable it? Create separate campaigns? Target specific sites using the placement tool? Develop different creative? Use placement targeting in Google?
- Campaign structure strategy. Campaign structure is important to ensure that search using a specific search term trigger the relevant ad creative. Are AdGroups small enough to deliver a message relevant for the keyphase entered?
- Keyword matching strategy. How is creative targeted using the combination of broad match and negative match, phrase match and exact match?
- Search-term targeting strategy. What is the strategies for targeting different types of keyphrases, such as brand, generic, product-specific and different qualifiers (chep, compare etc)
2. Budget and management
- Budget strategy. Is budget set as maximum cost-per-click (CPC) as the appropriate level to deliver satisfactory return on investment? Is daily budget sufficient that ads are at full delivery (always present)?
- Listing position strategy. Which position are targeted for different keywords?
- Bidding strategies. What is the appropriate maximum cost per click for different target keywords and campaigns to maximise effectiveness?
- Dayparting strategy. Are ads delivered continuously through the day and week or are different certain days and times targeted (e.g. office hours, evening after ad breaks)?
- Bid management tool strategy. Is a tool used to automate? Which?
3. Creative testing and campaign optimisation
- Ad creative and copy strategy. How are the 95 characters forming ad headlines, description and creative used to encourage click-though (and reduce click-through from unqualified visitors if necessary)? Is alternative copy tested? How are ads tested?
- Destination or landing page strategy. How are landing pages improved?
- Campaign review and optimisation strategy. What is the workflow for reviewing and improving success? Which reports are used? How often are they reviewed? By who? Which tests are used? What are the follow-ups?
- Specialist and innovative paid search techniques. These include local, international, pay-per-call, mobile search.
4. Communications integration
- SEO integration strategy. How is SEO integrated with paid search to maximise ROI?
- Affiliate integration strategy. How is affiliate marketing integrated with paid search to maximise ROI?
- Marketing campaign integration strategy. How is budget and creative changed during offline campaigns?
Chaffey, D. and Ellis-Chadwick, F., 2012. Digital marketing: strategy, implementation and practice (Vol. 5). Harlow: Pearson.