Return on Investment

A key factor when choosing a pay-per-click network (aka ppc network) and embarking upon an advertising campaign should be return on investment (ROI). There is an old adage that says you have to spend money to make money. While true, it is also true that you can spend more money than you make and put yourself out of business if you cannot measure the effectiveness of your advertising. Simply put, ROI is a measure of how much return (profit) you make on a given investment (advertising dollars).

So how to you maximize ROI on Pay Per Click networks?

In my Pay Per Click Advertising Guide you will notice the many different Pay Per Click networks available to advertise your products and services. Pay Per Click advertising can be deceptively expensive especially since some advertising networks have bid prices as low as $0.01 per click. It adds up more quickly than you think and if you’re using a very rough gauge of success (i.e. “Gee, it seems like my sales went up when I started that ad.”) and cannot more precisely gauge the success of particular campaigns or specific keywords then you could be throwing away hundreds or thousands of dollars per month. That is not how you maximize ROI, in fact, you have a negative ROI at that point.

Here are a couple of scenarios in two extremes. First, on the one extreme is a keyword on Yahoo! Search Marketing that costs $8.00 per click to be in top position. Paying this amount could cost you $8000/day. Just because somebody is bidding this amount does not mean they are profiting – in fact, many lose a lot of money quickly on Adwords or Yahoo! Search Marketing and then give up on Pay Per Click networks. Of course, there’s always enough new people flocking to these networks all the time that drive up the price per click and make it unprofitable. That $8/click may very well be profitable but how can you know unless you measured that after every 10 clicks you made a $100 sale or some other metric?

An opposite extreme is a network like Xuppa. You can pay $0.02 per click for the same term you would have to pay $8 per click on Yahoo! Search Marketing. What a deal! That is until you are paying $50 for 5000 clicks and you still haven’t gotten a single sale from the leads on that network. I have actually measured Kanoodle keyword target ads ROI – I had 400 clicks without a single user leaving my landing page. In fact, half of those “visitors” never even let the page fully load. The reason is click fraud. I don’t do keyword targeted ads on that network anymore and it only took me a couple of days of data instead of months of “I wonder if I’m getting any sales” to figure out Kanoodle was not for me.

The reason I can pick and choose keyword prices on Yahoo! Search Marketing and Adwords or pick and choose which networks work is because I measure ROI. There are two tools I recommend:

1. Google Analytics – Free with your Google Account. Measure campaign performance and keyworkd performance on your web site.

2. AtlasOnePoint – a real powerhouse. It costs about $80+ per month which seems like a lot of money but it comes with more sophisticated tools than you can shake a stick at. Their documentation alone is really good to look at just to see the different kinds of advertising strategies that are out there and even pitfalls like bidding wars that occur on those networks. If you are a business that will be advertising heavily on the major search engines, you ought to really consider the services. $80 is a drop in the bucket compared to most Pay Per Click advertising budgets.

Once you begin measuring ROI with either of the above services you will better be able to tell which ad networks work best and which campaigns within those ad networks work. This will help you better determine how to price your keywords and whether to give up on some campaigns to maximize ROI. I was actually pleasantly surprised recently to see how great ROI was on the 7search network. Results vary so measure ROI for your own ads.

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