Return On Investment is the Key to PPC

There is no better way to generate immediate traffic for your site then to use PPC advertising. You need to focus on return on investment to evaluate if this is a good marketing medium for you.

Known as PPC, pay-per-click advertising is a rather revolutionary concept. While each PPC system differs a bit, the basic idea is you can bid for placement on a search engine or other sites and get immediate placement. Instead of sweating out and waiting for search engine optimization to result in rankings, you can just buy your way to the first page of various search results.

PPC has evolved over time. Overture was one of the first big PPC platforms. The launching of Adwords by Google ratcheted up the competition. Yahoo eventually purchased Overture. MSN then finally got around to launching its own PPC platform. There are other small PPC search engines these days, but these represent the big three.

Most new sites jump into PPC without really thinking through the process. Inevitably, a vast majority of these sites lose their assets! The problem is they dont pay attention to their return on investment. Return on investment is another way of asking what you are getting for your money. Many new sites will spend $10,000 on PPC only to realize they made only $5,000 on sales. Yikes!

Before launching a PPC campaign, it helps to objectively evaluate what you are selling. The profit in each transaction is critical. If you are selling products that produce a $10 profit, then you really need to watch the bottom line. If you bid 90 cents to have your ad appear when a certain keyword is searched, you need to convert one in every ten clicks into a sale to be profitable. Even then, you are only making $1 per sale.

In my opinion, there are certain types of sites that should almost always use PPC marketing unless they are just dominating the organic rankings. These sites are professional service sites. Why should they use PPC? Well, their profit per client tends to be so high their return on investment on a PPC campaign should be excellent. A physician, consultant, lawyer or whatever is looking at thousands of dollars in revenue for each client, so bidding $2 a click shouldnt be a problem. Even if it takes 200 clicks to produce a client, the professional should make a profit well above the $400 cost.

Ultimately, the first step in running a PPC campaign is to understand the finances involved in what you are selling. Figure out how many clicks to make a sale, the average profit per sale and then make sure your bids are positioned to produce profits.

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