Why Google Adwords Ppc May Not Be As Viable As You Think

Let's say that your PPC search stats look good and it seems your campaign is going well. CTR is excellent, your keywords and ads are working, conversion rate is good. So, too, are your conversion costs. And, as far as you're concerned, PPC is making you money.

But simply taking your results at face value can give you a false picture. Because, when analyzing these, you can be making a major error.

The measure of success for PPC search is if it can deliver your goals profitably. For instance, you could be building a mailing list and looking for subscribers. Or trying to generate leads. Or online selling (e-commerce). No matter. In all cases, these goals are about converting visitors into prospects or customers.

So, applying a PPC strategy is about how much each conversion is worth to you. And how much it costs you in clicks achieve it.


THE CONVERSION RATES TO EXPECT

Although Google does this for you, here is how to work out the average cost per conversion. Divide your total advertising cost by your total conversions over the same period. Supposing your total CPC is $1200 and from this you have 20 conversions.

That means $60 is the average cost per conversion. To put it in practical terms, $60 has been the cost of every sign-up, lead or online sale.

Of course, the conversion rates you can expect from your keywords and ads are important. Unfortunately, there is no easy way to predict this. And rates are different depending on the industry. What also governs it is the type and quality of your offer. But here are some general indications. Especially where you are offering something free, you can get very good signup conversions. In my experience, you can have very high rates, but I think that up to 10% is a reasonable guide. Lead generation is about 2-4%. Online selling can be 1-2%.

Imagine you are in e-commerce. Your cost per click is $1 and you are achieving a conversion rate of 2%. The upshot is that each sale is costing $50. If the average value of your sale is $50 or more, worst-case scenario would seem to be that you come out even.


THE BIG MISTAKE

But the assumption you've just made may not be accurate. Many PPC advertisers misjudge the situation by failing to look beyond the sales value. They tend to dismiss the fact that this is not their bottom line. Let's assume that the price of the goods in the basket is $50. But let's say that the profit you make per sale is only $20.

So, for each $100 you spend on clicks, your return is only $40. Your PPC campaign has recorded a deficit of $30 for each transaction. If you take the proper course and concentrate only on the profit, and your CPC is $1 the total sales value would have to be $125.

Of course, these figures are generalizations, but they should prompt you to look again at your results. If the outcome is that your ppc is unprofitable, don't just give up.


THE SOLUTION

It's likely that you could perform a lot better. To some extent because you thought your results were fine you unconsciously became complacent and did not do as much work on your campaigns as you should have.

So, completely revise the way you have approached your PPC. If appropriate, look again at your PPC strategy. If a PPC management company has been running your account consider their position. Because a good professional would have told you about this from the beginning.

With regular optimization of your campaign, ad group, keyword, ads, and landing pages, you could soon cut your advertising costs, improve your conversion rates, and reduce your CPA. And perhaps then transform your PPC marketing into a profitable strategy.