Category : Ad Marketing

Tips for pay-per-click bidding

As you may know, Overture was recently bought by Yahoo! Due to the publicity generated by the deal, now is a good time to review some tips for bidding in pay-per-click (PPC) campaigns on Overture and Google AdWords.

How does a pay-per-click search engine work?

With a PPC search engine, you bid a certain amount for your chosen keyphrase. Whenever someone searches for that keyphrase, and clicks on your website’s link under it in the search result, you pay the bid amount (or less, depending on your competition). Generally, the higher you bid, the higher your placement is in the search results.

Overture

Overture was the biggest PPC search engine before Google AdWords came along. Now they are both fighting for the top spot, leaving the rest of the pack in their wake. Overture works on a strict auction model: the higher you bid, the higher your position is. Overture’s results are included in the sponsored results at the top of Yahoo!, MSN, Lycos, HotBot, and others. They claim to reach over 80% of all Internet users.

Google AdWords

Google’s AdWords program started in February 2002, and quickly became Overture’s only serious competitor. Google’s system is different from Overture’s in that the bidding is only one part of the ranking equation. The other part is the click-through rate (how often people click on your ad). Google AdWords are found on AOL, Netscape, Ask Jeeves, Teoma, Earthlink, and, of course, Google. Google states that their AdWords appear 200 million times a day. I figure that they also reach about 70% of all Internet users.

Other PPC search engines:

There are hundreds of PPC search engines out there, but you really only need to advertise with the top two. If you want to see some lists, you can go to www.PayPerClickSearchEngines.com

Pay-per-click tips

Here are some tips for running a PPC campaign:

  1. The #1 rank is not always the best. In fact, you can usually get a better return on investment (ROI) by being the second or third result in a search. The reason is that people will often click on the first result without thinking. They then realize that the site does not offer what they want, and they will come back and think (and read the description) before clicking on the second or third results. I mention only the second and third results because usually, only the top three results get published (Yahoo, MSN, and many more). Often the second and third results are much less expensive than the number one spot.
  2. Bid on as many relevant, highly specific, low cost keyphrases as you can afford. A keyphrase with only one or two keywords will usually cost much more than one with three or four words. Longer keyphrases also tend to be more targeted (for example, shiny blue widgets, instead of just plain old widgets). Thus, with longer keyphrases, you get lower costs and a higher return on investment. If you bid on enough of these targeted keyphrases, you can usually generate enough traffic to match what you would receive for a single-word keyphrase. To summarize, bidding on shiny blue widgets, pre-owned utility widgets, and zebra-stripped widgets, will cumulatively generate the same amount traffic as just bidding on widgets, but with a higher ROI because they cost less per click.
  3. Include your keyphrases in your title and descriptions. Think hard about your description because generally, the best description gets the most traffic (not always the highest ranking result).
  4. Use objective, not subjective language in your descriptions. Subjective descriptions will state how great the website is. Objective descriptions are ones that list the benefits of a website, or mention what the surfer can expect to find. Try to point out what is unique about your website.
  5. Create highly relevant landing pages for your PPC campaign. These landing pages (where the PPC link goes) are what will convert a surfer into a buyer. You have already paid for the surfer to see this page, so use your resources to make it into a good conversion page. Also, keep separate, track of buyers that arrive via your PPC campaign, and buyers that arrive via other means. That way, you can track your ROI, and figure out how much you should spend on the PPC engines.

Other helpful resources:

Shawn Campbell

Shawn Campbell is the co-founder and Chief Search Engine Optimizer at Red Carpet Web Promotion, Inc.
www.redcarpetweb.com

Increase your sales ratio to deliver more ROI

You may have noticed the animation on www.overture.com that says, “Overture delivers ROI daily.” Notice that they do not specify whether they are delivering a positive ROI (return on investment) or a negative ROI! Unfortunately, you will have to make those calculations yourself.

Knowing how much you can afford to spend on each visitor, will help you to use your marketing dollars more effectively. First however, let’s focus on the nuts and bolts of the marketing plan to sell your products and services online.

CPC
CPC stands for Cost per Click-through. Many marketing options involve paying a fee for each visitor who is brought to your site. Overture is a perfect example. (See our past article on Overture).

Overture sets a minimum bid of $0.05 per click-through, so to use this service, you should at least be able to spend this amount per visitor to your site, and still make a profit. Since your competitors also want a higher position in results for the same keyphrase as you, the bids escalate, and in some cases, companies end up paying over $10 per click-through! Many companies are getting caught up in the challenge of keeping the top positions, and may even be losing money on these bids in order to be the market leaders. In these cases Overture is the only winner.

Another factor in the bidding wars is that search engines such as Yahoo, MSN, and AltaVista display the top three Overture results, therefore making these positions even more sought after. Paying click-through fees that are above your estimated profit margin is a dangerous practice because your competitors may be able to keep beating you until you run out of money! Is it worth it playing chicken with a company that may have much deeper pockets than you do? It is a good idea to figure out how much you are willing to spend per sale, and then to figure out your sales-per-visitor ratio. This will help you to find out how much you should spend per visitor. Avoid spending any more than that amount.

SEO
SEO stands for Search Engine Optimization. It is often a better investment to pay for search engine optimization and submissions, than to pay click-through fees. As CPC bids escalate, the long-term benefit of SEO becomes more evident. An SEO campaign increases your position in the search engines to generate more traffic. Although you will have to pay to optimize your site, you will not have to pay a forever increasing click-through fee. Rather than paying by the visitor, you are investing in a long-term strategy to bring in a steady stream of customers. You may find after some experimentation that a combination of both CPC and SEO services works best for your needs.

Sales per visitor
The sales-per-visitor ratio is a crucial number to monitor and improve for a higher ROI. For example, if you make one sale on your site out of 100 unique visitors to your site, then you have 1% sales-per-visitor ratio (depending on your industry this could be average). A higher sales-per-visitor ratio is more desirable because you will make more sales for the same amount of visitors. This may allow you to increase your marketing budget and to achieve an even higher volume of sales. Even if you do not raise your marketing budget, an increase in your sales-per-visitor ratio will leave you with a higher ROI.

Steps to increase your sales-per-visitor ratio

  1. Improve the quality of your traffic
  2. Improve your site’s usability to keep visitors on the site
  3. Improve your perceived credibility to increase customer confidence
  4. Improve or simplify your ordering process to reduce shopping cart abandonment

Increased marketing budget to get more volume
If you pay for visitors by the click, and after working on these steps your sales-per-visitor ratio increases from 1% to 3%, then you will be able to increase your bids because you will be making more sales. For example, if you pay $0.10 per visitor (CPC) and make $15 per sale (after other expenses), then with a 1% sales ratio you end up with a $50 profit for 1000 visitors (see breakdown below).

Sales-per-visitor ratio of 1%
1% of 1000 visitors
10 sales
$15 time 10 sales
$150 profit before CPC
– $100.00 CPC cost: ($0.10 X 1000)
$50 total profit

If you increase your ratio to 3% your profits go from $50 to $250 for the same amount of visitors! At this point you may consider raising your bid to $0.15, which may in fact raise your volume enough to increase your overall profit.

Sales-per-visitor ratio of 3%
3% of 1000 visitors
30 sales
$15 time 30 sales
$450 profit before CPC
– $200.00 CPC cost ($0.10 X 1000)
$250 total profit

Key to success
Depending on your goals, you may choose to increase your profit per unit or your volume, in order to make more money. Either way, you must first understand the relationships between CPC, sales-per-visitor, and profit. An increased sales-per-visitor ratio is the best way to take advantage of increased visitors because it will turn more of those visitors into buyers.

Jason Campbell

Jason Campbell is the co-founder and President at Red Carpet Web Promotion, Inc.

How to Profit from Seasonal Shopping April 2002

When our last newsletter was published in January, the Holiday shopping results were not yet in, but reports over the last three months have made it clear that online holiday shopping is a growing phenomenon. For example, the traffic to shopping sites for the five weeks preceding Christmas over the last 3 years has been:

Holiday season Average weekly unique visitors
1999 26,303,000
2000 34,265,000
2001 51,318,000

In terms of unique visits, there is a 50 percent increase compared with the 2000 holiday shopping season and a 95 percent increase versus 1999.
(Statistics provided by Jupiter Media Metrix). Click here for a weekly breakdown for 2001.*

In terms of actual sales revenue, online sales in the fourth quarter of 2001 totaled about USD10.5 billion, up from USD10 billion last year according to ComScore Networks (ComScore’s estimates do not include online travel sales).

Bizrate, on the other hand, estimated online spending for the fourth quarter of 2001 to be USD12.4 billion (up 35 percent on last year) and its estimate for the holiday season is USD 6.4 billion.

In order to profit from an online seasonal rush it is important to think ahead. Unfortunately, most promotion activities take a few months to kick in. However, there are some short term tactics that you can use before an upcoming lucrative season to bring the customers to you. These tactics can be used for any seasonal rush, be it for holidays, sports seasons, back to school or even events such as Formula One Racing, the World Cup Soccer or the Olympics. Below is a breakdown of some short-term marketing tactics that have immediate results, as well as long term tactics that take more time to mature.

Short-term tactics:

Inktomi

  • You can submit specific web pages to the Inktomi directory for under $40 each and they will add you to their database in less than 48 hours! This is great for seasonal specials. However, it is up to you to make sure that your page is well optimized to increase your potential for high rankings. In other words, the page that you submit should be about the keyphrase that you are targeting. Once you are in the Inktomi directory you can also be found in the following search engines: MSN, AOL, Overture, Hotbot, Iwon, LookSmart, About, and Espotting.

Pay-for-placement

  • Starting a pay for placement campaign produces very fast results; but you can bet your laptop that you will not be the only one to bid on terms like “Christmas Gift” next December. Nevertheless, if you have a page on your site relating to something specific, it is a good idea to bid on that item in Overture when the demand is highest. Overture is also useful for seasonal specials since any changes made to a listing are posted the same day. See our previous issue for more details on pay-for-placement bidding.

Long term tactics:

Search engine and directory submissions

  • The most cost-effective way to attract traffic (even for something seasonal like ski equipment) is to work at it all year round. For example, if you have a summer collection and a winter collection of products, you are much better off having two sites instead of flip-flopping your site with the seasons. This way each site will have the whole year to climb in the search results pages and your traffic will be better with each coming year. To switch collections to accommodate each season on the same site would entail having to start from scratch at the onset of every season.

Keyword Research

  • In any search engine positioning campaign, it always pays off to conduct proper keyword research. Knowing which keywords are most in demand, and which ones are overloaded with competition, is essential to making informed decisions about which keywords to focus on.

Other interesting 2001 Holiday shopping facts:

  • In marked contrast to their offline counterparts, few online retailers slashed their prices towards the end of the holiday season. (ComScore)
  • There was a strong growth in clothing and consumer electronics sectors in particular. (ComScore)
  • The number of online holiday shoppers grew from 53 million adults in the 2000 holiday shopping season to 64 million in the 2001 holiday season. (Jupiter Media Metrix)
  • The average spend per order was up 13 percent ($126 USD from $112 USD last year). Consumers also spent an average of 27 percent more on shipping, and 87 percent of orders were delivered on time.(BizRate)

In terms of the top shopping sites, Jupiter Media Metrix provided the following list of average daily unique visitors over the five week 2001 holiday season. These top sites should give you an idea of the holiday shopping mentality.

# website 2001 Holiday Season
Average Daily Unique Visitors in the U.S.
Home/Work Combined
1 ebay.com 4,515,000
2 amazon.com 2,519,000
3 mypoints.com 2,016,000
4 bizrate.com 683,000
5 half.com 660,000
6 mcafee.com 652,000
7 columbia house sites 598,000
8 eshop.com 588,000
9 americangreetings.com 563,000
10 toysrus 515,000
11 barnesandnoble.com 447,000
12 walmart.com 434,000
13 bestbuy.com 416,000
14 dell.com 408,000
15 bmgmusicservice.com 379,000

If you are wondering which products or services to promote, visit these sites to see what they are offering. If you can combine the right product with the right keyword, and promote it so that shoppers can find you, then you will truly profit from the public’s growing love affair with e-shopping during the holidays.

Jason Campbell

If you have any comments on this article, please respond to news@redcarpetweb.com

Jason Campbell is the co-founder and President at Red Carpet Web Promotion, Inc.

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