As an SEO guy I am often surprised by the amount of dollars companies are willing to invest into PPC (pay-per-click) marketing while at the same time balking about a similar investment into SEO. Especially since I believe, and there are statistics that will back this up, that an effective SEO campaign will usually provide a better return on investment over PPC.
But time and time again, we see people throw money at PPC, because of its immediacy, rather than invest wisely in SEO, which take more time to fully mature into a fruitful campaign. So I give up. I'll get off my soapbox and not try to convince you that SEO is the better way to go. PPC marketing definitely has its place and it actually is important to a well-balanced online marketing campaign. Provided, that is, it is managed effectively.
But see, that's the problem with most PPC campaigns. They simply are not being managed as well as they should be... or even managed at all. Many companies simply throw up some ads, bid in the top three, and spend whatever is necessary to keep themselves there. There is no significant management of costs, clicks, ad effectiveness, landing pages, and the most important detail of all, cost per conversion. The few that do manage these things often have unrealistic expectations of how a campaign should perform.
PPC marketing is like investing in stocks
Investment into the stock market and PPC marketing has a host of similarities. By drawing these comparisons I hope to shed some light on the expectations of a well-managed PPC campaign and provides some solutions to effectively managing your PPC "portfolio".
Both are an investment: Before you put any significant money into an investment you need to do your research and set realistic expectations. You wouldn't buy a stock without first researching the company and their long-term growth potential. With that information you can see past performance, highs and lows and then casually predict how that stock might perform over time.
Researching the PPC market should include knowing what your most effective keywords are, knowing who's competing on those keywords, knowing what your budget is, knowing the estimated search and click through rates for your keywords, and knowing what it'll cost to be in the top positions. With that information you can then expect some realistic expectations for cost and overall performance. But as with stocks, predictions are never 100% accurate and you need to be ready for periods of less than expected performance.
With both stocks and PPC, much of the research you can do yourself. One thing to keep in mind is that all of the information you gather before you begin your campaign will ultimately change once you start getting real results. Keywords you thought would be effective may not be, click through rates and cost per clicks will vary and your budget may change based on your results. The preliminary research is important as a guideline for how to get started, but an effective campaign will adjust itself as different situations present themselves.
Both can easily be managed: It's not difficult to set up an account with TD Ameritrade, Options Express, or any number of online stock trading services. Buying and selling of stocks and measuring performance have been made easy. But don't mistake the ease at which stocks can be managed as a barometer for expected investment growth. There is so much more to building your investments than ease of use.
With PPC you can easily set up your accounts with Google, Yahoo, MSN, etc. All of these systems make managing your ads relatively easy as they provide reports, historical data, and real-time performance results. But again, while managing the account is easy to do, that does not translate into performance and results. You need to be equipped with knowledge, not just of the system being used, but how to create a more lucrative investment.
Both require deeper knowledge: Knowledge of stock trading and individual stocks is relatively easy to obtain. You can purchase a few books, and use the research tools provided you from your online trading account. The only real cost is time. Knowing what stocks to invest in, when is the best time to buy, and when to sell all requires a new knowledge set for each company you wish to invest in.
With PPC the need to gain knowledge is similar. But instead of having to know about multiple companies, you have to know how to create and manage multiple ads and their landing pages while testing various strategies in order to get the best performance from each. You can read books on the topic and do much of this testing yourself, but the issue again is often one of time. The knowledge you need to run an effective campaign takes time to gather, process, and test in the real world. But without the necessary knowledge you won't be able to manage your investments effectively.
Both have their ups and downs: Anybody who has watched a stock for more than 30 seconds knows that the value of the stock goes up and down constantly. With each investment we hope to see our stocks rise in value and most long-term stock investments do see gains in their investments. But even if you look at a one-year history of consistent stock growth, you're not going to see 100% upward movement. Over the course of time the stock goes up and down, sometimes dipping down significantly for long periods, but then you'll see another upward trend. This is normal.
With PPC you'll see similar results when looking at overall cost per conversion. Some days you'll have a really low CPC and other days you'll have a much higher CPC. And yes, even the CPC will, at times, reach levels that will ultimately bring you a loss. This, again, is normal. The difference here between stocks and PPC is that with stocks you rely on the market to decide the value. With PPC you rely on your own management skills to keep your cost per conversions where they need to be to make a profit. But just as with stocks, there are many outside factors that weigh in on it.
Both, if mismanaged, can lead to significant loss: It's easy to lose money in the stock market. Even the most trusted stock investment veterans get things wrong. But by and large, people lose money in stocks from mismanagement. They buy when the stock is "hot" (high) and sell when things look bad (low). Do this enough and you're well on your way to a diminishing portfolio.
With PPC campaigns, effective management is key to realizing overall gains and improving return on investment. You can't just create an ad, set your bid price, and walk away. Managing your PPC campaign means weekly, if not daily, evaluation and testing. Poor bidding, ads, and/or landing pages can result in huge dollar losses, literally overnight. A well-managed campaign is essential for positive return on investment gains.
Both can bring solid long term gains: A well managed, knowledge-based stock investment can lead to solid long-term financial growth. Unless you are extraordinarily lucky, you won't get rich overnight, but you can develop a stock portfolio that provides a respectable retirement income. Remembering that the goal of stock investment is for long-term financial security (for most of us) that will ensure the right amount of time and resources are invested in order to produce the desired results.
With PPC the same principles apply. Looking for short-term gains often goes against the long-term business strategy. When a PPC campaign is well-implemented and managed, traffic and sales will be the result, but more importantly, costs will be kept in line with financial/profit goals. Implementing a strategic PPC campaign that allows for varied strategies and testing, like stocks, leads to steady long-term gains.
Stoney deGeyter is the President of Pole Position Marketing, a leading search engine optimization and marketing firm helping businesses grow since 1998. Stoney is a frequent speaker at website marketing conferences and has published hundreds of helpful SEO, SEM and small business articles.
If you'd like Stoney deGeyter to speak at your conference, seminar, workshop or provide in-house training to your team, contact him via his site or by phone at 866-685-3374.
Stoney pioneered the concept of Destination Search Engine Marketing which is the driving philosophy of how Pole Position Marketing helps clients expand their online presence and grow their businesses. Stoney is Associate Editor at Search Engine Guide and has written several SEO and SEM e-books including E-Marketing Performance; The Best Damn Web Marketing Checklist, Period!; Keyword Research and Selection, Destination Search Engine Marketing, and more.
Stoney has five wonderful children and spends his free time reviewing restaurants and other things to do in Canton, Ohio.
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