SEM: Managing PPC Program Costs
Austin search engine marketing company article on SEM Strategy and PPC Cost Management
Marketing Strategy – Click Valuation
Before doing keyword research, composing the first PPC ad, or allocating a SEM services budget, you need to develop a search
engine marketing strategy. One of
the first steps is estimating the business value of a website visitor and
various actions the visitor may take while on your website. In order to develop and implement your search marketing strategy, your SEM services company needs to know what these
clicks are worth to your business.
The best way to determine the value of a visitor (and the
click that brings him to your site) is to divide your web marketing and sales
process into discrete steps -- called ‘conversions’ in online marketing company parlance. In simplistic terms, the
sales process guides the prospect through a series of discrete conversions; and
at each successive step the prospect is increasingly likely to buy.
For example, suppose you’re selling $1000 refrigerators
online, and your business nets $300 on each sale. Your company’s online marketing and sales process might
consist of these steps:
website visit – lands on Refrigerator page
to specific Refrigerator Model page
on Refrigerator Comparison
BUY to put refrigerator in online shopping cart
out and pay
And, from past experience, let’s say you know that
of people landing on the Refrigerator page go to a Refrigerator Model page
of Model page visitors click through to the Comparison page (Step 2=>3)
of people on the Comparison page click to read the Testimonials page (Step
of Testimonials page visitors click BUY (Step 4=>5)
of people with a refrigerator in the cart check out and pay (Step 5=>6)
So the overall probability of a visitor to the Refrigerator
page buying a refrigerator is .15*.35*.55*.40*.95, or about 1.1%. You make $300 per sale, so the value of
a visitor is about $3.30 -- you could rationally pay that much (and hopefully
somewhat less) to bring a visitor to your website. Once you know the value of a visitor, you can choose
keywords and establish ad groups, select negative keywords, and specify bids
for each keyword.
Marketing – Firm Cost-Per-Click (CPC) vs. Cost-Per-Impression (CPM)
The power and value of search engine marketing has made SEM
an increasingly popular advertising channel. This has resulted in some remarkably elevated PPC costs in
highly competitive markets. The keywords ‘mesothelioma attorney’, ‘DUI
lawyer’, ‘vehicle insurance quotes’, ‘donate your car’, ‘structured settlement
cash’ and others can run in excess of $100
per click in major cities.
Presumably these advertisers have done the math and know
what the value of a click is to their business; but CPCs this high are
difficult to justify – and an invitation to click fraud. One can imagine competitors spending
their lunch hour hammering rivals’ PPC ads to drive up their SEM costs. [We’re glad Austin search engine
marketing hasn’t experienced these extremes.] In any case, PPC campaign managers should review the
Pay-Per-Click performance reports to determine the number of impressions per click, and switch to CPM payment if this would be less costly.
Even in normal markets with reasonable pay-per-click costs,
it’s important to develop an effective SEM strategy, monitor ad performance and
adjust budget allocations to maximize Return on Ad Spend (ROAS). A professional search engine marketing
company like Semantic Advantage can assist you in establishing Pay-Per-Click
program goals, developing a firm PPC budget, selecting
effective keywords and ad groups, managing bids and budget, and analyzing
the search marketing program results.
Tools for Managing
Search Engine Marketing Campaigns
There are many sophisticated software applications and web
services that can assist in PPC keyword selection, keyword grouping, bid and
budget management. For
Pay-Per-Click programs with just a few dozen keywords and budgets under
$5,000/month, the native SEM program management tools from Google, Microsoft
(Bing) and Yahoo! are easy to use and provide basic research, analysis and
Once your SEM program has a hundred keywords, with ads spread
across Google AdWords, Yahoo! Search Marketing, Microsoft adCenter and
Facebook, you should consider using a high-end SEM campaign management product
like Adapt SEM’s SEM-in-a-Box, Apex Pacific’s PPC BidMax, DoubleClick DART,
Marin Software’s Search Marketer or Omniture SearchCenter. These tools greatly simplify the
monitoring, analysis and management of complex search engine marketing
campaigns, and enable you to optimize your ad spend across multiple advertising
Many companies – and particularly small to medium-sized
businesses that don’t have in-house expertise in search engine marketing or Pay-Per-Click campaign management –
outsource SEM program development and management to an ad agency, online
marketing firm or search engine marketing company specializing in PPC campaigns. When selecting a SEM
company, it’s important to choose one with expertise and experience in your
industry and competitive environment, as well as in managing paid search programs of
the same scale.
Tips for Reducing
Search Engine Marketing Costs
Here are some specific SEM tips and methods search marketing
companies use for setting up and managing Pay-Per-Click programs:
bid and budget management software to monitor PPC campaigns and identify
opportunities for increasing ROAS.
separate campaigns for Search and Content ads. Mixing these compromises effectiveness and eliminates some cost reduction opportunities..
Keep short-tail and long-tail keywords in separate ad groups. Also separate keywords with dissimilar
CPCs or search volumes.
a separate landing page for each ad group (every keyword even better), and
optimize the pages for those keywords.
on multiple match types – less for Broad Match, more for Exact Match.
advantage of ad scheduling and day parting to conform to your target audience’s
time zone and availability. For example, if your B2B customers don’t work on
weekends, there’s not much point running ads then.
geo-targeting to focus on your target geographic market and avoid presenting
ads in locales you don’t serve.
Establish separate ad groups for geographies with different keywords or
the organic search results for your major keywords and use the non-relevant results to build out
your Negative Keywords.
Begin your SEM campaigns with CPC pricing, then analyze the results to determine if CPM would be less
test, and test again. Conduct
split testing (aka A/B testing) to experiment with improved ad titles, ad copy,
landing pages and Click-Through-Rates (CTRs).
PPC Quality Scores with SEO, Social Marketing and enhanced landing pages. This will reduce your CPCs – and also
attract free organic traffic.
Semantic Advantage --
Austin Search Engine Marketing Company
Semantic Advantage is an experienced Austin SEM firm
specializing in display advertising, PPC campaign management, and search engine
marketing on Google, Bing and Yahoo!
For more information about our Austin SEM services, social marketing, SEO and email marketing
programs, contact Semantic Advantage.