Semantic Advantage Inc.
SEO, SEM/PPC and Social Media Marketing

SEM - Managing PPC Program Costs

Austin search engine marketing company article on SEM Strategy and PPC Cost Management

Search Engine 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:
  1. Initial website visit – lands on Refrigerator page
  2. Navigate to specific Refrigerator Model page
  3. Click on Refrigerator Comparison
  4. Read customer Testimonials
  5. Click BUY to put refrigerator in online shopping cart
  6. Check out and pay  
And, from past experience, let’s say you know that
  • 15% of people landing on the Refrigerator page go to a Refrigerator Model page (Step 1=>2)
  • 35% of Model page visitors click through to the Comparison page (Step 2=>3)
  • 55% of people on the Comparison page click to read the Testimonials page (Step 3=>4)
  • 40% of Testimonials page visitors click BUY (Step 4=>5)
  • 95% 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.

Search Engine 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 reporting.

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 platforms.

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:
  • Use bid and budget management software to monitor PPC campaigns and identify opportunities for increasing ROAS.
  • Create 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.
  • Create a separate landing page for each ad group (every keyword even better), and optimize the pages for those keywords.
  • Bid on multiple match types – less for Broad Match, more for Exact Match.
  • Take 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.
  • Use 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 CPCs.
  • Review 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 expensive.
  • Test, 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).
  • Build 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.