“ Xenical ”By Neal LebarI have utilized pay-per-click
(PPC) advertising since itsinception about two years ago.
With PPC, the advertiser isonly charged when a person
actually clicks on their link.The amount you actually
pay for each click is referred toas the cost-per-click
(CPC). I've got to admit, I was pretty leery at first.
But since then I've watched the price of certain search
engine keywords skyrocket in excessof $10 per click!
The big question isn't how much it costsper click but
how many clicks does it take to get anacquisition.
I've often asked myself, why would so many companies
pay that much money for one single, measly, push of
the index finger?
The answer is simple - it just works!
HOW TO JUSTIFY $10 PER CLICK The advent of
PPC advertising has changed Internet marketing forever.
It represents a free market in much the same way as
eBay -- controlled by a natural supply and demand
relationship. For a keyword phrase such as "debt
consolidation," the top five advertisers are willing to
paycost-per-click charges of $10.01, $10, $9.99, $7,
and$6.97.
My first reaction was, something has to be wrong with
this picture - it just can't be! So I looked at the
"life insurance" phrase, where the top five range from
$7 to $3.50.
Then there are drugs like "Xenical" that range from
$6.76 to $6.74. There are many more examples where
the cost-per-click exceeds $6, $7, or $10,but you get
the point.
The fact of the matter is that while PPC advertising can
work quite well - it can also be a flat out failure. When
companies are willing to pay more than $5 per click, you
can be pretty certain that they have figured out how
to make it work - otherwise they wouldn't pay those
prices.
THE SELECT FEW I have seen many situations where
PPC will work for one company but not for another in
the same industry, using the same keywords. Large
and small companies will venture in,bid for a week or
two, and then drop out -- never to be heard from again.
Some will come in, drive the prices way up then drop
back out to obscurity. The select few who are successful
have found the secret -- a combination of patience,
determination, creativity, keyword selection,management
and analysis.
They do the math, every day -they manage the
bids, every day - they look for new keywords, every day
- they analyze the results, every day.It takes a great deal
of work to figure out how to make PPC advertising deliver
results, and the ones who have are nowbenefiting -
every day.
WHAT IS THE COST OF AN ACQUISITION? In order
to determine if your PPC advertising is justified,the
first thing you need to understand is your current
acquisition cost - what does it now cost to acquire a
newcustomer or order?
It's amazing how few companies know what their cost
of acquisition is. To keep it simple, take your total
advertising expenditures and divide it by the number of
new acquisitions (orders or customers), that should give
you a rough estimate of your cost per acquisition.
Similarly, after running a PPC campaign for a month,
you take the total advertising expenditures divided by
the number of acquisitions. Of course, these raw numbers
are not burdened by administrative costs, but they still
provide an apples-versus-apples comparison.
I have managed PPC campaigns where the averagecost
-per-click was $0.40 and others where it was $5.The key
question remains: how many clicks does it take to get an
acquisition?
If the cost for each click is $0.40and it takes 200 clicks
for an acquisition, then the acquisition cost is $80.
If the cost for each click is$5 and it takes 10 clicks,
the cost of the acquisitionis $50.FINDING THE GAPS
Two key points are crucial:
(1) how much does it cost toget an Internet acquisition
compared to traditionalmethods? and
(2) what is the value of a new customer?
In some businesses a new customer is worth $1,000,
while inothers, only $10. Typically, the cost-per-click
reflects this value, but since the market is still very
small, there are significant gaps. Remember the
"debt consolidation"keyword phrase above?
The difference between the first and last cost-per-click
was about 30%. On the other hand,there is literally no
difference between cost-per-click rates for the keyword
"Xenical".
From this you may conclude that there is a lot more
competition for "Xenical"then there is for "debt
consolidation".
The opportunity is between the gaps in the 30%
differential example.The bidding market for keywords
is still so new and untapped that it's rare to have more
than three competitors fighting over a specific phrase.
The gaps in key word cost-per-click charges such as
"debt consolidation" are the norm and represent
tremendous opportunities still available in this media.
Right now they are plentiful, and for those few people
who take the time to understand this important marketing
tool, the time to act is NOW!
ABOUT THE AUTHOR:
Neal Lebar has proven that Internet marketing can
generate returns far greater than traditional media.
For more information, visit www.innovate-inc.com or e-mail
http://www.blogger.com/.
This article is free for republishing
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