|It may be that you get no direct sales from your PPC, but do you know if that initial PPC click led to your site being bookmarked or otherwise recognised - which then led to a sale? |
Sure, just set a 30-day cookie, right?
We turned our PPC's off and our traffic dropped slightly but our ROI on analytics was showing we weren't getting the bang for the buck. Now we're saving thousands of dollars that were going to Google and our orders are just as strong. We analyzed the data carefully. We had strong CTRs, some up in the 20% range, but the conversion rate was low, around 2-3%. We know some of that is our site design and are currently in a site-wide revision, but honestly, the money spent on Google was a cash drain.
|.. you are in a competitive (= profitable) niche, yet see little added benefit in your PPC campaign, then I think you should consider outsourcing your account management to a dedicated PPC professional... |
Outsourcing is fine if they know what they are doing, but of the two places we tried, neither one had a clue about our niche. On both, their proposal was to load up on what were basically 90% semi-generic search terms, or keywords/phrases that were so broad as to be useless. The equivalent of paying $4 a click for the term "water".
Another issue that did not exist when we first started PPC is the proliferation of "trash" ads. The most common ads that turn up in a search for our main line of products, many are apparently from machine driven lists that target every single keyword that ever existed.
PPC has it's place, but to be done right is a lot more time consuming than it was just 3-4 years ago. So I am basically starting from scratch. What worked way back when I set up our campaigns, it was pretty much cut and dried, but now it is forcing me to actually think :(
There's plenty of reasons to get into PPC. As previously noted, you help prevent your competition. And PPC traffic should be profitable if done right.
I'm hoping to get back into PPC in the next year and intend to dominate it in my niche (i.e. #1 all over the place). Here's why:
- branding. Not big on it, but I' gotta start doing it
- prevent competitors/bleed them dry
- PPC + top organic rankings has been shown to provide more traffic than the total of the two individually.
- it's an easy spot to grow into.
- lots of people - and I mean lots of people, still think the #1 adwords position is #1 in Google. Lots of people just don't know that those top three listings are paid and not organic.
Plus it seems like everyone's leaving adwords right now ;). So now's a great time to get in and get my CTR pinned high while there's less competition. Then when everyone decides to return, I'm sitting pretty with high CTR.
|lots of people - and I mean lots of people, still think the #1 adwords position is #1 in Google. Lots of people just don't know that those top three listings are paid and not organic. |
This is the one thing that keeps me tweaking our PPC. Even the company owner still thinks so, even though I have explained it to him at least 173 times :/
|Not at all. Maybe 20-30%, but that's not the point. The point is, once you calculate how much money you're making per click, you need to use that to determine your maximum bid. Do you want your bid at 50% of the value of a click? You don't want it at 0% or 100% because you won't make any money. The questions is, at what point between 0% and 100% is your total profit maximized. |
The ideal formula is discoverable by some differential
If you let P(x) be the profit for x% given to google.
P(x) = (1-x)f(x)
Where f(x) means the number of clicks you get when you bid x% of your max.
To maximize this function, you've already eliminated the endpoints, so you need to look for an extreme point by taking the first derivative and setting it equal to zero.
Skipping a few steps gives you:
So all you have to do is come up with a formula for f(x) and f'(x). Be aware that some formulas will have multiple solutions.
If the number of clicks were a linear function, say 600 clicks for every penny you bid, the math is simple. The answer is 50%. Every time.
But f(x) is probably not linear, and may not even be described by a mathematical formula. But you can probably get a table of values.
The simplest solution then is probably to graph P(x) and look for the highest hump.
I hadn't thought of offering math consulting to webmasters, but maybe there is a possibility there.
Main Site, PPC Free since Jan 5th 2005!
Never trusted that Google was really working as hard as they should on click fraud, and I don't know many people myself included who has the time to decipher if this sort of prevention is working.
Internal reviews, especially at a for profit, rarely work. You need an independent review body to get anything done. Many examples of this, why would Google be any different, the bigger the company the worse it is generally.
The worse the economy becomes the more envious competitors become at the upper spots. This means the whole line is looking, not somewhere I would want to be.
|I realize that in some cases early on or whatever, you may have no choice. But straight-up Adwords forever is not a super-robust business plan. JMHO. |
So counting on Google to drive free traffic to your site is a super robust business plan?
I don't even count any of my organic traffic in any of my calculation. I want to know how much I paid for the keyword and how much it cost me to convert and my profit.
If i can pay for the traffic i am a in. Free traffic i will take it but if i convert or not really doesn't effect my business plan
|So counting on Google to drive free traffic to your site is a super robust business plan? |
:) Not just Google. But yes, I am saying that I prefer free/natural traffic, whether it is from Google, or any other SE, or natural links, or forums, or social networking, or what-have-you. I'd rather spend money optimizing my site for SEO and user-experience and developing a presence in niche forums, etc., than figuring that I'll shell out for paid placements that go to the highest bidder.
It's a whole lot harder for a competitor to dislodge my rank in organic search than it is for them to usurp my top Adwords position. I've done the keyword bidding war thing before and nobody won.
As stated previously, the best combination (obviously) is top organic placement coupled with top PPC placement. It is my opinion that I prefer to spend more time/money developing organic placement - it is harder to get, harder to lose, and the work done will likely be relevant to all major search engines, both now and in the forseeable future.
If I want top PPC position, I can have that in about...30 seconds. And I can keep it if my profit margin is greater than that of my competitors. If the sky falls and Amazon, Walmart, Target, or whatever-else deep-pocketed big guy or well-funded start-up starts competing for PPC keywords in my niche, I'm toast.
Again, JMHO, and I realize that what works for some doesn't always work for others.
I agree with Rachel123. A solid website that has a good UI and ranks well, shouldn't have to spend tens of thousands of dollars a year for PPC's. I'd much rather devote the $$ to natural SEO.
|The simplest solution then is probably to graph P(x) and look for the highest hump. |
Thank you for that Sierra_Dad. I'd love to be able to determine the ideal % but I'm afraid math is not my strong suit. How would you go about determining those two formulas?
|I am saying that I prefer free/natural traffic |
Me too...but i don't think it's realistic If you are running a commercial online business. I will be out of business if I was depending on free traffic but if you can make a living from free traffic more power to you.
|Thank you for that Sierra_Dad. I'd love to be able to determine the ideal % but I'm afraid math is not my strong suit. How would you go about determining those two formulas? |
Now that we've talked about the theory, here's one way you could do it. Can you use excel?
You need to know two things:
1. The dollar value of a click to you. (conv value/conv percentage). Sounds like you know this already and are assuming it is constant.
2. The number of clicks Google will give you for range of cost per click. You may know some of this by historical values, or by using the Adwords traffic estimator.
Let's say you value a new customer from Google at $1, so you want to bid somewhere between
So if you made a spreadsheet like this:
Col 1: Adword Click cost. Fill in the numbers from .01 to 1.00
Col 2: Number of clicks you will get from Google at the price of Column 1. Just fill in the ones you know. Say you know the number for .13, .24, .28, .36, .49, .71, and .89. There may be some blank spots in between.
Col 3: Profit. Enter a simple formula of ($1-col1)*col2.
Find the biggest number in column three. Pick that row and bid that much. If you need to refine that number, fill out more of the values in column 2.
I suspect (without any data) that traffic from Adwords might be quadratic, in which case you will come up with 66%, and is probably more than linear, which would give you 50%. If traffic from Adwords is cubic, you may get closer to 75%.
Be sure to report back.
Google keeps their Adsense payout percentage a closely guarded secret, but some think it is somewhere around 60%. If you knew that percentage it might be very close to what you want to pay on adwords.
|but i don't think it's realistic If you are running a commercial online business |
It's extremely realistic ..running successfull online businesses based on free traffic ..but SEO takes more work and skill and intelligence etc than just taking out the credit card and punching in 16 digits ..and long term is more sure ..( you never know when someones PPC program is going to decide it doesn't like your landing page ) ..and is free to learn ..like you learned how to walk ..or type :))..not every life skill needs to be paid for to be valid ..
Unless you start off with a very very very great deal of money on your credit card ..( or are using someone elses money )..and even then ..
you may at first think that YMMV ..but long term it won't :)
|but i don't think it's realistic If you are running a commercial online business |
PPC counts for less than 5% of my overall sales, and it's not because I don't use it. As stated before, I am actually pretty fond of Adwords, but I won't bid PPC. I only use it for campaigns that are eligible for CPA bidding and use that.
So yes, for my site, it would be very realistic to run a business/make a living off of free traffic. I'm pretty much doing it already...as are several others...
|It's extremely realistic ..running successfull online businesses based on free traffic |
Define successful please
$200K a month, 10 employee, 10 years in business?
a definition ..good as any ..
working just a couple of hours a day for a month ..without ever having to leave home and have the stress and commute and drive etc ..to make what your average well paid senior management or executive drone makes in six months ..
not needing to put up with crap from a boss ( actually last time I had a boss was decades ago ..well before the web ) nor from employees ( ditched those in 96 ..look up french employee legislation ..and why you dont want to be a boss here )..
you make 200k per month ? with 10 employees ..( played those kind of games in the late seventies ..got wise ) you are too busy running that machine to enjoy life ..
money can buy you a real good heart surgeon ..and even a spare heart ..but better not to be chasing mammon so much ..that way you never stress the heart you have til it breaks or needs fixing ..
as the song says you dont see luggage racks on hearses.
again you may think that YMMV ..but you'll learn :)
BTW ..it depends on how well you run your business aswell ..for example ..I have a very profitable commercial site ..I buy for $20.oo and I sell for $400.oo to $900.oo depending on how the customer buys ( wholesale or retail ) ..my overheads per item are less than $2.oo ..and my taxes dont come higher than 12% of my net profit :)
thats just one site ..the others are very diverse ..principle is the same though ..but that one has the best margins ..
I could make more with PPC ( but I wont buy ads when I can SEO it to where I need it to be ) ..but I dont need to ..
|you dont see luggage racks on hearses |
Or pockets in shrouds. Today's inspirational message LOL
I'm not going to get into a p*ssing match over what 'successful' is, or share my financial specs. ;) I'll just say that my results satisfy me and I believe they would satisfy you too. Every niche is different...
If you're running that volume all thru Adwords, then you should be able to pay CPA, which makes Adwords a much better tool.
Sometimes you don't get to kiss off PPC.. PPC can also kiss you off, as recently many adwords advertisers have realized over the past month..so one should always have a contigency plan and learn how to survive without PPC..My main ecomm site got hit by QS 1 on adWords recently after 5 years..I seem to be doing alright. Exploring print ads, buying some direct ads, setting up affiliates..
|working just a couple of hours a day for a month ..without ever having to leave home and have the stress and commute and drive etc ..to make what your average well paid senior management or executive drone makes in six months .. |
I'm not really questioning your success or your ability to make money. (and it's sound like you are doing very good) The only thing I'm saying it might be a different story if you run a one man shop or you have employee and 100's of customers. You can't run your business depending on Google to keep you on the first page.
I find paid advertising very profitable and very easy specially online. Advertise, track and convert. Now I don't only depends on Google for advertising there are plenty of other options out there.
I think - at least in my industry - a big part of this (PPC) had to do with those that got into this game early (mid to late 90's) and not wanting to let our market share go...therefore, we all started beating each other in the head with PPC - driving up the costs and driving down profits all to keep doing the same gross sales.
In other words, the 'fear' of losing business caused people to massively overbid, often forcing them to sell products at a loss just to pad their gross sales - but at least they kept a competitor from getting that sale.
I got off that treadmill a long time ago...now I just sit and laugh at them.
For me, I have better things to do than spend half my day tracking this stuff. More importantly, when I did do it, I found that they resulted (overall) in smaller orders, plus were customers that usually required more 'handholding', didn't take the time to actually READ, etc.
I really don't need to fight for 'those' sales.
|In other words, the 'fear' of losing business caused people to massively overbid, often forcing them to sell products at a loss just to pad their gross sales - but at least they kept a competitor from getting that sale. |
So Google making billion and billion from customers that lose money but keep advertising?
it's called the casino principle ..or a the carnies say "there is always another dumb mark waiting in line" ..
Hundreds lose their shirts ( and don't admit it ) ..one or two win a little of the overall pot ..and the house rakes it in ..even more so if they can make it as black box as PPC ..and get away with it ..
Also sometimes known as blind auctions ..where you lose your bid ..even if you dont have the winning bid that gets the "lot" ..
Is your ppc account set up correctly? A professional who knows how to set up ppc can increase your ROI quite a bit. Do you know that Yahoo and Google have to be set up very differently? Do you use negative keywords. Do you monitor your analytics several times a week? Do you do a/b testing on ad text and multivariate testing on landing pages? Have you used heat map software to help design better landing pages?
Have you looked into analytics that track people in more detail? There are some analytics out there that will show you exactly how each customer came to buy your product. It will show you all the keywords that each person used before they made a buying decision not just the last one they used before they bought.
Every time I see somebody complain about PPC I see that they don't know what they are doing. There are lots of people that make a ton of money from it because they took the time to learn it correctly and/or hired somebody who did.
|Every time I see somebody complain about PPC I see that they don't know what they are doing |
And every time I see that kind of comment I see that someone is trying to sell to someone the idea that a race can have more than one winner ..or that more than one person can buy their way to the top of the pile ..
And funnily enough they all work in the "we can fix your PPC" industry ..or you need us/me to explain ..for an eventual fee ..
And they never work for a percentage of your net profit ( after they have done their "voodoo" )..just for a percentage of your spend on PPC ..wether or not their "advice" makes you more money ..or not ..usually ..not
|Hundreds lose their shirts ( and don't admit it ) ..one or two win a little of the overall pot ..and the house rakes it in ..even more so if they can make it as black box as PPC ..and get away with it .. |
and that's Google business plan? having majority of their customers lose their shirts, that's a hell of a plan... come on my friend
You must have missed this bit
|it's called the casino principle ..or a the carnies say "there is always another dumb mark waiting in line" |
amongst others :)
people always believe that they can beat the house ..and there is always another person who believes this waiting to take the place of the last one who thought that and lost ..
people are credible ..and believe what they want to believe ..even when its ridiculous ..or hurts them or leads to their ruin..( see "addiction" ..to anything )..but there are always more people waiting to take the place in line ..ad infinitum ..
Thats how religions work too ..GORG know this too ..( my ethics get in the way ..else I'd have started my own religion when I was younger and looked like a giant jesus )..I went into old school advertising instead ..nearly as sleazy ..but based upon manipulating the same psychological traits as religion, gambling,PPC ..just less "black box" and definitely less scammy ..
Hard to read these posts and not think about shorting Google stock.
Emperors New Clothes comes to mind. Wonder how many g users feel they're the only one losing money.
|You can't run your business depending on Google to keep you on the first page. |
If you can run your business depending on ability to outbid all competitors present and future, I can run mine depending on solid site design and organic placement. ;)
Really it's neither here nor there. It's just two different (equally valid) approaches. Sure PPC is a zero-sum game, but then so is organic placement. Everybody can't be first.
As stated before, my approach is to build a relevant and user-friendly/bot-friendly site, and soak up the 'free' traffic. I figure any major search engine depends on the quality of their SERPs, as along as I keep ahead of that game and maintain a quality site with lots of relevant inbound links - if Google goes under, I 'should' still rank well with the next big thing, plus I'll still have the traffic from the links, forums, social networks, etc that I developed as part of my SEO strategy.
Sure, I still use Adwords, and I am counting on maintaining my organic placements. The site I currently run has ranked well since the altavista/lycos days. We've done well in organic search since the inception of Google. Thirteen years of success, but sure, tomorrow the algo could explode and I could get dumped on page 100. Tomorrow someone might outbid you on all your keywords or Google could decide your landing page isn't good enough for them. It's just a matter of what kind of and how much risk you are comfortable with.
For some people it's a control thing. Organic rankings are more nebulous. If I lose organic placement I've got to figure out why and try to fix it without any definite answers. If I lose PPC placement, usually the cause is clear - someone outbid me - I just have to increase my bid. I can control that. Doesn't matter if increasing my bid would turn ROI negative - it's still something I can DO to fix things. Some people just need that kind of control - I have a friend who is big into PPC and you sound a lot like him. He needs that feeling of control and reassurance - I pay, I bid, this happens...nothing wrong with that. Just different personalities/approaches.
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