John Ellis talks about pay-per-click advertising and budget during tough times in his post, “Budget? What Budget? it’s pay-per-click.” He argues, “PPC does not follow the old marketing budget rules.”
The whole notion of pay-per-click advertising is based on performance. An advertiser pays a high price for a pay-per-click campaign because he/she expects the conversions to happen relatively easy.
The thought here is that when running an effective pay-per-click campaign, the more you spend, the more you should be able to convert. The more you convert, the more your bottom line should improve. The more the bottom line improves, the more budget you should have for pay-per-click (PPC) advertising campaigns.
Based on that ground John argues that the notion of budget when applied to pay-per-click advertising doesn’t make sense. In order for this claim to hold true, one thing must happen: you must be running an effective campaign. By effective campaign, I mean that your conversion rate is healthy. Of course that means you must be generating revenues.
Another important element in ensuring an effective pay per click campaign is having landing pages that are optimized for conversion. Often times I see pay-per-click ads leading to pages with absolutely no clear conversion goals. On conversion pages, the goals is to convert a user as quickly as possible without confusing them by presenting hundreds and hundreds of links.
You also need to be careful about click fraud. In the pay-per-click world, click fraud runs rampant. By carefully monitoring your click logs and analyzing them you can ensure your pay-per-click budget is put to good use.
There are many more factors that together make a pay-per-click advertising campaign effective. I will cover these in a later post.
One important thing to consider is that all pay-per-click is NOT created equal. The pay-per-click traffic generated from a search engine like Google might be far more valuable than pay-per-click traffic generated from a site that runs Google AdSense. In other words, search advertising can be more effective than contextually targeted advertising.
If you are running a pay per click campaign for promoting your blog with no clear conversion goals (and yes, there are people doing that), then you, of course, need a budget. Here distinction between brand marketing and conversion marketing is important. For brand marketing, one way or the other you’re going to need a budget. For conversion marketing you can let the demand (clicks) on your pay-per-click decide the “budget.”
So, unless you can see pay-per-click advertising model working for you in a healthy way, you should continue to operate under a budget.
That said, I see where John is coming from and I agree with him that search marketing is stronger than ever. It is one of the best ways for SMBs to deliver their message to prospect. Plus, with a well organized and executed campaign, you can easily track ROI on your investment.
Tags: budget, pay-per-click, ROI
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