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How do you establish if PPC advertising is right for your business

Pay Per Click advertising can be a powerful tool in the online armoury of businesses of all sizes. When used at the right time and in the correct situations it can deliver increased profits and impressive returns on investment.

The key element of this is that it is used when appropriate, and not just as an obligatory element of your online promotion.

Here’s how you establish whether or not it is suitable for your business:

How bidding works and costs per click are set

As you may already be aware, PPC advertising works on the basis that every time someone clicks on your advert you pay an advertising fee. The cost of that fee is dependent on the competition of the key phrase you’re bidding on.

For example, if you would like to advertise for the key phrase ‘Home Insurance’ you’ll be forking out somewhere in the region of £16 for every click you receive. This cost is so high because the competition is fierce and from businesses that have extremely large Pay Per Click advertising budgets.

Because there are multiple bidders willing to bid highly for a click, the cost of that click is artificially pushed upwards, in line with the basic principles of supply and demand. Something is worth as much as someone is willing to pay for it.

Another example is the key phrase ‘web design Cornwall’. If a business was looking to compete for this phrase they would be budgeting somewhere between £2 – £4 per click. Again in this situation there are a variety of people advertising for it, but the costs they’re willing to budget for a click are much lower.

Where do you find the costs per click for your business?

If you have a Google account all you’ll need to do is Google ‘Adwords’.

Once in the system you’ll need to click on the Tools tab at the top of your screen and select the appropriate tool you’d like to use, depending on the information you’d like to gain, for example the volume of searches being made for certain key phrases or the levels of traffic you can expect.

Don’t worry, by signing up for Google Adwords or using their tools there is no obligation for you to spend any money or to advertise.

Now we know how a PPC cost is established and where you can find it lets work out if the cost stacks up.

Does the cost add up for your business?

There are a few things to consider when looking at PPC advertising on Google:

a) What is the cost of the click?
b) How many clicks does it take to convert to a paying customer?
c) What is the revenue per unit you would gain as a result of a converted click?
d) Is figure C sufficiently higher than A x B?

If the answer is yes then it is a viable option for you.

If the answer is no then on the face of it the sums don’t add up. This would mean that unless there are other reasons driving your advertising, such as competitive or loss leader activity you should evaluate your current advertising spend and weigh up if it would be better spent elsewhere.

For more information on how we can help you implement effective PPC campaigns as a local business please give us a call on 01566 784860 or email mark@mihidigital.co.uk

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