Main Menu
Articles Home
Most Popular Articles
Top Authors
Submit Articles
Submission Guidelines
Link to Us
Bookmark
Contact Us



Partners
 
Home / Legal

$10 Per Click - Do They Know Something We Don't?

By:Neal Lebar



I have utilized pay-per-click (PPC) advertising since its inception about two years ago. With PPC, the advertiser is only charged when a person actually clicks on their link. The amount you actually pay for each click is referred to as 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 excess of $10 per click! The big question isn't how much it costs per click but how many clicks does it take to get an acquisition. 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 pay cost-per-click charges of $10.01, $10.00, $9.99, $7.00, 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 $7.00 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 $6.00, $7.00, or $10.00, 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 $5.00 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 now benefiting - 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 new customer 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 average cost-per-click was $0.40 and others where it was $5.00. The key question remains: how many clicks does it take to get an acquisition? If the cost for each click is $0.40 and it takes 200 clicks for an acquisition, then the acquisition cost is $80.00. If the cost for each click is $5.00 and it takes 10 clicks, the cost of the acquisition is $50.00.

FINDING THE GAPS

Two key points are crucial: (1) how much does it cost to get an Internet acquisition compared to traditional methods? and (2) what is the value of a new customer? In some businesses a new customer is worth $1,000, while in others, 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 keyword 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

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 nlebar@innovate-inc.com






Digg del.icio.us Blink Stumble Spurl Reddit Netscape Furl

Article Source: http://www.articles2k.com
Top Legal Articles
  • 1). how to defer jury duty  By : Phil Wiley
    Let’s face it. Jury duty can be a drag, but most of all it’s not always convenient when we’re called up to service. So how can you defer jury duty?
  • 3). The New Bankruptcy “Means Test” Explained in Plain English  By : Charles J. Phelan
    With the new bankruptcy law in effect as of October 17, 2005, there is a lot of confusion regarding the new "means test" requirement. The means test will be used by the courts to determine eligibility for Chapter 7 or Chapter 13 bankruptcy. The purpose of this article is to explain in plain language how the means test works, so that consumers can get a better idea of how they will be affected under the new rules.
  • 4). Estate Planning - No Contest Clause in your Will  By : Ronald Hudkins
    Copyright 2006 Ronald Hudkins There is value in the story of an older client who had seen a very interesting clause employed in a will. There was a great deal of money at stake and the many family members had little reason to love each other, because they had never met and never knew of each other’s existence. It was expected that the will would be heavily contested on several different fronts in every conceivable way.


New Legal Articles
  • 1). Personal Injury Compensation Claims  By : Julian Hall
    Not all accidents lead to legal proceedings, however if there are no serious injuries, you may be entitled to recover damages for property and other expenses from the third party. The likelihood of legal proceedings will usually rest on the quantum, or the amount of financial damage which has ensued from the accident.
  • 3). California Contractor License Bond  By : Seth Miller
    Before a contractor can receive a contractor’s license in California, the contractor must register with the California Contractors State License Board and pay a Contractor's License Bond or a cash credit. In the event of a contractor's license getting suspended or annulled due to a breach of the Contractors License Law, the contractor must file a disciplinary bond with the CSLB.
  • 4). Montana Child Support the Treasure State  By : Holcy
    Montana Child Support How do you know if you qualify for child support? Child support is available to all single parents in need of financial assistance from the non-custodial parent. In order to receive child support services, you must first fill out an application with the state of Montana. When apply for child support, there will be a non-refundable application fee.
  • 5). Criminal background check  By : Stanley Alpin
    Background checks are a useful screening and selection tool for companies. Of the many types of background checks, criminal background checks are routinely carried out by employers to ensure that they are not courting a risk of physical and mental trauma. In fact, in several states in the U.S, criminal background checks are compulsory for prospects who apply for positions in places such as nursing homes, educational institutions, and adult care centers.
  • 6). Employment background check  By : Stanley Alpin
    Employment background checks are becoming increasingly common these days. The reasons for this include the fact that negligent hiring lawsuits that result from the actions of an errant employee can damage a company’s credibility and lead to hefty fines; companies have become more selective in their choice of employees following the threat of terrorist activities; accepting a resume at face value has resulted in many companies wasting time and money due to frequent hire-and-fire situations.
  • 7). How an employee background check works  By : Stanley Alpin
    Over the past few years pre-employment background checks have gained significance for employers big and small. Companies can either execute the required activities in-house or can outsource them to human resource companies that specialize in carrying out background checks. There is a lot of paper-work, co-coordination, and follow-up that goes into conducting a background check and for this reasons companies prefer to get the job done by an outside agency.
  • 8). Is an instant background check even possible?  By : Stanley Alpin
    Given that there are more than 12 million illegal immigrants in the United States and that information on U.S citizens is scattered across various databases all over 3,142 counties, it is safe to conclude that an instant background check is not possible at present. Yet, there are innumerable companies that purportedly offer instant background checks.
  • 9). What shows up on a criminal record background check?  By : Stanley Alpin
    A criminal record background check can throw up a lot of information on an individual including previous arrests as well as conviction and non-conviction information. The information is obtained from Federal Fugitive files, files from the Department of Corrections prison, state criminal records, databases on sex offenders, and prison parole records.
  • 10). Offshore Trust - Effective Estate Planning, You Decide  By : Ronald Hudkins
    Copyright 2006 Ronald Hudkins The creation of offshore trusts and other financial plans is a way of shielding your assets from the laws of the nation in which you reside. It can sometimes be used to remove one of the two certainties of life; taxes. Americans are far less likely than the citizens of other countries to put assets abroad because, although when you receive the benefits of being free of your country’s laws regarding assets (namely taxation) you also lose the aspect of those laws that are designed to protect your assets.


 

© 2006 articles2k.com - Privacy Policy