Pay Per Click

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  Pay per click search engines can give you instant traffic and allow you to test
new business models in real time. The pay per click market is competitive
though. It is worth spending an extensive period of time learning how to
write and target ads, tracking your competitors, and doing deep keyword
research before jumping in.

Before You Start

Metrics Based Marketing:
PPC search engines provide a highly trackable marketing medium. Frequently
people begin marketing without any idea as to the approximate value of a click. If
you do not set up a value range and track the results you have no way to distinguish
good marketing from bad marketing.

To know the value of a click you need to decide what the goal of your marketing is.
If you are just branding then you should expect to lose money and tracking may not
be that important.  

If you are using pay per click search engines for direct product marketing you need
to know how much each click is worth.

Typical Conversion Rates:
Lead generation sites typically have a conversion rate around 10 to 12%, but can go
as high as 30% + if they are properly targeted and exceptionally appealing to
visitors. Since little investment is needed to arrive at your website and so many
others are just a click away selling stuff the web has a conversion rate similar to
direct mail advertising. High ticket items have a lower conversion rate and unique
cheap items tend to have higher conversion rates. Many stores find typical
conversion rates might be anywhere from .3 to 4%.  

Doing the Math:
There are a ton of factors that go into click price. It is somewhat hard to measure
branding, but ad distribution can help with that. Most other things are tangible.

If you know your average order size, profit per order, and estimated conversion rate
you can get a good idea what clicks are worth. Some people also factor in lifetime
cost of a customer, but it is harder to measure and there is still enough opportunity
in many markets to do your math primarily based on direct return.

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