Overcome Five PPC Obstacles and Achieve Significant ROI

It’s common knowledge that Pay-Per-Click advertising – having your listing show in the “Sponsored Links” area of search engine results – is one of the most effective and efficient marketing tactics around. A successful PPC campaign is often more measurable and accountable than any traditional advertising medium. When managed proactively, PPC can offer a significant ROI and have a tremendous impact on a company’s bottom line.

But Pay-Per-Click is growing increasingly complex. Many advertisers are questioning whether it’s worth it and some are even leaving the market. Five trends in particular are increasing the “hassle factor” for PPC.

1. Increasing Cost

Sometimes average costs per click (CPC) trend downward for a short time, but overall, they seem to be only going in one direction -- up. The average CPC in Q306 increased over 16% to $1.48, according to the Keyword Price Index® from Fathom Online. While historically search has evened the playing field for smaller businesses, many of these organizations are now being squeezed out of PPC by bigger brands with deeper pockets.

Will there be an end to this runaway inflation? There has to be, as marketers get more sophisticated about tracking the ROI from their campaigns. They’ll know exactly how much they can afford to spend, and CPCs will settle into a range that makes sense. The open market will work, in other words.

Still, this is likely little comfort to those with limited budgets who want to continue to leverage PPC in the short term. What can you do? You can stop hanging your hat on the broader, more competitive keywords (known as “head” terms). For example, a company selling telephone equipment may get caught up in a bidding war for a search term that’s used frequently, such as “telephone equipment.” Rather than continue to buy few, expensive clicks with their set budget, they should strive to buy more, inexpensive clicks. How? By bidding on hundreds – even thousands – of “tail terms” such as “small business telephone equipment,” “wholesale office phone systems,” and “affordable telecom equipment provider.” Not only are these keywords more affordable, but they’ll drive more targeted traffic than the broader ones. Prospects using these tail terms are usually further along in the sales cycle and more likely to make a purchase.

2.  Click Fraud.

The issue of advertisers paying for clicks that aren’t from prospective customers is becoming so talked about that it even hit the cover of Business Week recently.  While industry estimates of the magnitude of the click fraud problem vary widely, many businesses are feeling the sting.  The search engines are getting more sophisticated in detecting click fraud, and numerous software products have entered the market that advertisers can use to identify it.  Still, it’s likely that some level of click fraud will remain – it may become a cost of doing business, similar to “shrinkage” in the retail industry.

Who’s most at risk?  Companies in highly competitive, usually consumer, categories (think gambling, pharmaceuticals, travel, etc.).  Also those using content targeting, where their listings are displayed on regular websites in addition to search results.  Content targeting can be a great option for businesses whose search marketing goal is primarily branding and getting their message out to as many people as possible.  But for those using search marketing to drive conversions on their site (a sale on an ecommerce site, or lead generation on a B2B site), content targeting usually isn’t a good option.  Turn it off and your click fraud concerns should diminish considerably.  Still worried?  Get click fraud detection software.  Also look at your web analytics on a regular basis to identify unusual activity, such as a spike in clicks that doesn’t translate to a corresponding spike in conversions, or large click volumes from a specific IP address.

3.  Quality Score.

Both Google and Yahoo now use a “Quality Score” – along with your bid amount – to determine where your PPC ad is ranked on the page and how much you’ll pay per click.  The Quality Score partly consists of your click-through rate, and it also includes the relevance of your ad text, keyword, and landing page.  What does this mean?  If you bid on irrelevant keywords or your ad’s creative isn’t particularly compelling, not only will your ad be displayed lower on the search results page, but you’ll pay more per click.

This isn’t really new – Google has considered these factors for years.  But recently, they also started analyzing landing pages – the pages that the ads link to.  Google’s goal is to ensure a positive experience for the searcher.  They reward PPC users who provide relevant and substantial content on their landing pages, treat the searcher’s personal information responsibly, and have an easily navigable site.  Yahoo launched a similar system very recently too.  (Did we mention that the engines don’t actually tell you what your Quality Score is?  Hopefully pressure from advertisers will change that soon.)

The results of the new focus on Quality Scores is that advertisers who use their website’s home page as the landing page for all their PPC listings will be at a disadvantage over those who create custom landing pages and incorporate best practices from the web usability world.  But the good news is, those who play by the new rules will be ranked higher and have lower CPCs – another solution to the first challenge outlined above.

4.  New Platforms.

For years, advertisers only had to learn and deal with two PPC platforms – Google’s and Yahoo’s.  Recently, both Microsoft adCenter and Ask (formerly Ask Jeeves) have launched their own PPC platforms, so many companies feel the need to learn the nuances of four (sometimes very different) systems.  Anyone also doing PPC on Internet Yellow Pages or vertical search engines has even more platforms to manage.

Until the past month or so, Yahoo’s PPC system still used the technology developed by GoTo.com in the late 90’s (which evolved into Overture and was bought by Yahoo).  It was an old, klunky platform with numerous limitations.  Yahoo has spent the last couple of years reprogramming their platform from scratch, and now it’s remarkably similar to Google’s (coincidence?).  They’ve been migrating their customers to the new platform in December and January.  It’s been a painful process across the board, fraught with surprises and bugs.  While that should be a one-time occurrence, the reality remains that anyone managing PPC must be intimately familiar with how multiple, complex systems work.

5.  Search Engine Meddling.

We have documented many cases of what we’ll call “search engine meddling,” or the search engines making changes to your campaign, often without telling you.  For example, Google’s system may indicate that a keyword is “active” (up and running) when in actuality, sometimes it’s not.  Sometimes Google will put one keyword’s headline on a different keyword’s ad, which can create an ad that makes no sense.  MSN recently sent an email to some advertisers telling them that they are going to automatically turn on content targeting.  Those knowing enough to know that they don’t want content targeting will have to log in and turn it off manually.  Those who don’t know the difference are liable to see some percentage of their budget go to these less qualified clicks that are more likely to be fraudulent.

Finally, the engines can serve up your ad on highly irrelevant keywords if you use “broad match.”  Match types, in brief, allow you to determine, on a keyword level, how tightly or loosely you want your ad matched to the searcher’s query.  For example, if you’re bidding on “used Sun” (as in Microsystems), you can choose “Exact Match” (only serve up the ad to searchers typing in “used Sun”), “Phrase Match” (serve up the ad to searchers typing in “used Sun” plus other words, but don’t change the word order to “Sun used”), or “Broad Match.”  It’s commonly thought that Broad Match serves up your ad to any query with the word “used” and the word “Sun” in it, and it does.  But it also displays your ads for synonyms and related phrases, which many advertisers don’t realize.

Net result?  We’ve seen our client’s ad for “used Sun” – using broad match -- show up for the query “used heat pumps.”  We’ve seen our ad for “used AS400” (a computer server) show up for the query “rebuilt Calcutta 400” (a fishing reel).  Clearly, these are irrelevant results that won’t drive qualified traffic, although they can make more money for the PPC engines.  Fortunately, it’s easy to fix by using Phrase Match or, in this case, adding “Negative Keywords” such as “heat pumps” and “Calcutta” to the campaign.

What can companies do about the search engines meddling in their PPC accounts?  Be aware of the pitfalls as we’ve outlined them above and keep a close eye on all facets of their campaigns.  Be very careful if you choose to use Broad Match, and keep an eye on your web analytics to see which keywords are generating clicks.

Why Bother with Pay-Per-Click?

After all this gloom and doom, some companies may feel like throwing in the towel – that PPC is too complex and fraught with unknown risks to bother with.  But it’s not – as with most nascent industries, it’s simply going through growing pains.  Pay-per-click, as a key component of search marketing, remains the most cost efficient and effective marketing vehicle ever known.  (It’s not just us making that statement; investment banking firm Piper Jaffray & Co. said it first.)

The bottom line is that businesses undertaking PPC must be aware of the pros and cons of the medium, and must be willing to invest the time and education it takes to manage PPC properly.  There must be a strategy in place in order to reach measurable goals.  It’s so easy to get bogged down in the many tactical details of PPC that it’s important to ensure that everything’s managed to an overarching strategy and goals that will meet the organization’s business objectives.  At the same time, PPC must be managed proactively, data must be analyzed regularly, and the campaign must be continually adjusted to maximize its results.

Minimize pay-per-click’s risks, manage it expertly, and it can drive a tremendous number of qualified prospects to your door – people who are actively searching for what you’re selling.  Someone once said that “Nothing worth doing is easy.”  It’s just as true that nothing about driving revenue is hassle-free.  The benefits of PPC far outweigh the effort involved to do it right.

About Us

Founded in 2001, Prominent Placement is an industry leading search engine marketing agency offering integrated search engine optimization, pay-per-click advertising and strategic linking services.  Prominent Placement has unrivaled experience in driving business success and has earned industry accolades including AMA Atlanta Chapter AMY award winner the past four consecutive competitions, TAG TAMY award winner 2005, and PRSA Atlanta Chapter award Finalist 2006.  Prominent Placement is a member of the Search Engine Marketing Professionals Organization (SEMPO), the American Marketing Association, the Technology Association of Georgia (TAG), the Atlanta Interactive Marketing Association (AiMA) and the Public Relations Society of America (PRSA).

For more information call us at 888.SEM.MKTR (888.736.6587).  For a look at our comprehensive approach, please see our Search Engine Marketing Services page. And to discuss your company's individual search marketing needs, please use our contact us form.