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3 strategies to profit when click prices add to (part 1 of 3 series) - ppc-advertising

 

Although the gradation of become more intense varies among activity resources, a contemporary appraise conducted by the Exploration Engine Marketing Certified Business (SEMPO) indicated an be in the region of 26% amplify in bid prices in 2004.

Statistics aside, all indications show an upward trend in keyword bid prices which means fewer domino effect in 2005 from the same money spent on pay-per-click marketing in 2004.

What Has Caused the Increase?

The austere counter is that pay-per-click marketing has proven to be a tremendous appreciable and handy plan for generating besieged website visitors among small, average and large enterprises. As challenge for pay-per-click marketing flood the keyword contribute of top-tiered pay-per-click examination engines and as enterprises compete for top ad placement, the bid prices add to accordingly.

Also, the competitive character inherent with a bid dutch auction or even with Google Adwords' carrying out sale arrangement where a amalgamation of greatest bid and click-through rate calculates your bid price causes an become more intense in bid prices. Just as with an eBay auction, the bid price increases until also a buyer pulls out of the keyword request or backs off from shooting for a top position.

What Do YOU Do When Keyword Bid Prices Increase?

This cast doubt on will be answered over a chain of three articles. Each critique will address, in detail, each one of the subsequent three strategies:

1. Appreciate Your Act Metrics.

2. Boost Your Website Conversion. (Part Two)

3. Ascertain the Days Value of a Customer. (Part Three)

Collectively, these three strategies will assist you in organization your pay-per-click marketing apart from of an ever growing bid pricing environment.

Understanding Your Act Metrics - the Foundation

The foundation for organization a performance-based pay-per-click marketing battle is all the way through appreciation your act metrics. By measuring battle and keyword performance, you'll know how to efficiently carry out the dynamics of a competitive request marketplace.

What are Accomplishment Metrics?

Performance metrics are appreciable outcome gathered and calculated from your business' online systems or in this case, from your pay-per-click marketing campaign.

Referred to also as "key accomplishment indicators", carrying out metrics form a dash for you to gauge the effectiveness of your pay-per-click marketing. Further, act metrics help create a baseline for cost effectual bid management supported by your contemporary website accomplishment and your business' financials. As Affair Executive, Thomas S. Monson stated,

"Where accomplishment is measured, accomplishment improves. Where act is considered and reported, the rate of change for the better accelerates. "

Understanding your act metrics starts with crucial at least one value-oriented act such as an opt-in, subscription, registration or sale that you seek a visitor to act on your website. This battle (or your "marketing objective") is the affect for calculating your carrying out metrics and measuring your campaign's effectiveness.

Performance metrics vary among character businesses and their inimitable marketing objectives; however, two aspect carrying out metrics apply to all pay-per-click marketing campaigns anyhow of their objectives. These include:

? Conversion Rate

? Cost per Action

You also need a firm accord of your big business financials and your pay-per-click marketing campaign's inimitable interchange data including:

? Arithmetic mean Battle Value - The be in the region of worth generated from the completion of an action.

? Gross Profit Margin - How much you create on an action, not including marketing costs.

? # of Distinctive Visitors - Visitors generated from your pay-per-click marketing efforts.

? Total Pay-per-Click Cost - Cost to create the visitors.

Conversion Rate

Google defines a conversion rate as "the amount of visitors who took a beloved accomplishment not speaking by the total come to of visitors in a given time episode (typically, per month). " A conversion rate represents your website's capability to turn clicks into actions.

Conversion Rate Calculation: Events / Total Come to of Visitors

For example, if your pay-per-click marketing canvass generated 1,000 visitors to your website and 10 complete your objective (action) then your "conversion rate' is 1. 0%.

Cost per Accomplishment (also called "CPA")

Your "cost per action" (CPA) dealings how much it costs for you to breed an accomplishment (marketing objective. ) In other words, CPA is the money total you need to spend for your pay-per-click marketing battle to breed one advantageous action.

For example, if $100 in your pay-per-click marketing generated 1,400 visitors and 10 concluded your marketing objective, your cost per act is $10. 00.

Cost per Battle Calculation: Total Pay-per-Click Cost / Total Amount of Actions

Once you have figured how much it costs for you to engender one action, you can apply it to the value each battle is worth.

Here's an Example?

Imagine you are promotion foodstuffs (product sales is the marketing objective) and your be around "sales" value is $100 and your gross profit margin is $65. Historically for every 100 pay-per-click visitors to your website two sales are generated; a sales conversion rate of 2%.

During a detail month, you spend $500 on your pay-per-click campaign. It produces 1,400 visitors at an arithmetic mean cost-per-click of $0. 36. Based on your 2% conversion rate, your pay-per-click marketing generated 28 sales. With this data in hand, you can now compute your CPA.

Cost per Action: Expenditure of $500 not speaking by 28 sales = $17. 86 per sale.

Discover How to Analyze a Aim CPA to Confirm a Greatest Bid Price

Using the same example, you can set a ceiling bid for your pay-per-click battle by figuring out what percentage of your gross profit margin you are disposed to commit to your pay-per-click marketing budget. Let's fake you commit 30% of our gross profit margin to your pay-per-click marketing campaign.

With a gross profit margin of $65 and a financial plan binder of 30%, your aim CPA is $19. 50.

Target CPA: Gross Profit Margin ($65) times (30%) financial statement binder equals $19. 50.

Now take your aim at CPA of $19. 50 and multiply it by your contemporary conversion rate of 2% to find your ceiling bid price. In this exemplar your greatest extent bid price is $0. 39 per click.

From these calculations, you now know your arithmetic mean greatest extent bid price crosswise your pay-per-click marketing battle must be equal to or less than $0. 39 per click to churn out your aim at CPA of $19. 50.

Performance Metrics take the Risk Out of Your Request Decisions.

As Robert Kiyosaki, cause of mutliple New York Times best-seller books as well as Rich Dad Poor Dad states, "being amateurish is risky. " By conscious your accomplishment metrics, you can affect the constraints of your bid prices alongside your monetary objectives to guarantee the achievement of your commerce goals.

Performance Metrics Identify Areas of Competitive Advantage

Most importantly, aware your carrying out metrics enables you to associate and prioritize marketing strategies and website improvements that absolutely assume the bid price you can bid while left behind profitable.

As shown in the above example, your website's conversion rate and be in the region of sales value has an extraordinary bring about on your cost per action. By focusing your pains on greater than ever your conversion rate and/or your be around sales value, you can bid helpfully at senior "per click" amounts.

Competition beware - when your activity is armed with the insight gained by means of act metrics you are a athletic force apart from of ever greater than ever keyword bid prices.

Until next time when we dive into maximizing your website conversion rate?start calculating your carrying out metrics!

Kevin Gold is a Come to nothing of Enhanced Concepts and a in print author. If you're engrossed in escalating your leads or sales, get a free copy of "Understanding Your Conversion Rate" and "12 Dependable Ways to Amplify Your Website Conversion" by visiting http://www. enhancedconcepts. com


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