Ask Mr. Marketing: Paying for every click

By Rob Weinberg

How do online ads work?

—Bob Greene

Google almost any topic and you’ll encounter three-line ads on the screen’s top or right side. These are known as Pay Per Click ads, or PPC.

Examine these ads and you’ll see products or services beckoning you that all relate to your online inquiry.

These ads don’t pop up arbitrarily. They appear based on computer formulas tracking your interests and public profile (FaceBook information, address, etc.)

Ads appear based on an auction of key phrases. Marketers agree to maximum payments for select words important to them. Pay more for the word/phrase — get higher placement.

Let’s say you google “San Diego books.” Ads immediately materialize for yellowbookroad.com and Amazon. Amazon’s second position announces they’re paying less for each reader clicking on their ad.

However, a solid headline and ad copy may generate more activity for Amazon despite its lower position. Yellowbookroad’s ad — still seen — costs them nothing. However, they probably won’t make the sale.

To maximize results, thorough analysis of your competitors, keywords, and costs per phrase is critical prior to placing ads.

Online ads may not even have value for your business. Sales in insular industries with a small coterie of contacts probably happen more from networking and direct outreach than from online ads.

However, online ads may be worthwhile if you’re reaching out to the general public. Paying a quarter per lead means it cost $10 to get 40 qualified prospects in your door. If 10 percent each buy $10 of your products, you’ve got a 400 percent return on investment.

Determine the value of PPC ads for your business by answering the following:

How wide an audience are you trying to reach?

How much do sales leads typically cost you now?

Are your current marketing efforts working?

How much is your average sale worth?

Do your competitors advertise online?

How much web site traffic do you currently receive?

How effective is your web site at converting prospects to sales?

Thoroughly answering these questions should determine whether it’s better for you to test online ads or skip them in lieu of a different marketing vehicle.

With that said, I wish you a week of profitable marketing.