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Page 20
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Paid Search: A Necessity
In today's competitive online marketplace, merely optimizing your
site for high ranking is rarely enough. Many of your competitors are
paying for high-profile search results, using tools like Google AdWords,
which is why you'll probably need to as well.
To ensure your site comes up when a user searches for a given term, you
bid for that term on a per-click basis. The more popular the term, the
more expensive it is. Many terms are pennies per click (though many are
far more expensive), and the search engines allow you to set a spending
cap so you don't spend the family fortune.
Naturally, this gets expensive, and fast.
"When people step up to the plate who don't know what they're doing,
it's very easy to get hurt," notes Jeff Binder, CEO of Saffron Rouge and
an expert on setting up e-businesses.
The key to surviving and thriving in the world of paid search is doing
the math to see what you can afford. You need to calculate your cost of
acquisition, which is the amount it costs you to attract each customer.
(This is an important figure to know for your entire marketing budget,
not just for your paid search expenses.)
In short, you must calculate: what is the maximum dollar amount you can
spend to attract a customer and still make a profit from that customer?
As long as your cost of acquisition stays underneath this figure, you
have a chance of making a profit.
To calculate your cost of acquisition, you must know your conversion
rate, which is the percentage of the visitors to your site who actually
make a purchase. Conversion rates vary wildly across the e-commerce
industry, but many sites report a one to three percent rate.
Let's calculate a theoretical cost of acquisition. Let's say you buy a
keyword search term for 18 cents per click. At that rate, it will cost
you $180 to get 1,000 people to your site. With a conversion rate of 2
percent, from those 1,000 visitors you'll get 20 sales. So here's your
math: $180 (advertising cost) divided by 20 (number of customers
attracted) equals $9. Your cost of acquisition, the amount you pay for
each customer, is $9.
Do you have more than $9 profit in each of your sales? If you do, you
can afford to spend 18 cents per click and still make a profit. When you
start out, you won't know your conversion rate, so you'll need to
experiment. Be prepared to lose some money in the experimentation phase.
So, which words should you bid on? To research which words shoppers are
using to find your product, go the Overture Keyword Tool. Enter the
search terms you know are related, and the results will show you how
many times each term was used, along with related searches. The only
drawback is Overture's results are calculated using data from the
previous month.
It's important to remember that these popular terms are the ones you
want to build into your meta tags and the text of your site, so you're
boosting your free search ranking while you're paying for higher
ranking.
Another key point I want to make is that as you run your paid search
campaign, you need to monitor your results using your Web analytics
software. Where are visitors coming from? What keywords are driving the
most business? Only by knowing the answers to these questions can you
maximize the return from your paid search buy.
Examples of Web analytics software includes WebTrends, ClickTracks, and
Urchin, and there are many good packages available.
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Page 21 |
Online Money-Making Opportunities
Several Systems to make real money via
Internet
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