Paid Search Advertising that Delivers Maximum ROI (Part 4)
2. Designing Successful PPC Campaigns
The golden rule of PPC bidding is: “Attract highly qualified buyers and keep your bids as low as possible”. Since you are paying for each single visitor landing on your website obviously you wish to maximize the effectiveness of your PPC campaign. Let’s take a look at some basic guidelines to help you optimise your campaign and ensure your ROI:
* Determine your bid cost
The calculation of the bid cost (also cost per click) requires a rather complicated formula. For the purpose of this article I mention just a baseline that helps determine how much you can afford to bid:
- Firstly, you need to know the conversion rate of your web site. That means how many unique visitors you need to close one sale. For example, if you need 50 visitors (= clicks) to close 1 sale then your conversion rate is 2%. If your bid is 10 cents per click than one sale has $5 of bidding cost.
- Secondly, you need to know your profit margin. If your profit margin is high enough to justify the cost you can consider increasing the bid and getting a higher position for your ad. This way you may increase the number of clicks through your website and acquire more sales.
- Finally, calculate if the extra sales justify the extra cost and adjust the bid accordingly.
