PPC Marketing: Doing the Math

Business.com / Marketing Solutions / Last Modified: February 22, 2017

Tips on the numbers to look at during your PPC marketing campaign.

The beauty of a business owner's ability to actually measure the results.

Gone are the days when you had to guess how many of your customers learned about you from the dancing Statue of Liberty on the side of the road or the ad in the local coupon clipper. With PPC, you can actually see numbers on how much you're spending and how much you're making in return.

PPC enables business owners to not only target their ads to the customers who are most likely searching for their product or service, but also track how many click-thrus and impressions their ads received using multiple variables (ie: keywords, clicks from geographic areas, time of day, etc.).

For a novice, the keys to PPC success are taking the following steps (click here for a more of an in-depth explanation):

  1. Knowing the purpose of your campaign
  2. Establishing objectives and a budget
  3. Researching your market and competition
  4. Building a strong keyword pool
  5. Writing optimized ad copy
  6. Creating the relevant landing page
  7. Tracking the results
  8. Eliminating non-performing ads
  9. Expanding on performing ads
  10. Tracking the results again

Tracking the results of your campaign is one of the most important steps, but understanding how to analyze these numbers and make your targeted ads work harder for you can be confusing and intimidating for a PPC newbie, and downright time-consuming for a small business owner who wears multiple hats.

Karin Bilich, Founder of Smart Author Sites and Self Employed Sites, uses PPC marketing to help drive traffic to her business, as well as increase traffic to her customers' sites. She said enlisting the aide of a PPC consultant -- while expensive -- can be helpful.

"Otherwise, you're kind of taking a shot in the dark," she said.

To help give you a leg up on your next PPC marketing, we created  a primer of the most useful numbers to watch.

Average cost of the conversion (or how much your customers are worth)

By far the most important number to pay attention to is how much each conversion costs, said Bilich. Once you determine this, you'll want to make sure that, on average, you're spending less than that amount for each click. So, for example, if you get $20 per sale, then you would only want to use the keywords on which you spend, on average, less than $20 per conversion. Google Adwords will tell you the average cost of conversion for each keyword. You can calculate the average cost per conversion by using the following formula: Total Advertising Cost / Number of Conversions = Cost Per Conversion

How much you can spend

If you're new to the PPC game, don't start out paying thousands of dollars on a campaign. Set your dollar limit low -- say $50-$100 (once there's been $100 worth of clicks, the ad comes down). This will allow you to familiarize yourself with PPC basics without losing a ton of money on what could end up being an unsuccessful campaign (remember, just because someone clicks on your ad, doesn't mean they're necessarily going to buy your product). And again, keep in mind, if you feel like you're in over your head, you can always enlist a consultant.

Metrics

Test and analyze your campaign at least monthly to figure out which components are working and which need to be tweaked or scrapped. Metrics to look at include: Click-through rates, cost per acquisition, conversion rate, average sale and return on investment. There are plenty of other numbers you can study as well -- but these should give you a solid picture on how effective your campaign is and where it can be improved.

Addresses

The beauty of PPC marketing is that it can reach millions of people around the world (as opposed to, say, a billboard, which might only reach a couple thousand people an hour). But maybe your business in Toledo doesn't want customers from Toronto. To make sure you're not wasting money on impressions from customers outside of the geographic area you serve, be sure to use geographic targeting. You can select the continents, countries, cities, and/or postal codes in which your ads will be displayed.

Times

Figure out what time of the day you get the most clicks and conversions. If you notice a lot of site traffic at 4 a.m., but aren't seeing any conversions at that time, eliminate ads during that time period, targeting your ads for times when you have a higher conversion rate.

Google Quality Score

Keep your ad high on the page by following Google AdWords rules and providing quality advertising.

How much you're selling

To further streamline your campaign, figure out which products you're selling the most of and invest more of your PPC campaign in that product because it will generate more profit per sale. Eliminate any ads for products that aren't selling.

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