Making online advertising pay

If numbers make your eyes glaze over or head spin, you might want to skim over this section. But for the rest, this section explains how you can use one of online advertising’s biggest advantages — the fact that everything is trackable and measurable — to answer two thorny questions: Does my advertising pay? And how can I get more from every ad dollar I spend?

What pay per click (PPC) advertising costs

What you pay — the bid price — depends on competition for the keywords, so much of the art of PPC marketing is buying keywords at the best price.

three dartsKeyword research tools, like the free Google AdWords Keyword Tool we used earlier for keyword research, will tell you useful information such as the number of searches for that term, the likely cost of each click, and the amount of competition for those keywords. They’ll also give you an indication of the price other bidders are paying.

Prices typically range from US$1 to US$5 per click but can run much higher for very popular terms. They will vary based on both the keyword and the position your ad appears when several advertisers have bid for the same keyword.

As with search results pages, if your link doesn’t appear in the top two or three, you’re unlikely to see much traffic from it, giving you an incentive to outbid other advertisers.

The two factors that drive your overall advertising cost

There are two key factors that drive the overall cost of a PPC ad campaign:

  1. The cost of a click – how much you pay each time your ad is clicked
  2. The conversion rate – the percentage of those visitors who take up your offer

By taking these two factors into account when you analyse your sales results, you can work out the total cost per order for your advertising and calculate your profit or loss from this advertising.

The low value of most ebooks makes the economics of paid advertising difficult. It’s most useful for higher priced specialized ebooks and for situations where an author or publisher can earn income from repeat sales.

While PPC advertising is most frequently associated with search engine advertising, the method is common with many other types of online advertising, including social media advertising as we’ll see when we look at Facebook.

How to analyze the profitability of a PPC campaign

Online advertising is the most measurable and accountable form of advertising. This helps to fix a problem that has plagued advertisers since long before John Wanamaker’s famous remark: How to spend more on what works, and less on what doesn’t.

For anyone who’s familiar with direct marketing, the calculations and the terminology will be familiar. The payback from doing it can be very big indeed. So, if you’re up to the challenge, take a look at the simple worked example below.

Worked example: How to analyze the profitability of a PPC campaign

How to improve the success of a PPC advertising campaign

We can use the results of our analysis to improve our campaign — and the good thing about online advertising is that you can do this almost instantly, and frequently. Bad advertising can be quickly spotted and corrected.

Five ways to improve a PPC advertising strategy

VIDEO: Conversion tracking

One of the most powerful features of Google’s Analytics program is conversion tracking. It takes you beyond measuring how many users clicked your ad to see how many converted — that is, completed the action you set such as making a purchase or signing up for a newsletter — and what your return on investment was from the campaign.

This video from Google explains how conversion tracking works and how you can use it to improve your online marketing.

VIDEO: View a video from Google (9:04) explaining how conversion tracking works


Find out more about this topic on our Digital Publishing 101 useful resources site.


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