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Wednesday, Jan. 27, 2010 at 8:03 am

How To Optimize Pay Per Click Advertising & Control Costs

By Brendan Regan
January 27th, 2010

Every client I talk to who’s using Pay Per Click (PPC) as part of their online marketing mix voices some level of concern about cost and ROI, and for good reason.  With PPC, there seems to be a thousand different ways to spend too much money for not enough return.  Have you ever experienced any of these headaches?

  • Setting the wrong daily budget, only to have it spent within a few short hours
  • Having all your clicks come from the “content network with few or no conversions
  • Suspected click fraud
  • Lower than expected conversion rates
  • Struggling to bid the correct amounts for the various “match types”
  • Lots of competitors bidding for the same ad space
  • Suspecting that your PPC ads are bringing in unqualified (disqualified) traffic
  • Building out your keyword list through keyword research, then not having time to optimize it
  • And the list could go on!

Please don’t throw up your hands and pause your campaigns–there’s hope!  Believe it or not, the PPC game can be optimized and won.  You can get good ROI and good Return on Ad Spend (ROAS) with the right skills and tools.

Since giving advice on all the above challenges would be better suited to a book or an eBook, not a blog post, I’ll instead focus on an aspect of the PPC optimization game I don’t think gets enough attention: the various skill sets needed to optimize PPC campaigns and spending.  The skills needed to correct ALL of the above list of problems fall into two distinct buckets:  I’ll call one “Campaign Optimization” and the other “Conversion Rate Optimization.” They are two very important sides of the same coin, but it’s arguable that no agency/consultant soliciting you today can be successful at both, because the skill sets are so different and there is so much work that often needs to be done on both sides.

PPC Campaign Optimization

A lot of the “low hanging fruit” in PPC cost control can be quickly accomplished via Campaign Optimization.  When I talk about this particular skill set, I’m basically talking about the practitioners who do keyword research, bidding, account administration, budgeting, geo-targeting, ad types, reporting, match types, and more.  All the things that live in the administration side of AdWords or Yahoo’s or Bing’s advertising systems.

While online marketers used to be able to handle PPC in their “spare time,” it’s gotten so much more robust (and complicated) in recent years.  I would never, as an online marketer, try to run PPC campaigns while also juggling the management of a website, other marketing channels, SEO, etc.  Most online marketers outsource this skill set to a PPC agency or consultant, and I agree with the practice.  PPC administration is very specialized now, and it’s best left to the professionals. The downside, though, is that online marketers have to know enough about PPC campaign administration to keep their vendors honest.  For example, is your PPC agency actively doing match type keyword traps?  Or, does that sound like a foreign language?

While Campaign Optimization is a good way to get some quick improvements and cost savings, it takes dedicated effort, especially the constant testing, tweaking, and keyword list building that a successful PPC program needs.  Also, every campaign optimization done will only be successful if the traffic you pay for converts, so let’s talk about the other half of the story…

Conversion Rate Optimization (CRO)

While it’s the job of your campaign optimizer to bring in the most qualified traffic for the lowest price, your website has to convert in order to realize the return on your ad spend.  The better you convert, the more money you have to bid on keywords, the more qualified traffic you can get, the more traffic you’ll convert, the more marketing budget you’ll have, etc.  It’s a glorious marketing cycle when it’s working!

The Conversion Rate Optimization skill set should be able to segment and analyze your PPC traffic and conversion rate, recommend effective landing page tests, suggest better ad copy, and help you optimize your conversion funnel specifically for PPC traffic.  An understanding of the paid search segment, and the user intent of different keyword queries, is essential.  Another key skill is understanding your Unique Value Proposition, and how that UVP can span from PPC ads, to landing pages, to conversion.  Finally, a CRO practitioner should have a firm grasp on persuasive copywriting, and how to apply it to both PPC ads and websites.

Is There Overlap Between the Skill Sets?

You may be asking this question soon after you start thinking about separating the skill sets into two distinct categories: Is there overlap?  Should there be?  We believe there can and should be a bit of overlap in the areas of analytics, ad copy, and keywords.  And there would need to be cooperation for executing landing page tests that are valid.

Let’s say you’ve hired a PPC agency to handle that aspect of your online marketing.  And, you’ve also engaged a Conversion Rate Optimization firm [hint: FutureNow ;) ] to optimize your online marketing for conversion rate.  I would expect to work with your PPC agency if I need data, if I want to test different ad copy, if I want to test landing pages, and if I feel there are keywords that are ineffective or under-exploited. 

A good working relationship between the two specialties could add up to lower advertising costs via increased conversion rates.  And both of those “wins” will compound over time just like a good interest rate on a savings account.

Add Your Comments

Comments (61)

  1. Very graet article for Marketing
    THanks for sharing!
    Pavel Iliev

  2. Nice article. What are your thoughts on using CRO to improve the quality of leads?

  3. Great article and it really helped me to understand the concept of pay per click and also to learn a lot about Marketing.

  4. [...] How To Optimize Pay Per Click Advertising & Control Costs … [...]

  5. Really wonderful piece of information and I appreciate it that you share something so useful with the readers of this blog.i never about it before and you say we can say some what a awesome way i am fully satisfied about that topic thanks for that post really by heart.

  6. Speaking of bid limits, the first few minutes my new yahoo ppc account the max bid was set the same as the daily budget, before the hugh bid clicks got reported back from the network, they had exceeded the daily limit by like x5, which triggered auto rebills on my credit card 3 days in a row to reach their ‘anticipated week’s budget’ got a refund for the daily lmit overshoot.

  7. We know it very well that PPCs are a great mean for instant response for something. But, such an important analysis can definitely show the correct direction to this rapidly increasing phenomena…

    Great Info… Keep Rocking Guyz…

  8. so good article! i’m using Google Adwords now. Do you think that Landing page will be effect to the Search result on sponsor links?

  9. I just hope that there are really professional and reliable PPC agency and Conversion Rate Optimization firm around. I hope you can write an article on how to chooose for the best of both agency or firm.

  10. @Michaleen: good idea! we’ll work on this topic, so stay tuned.

    @CBOTmetals: not sure I understand your questions, so perhaps try and rephrase and maybe we can help

    @Andrew: yes, there are a few trustworthy agencies, but lots of charlatans. we’ll work up a post about this topic soon, stay tuned!

  11. I definitely feel that landing page copy is crucial to achieving higher conversion rates. Many people feel that you can write just anything and expect a return and it’s just not true. Good content here, thanks! Will return to read more :)

  12. There’s no question that the game is getting harder. I was able to consistently get quality scores of 10. Now I’m around 7. Definitely need to use these tips.

  13. great post, and great tips to folow these. these will certainly improve earning using pay per click.

  14. Very good advice about PPC.

    It has become an increasingly complicated affair. In the past I could juggle a few PPC campaigns alongside managing a website and planning other projects but now with the increased competition and the technical know-how that is needed to compete in PPC today, it is probably better to outsource.

    I found your advice both informative and realistic.

    Many Thanks

    Darren

  15. This is great advice. PPC campaigns can be difficult to manage, especially at first. I know a lot of people that have wasted a decent amount of money doing it the wrong way.

  16. The difficulty in the process of optimization of PPC campaigns lies in the fact that you need to do some considerable ad spend to be able to collect information that will allow you to start improving conversion rates and ROI. Of you are not willing to risk some money before reaching equilibrium point, you are better off with other promotional methods.

  17. I think one of the best way to control costs and increase profit is to go for SEO and target traffic which comes from Search Engines because they are the ones who are always looking for something concrete(some sort of service) when they use search engines.

  18. I’ve been able to turn a $2 per click bid into eventually .40…

    Just takes time and money.

  19. It’s amazing how much time each aspect of successful website takes. SEO, PPC, design, content, backlinks and so on. Thank got it’s not too boring! ;) Thanks for the article Brendan.

  20. I spent over $600 on “Yahoo partner networks” PPC campaign and got 1 sale. Lost all respect for yahoo after that.

  21. I’ve been really shy about stepping into the world of CPC. This article has given me a lot to think about though. Once I get a better footing under me maybe I will finally give it a try.

  22. One of the central most issues we see with PPC campaigns is people often forget to separate their ad groups into national and local campaigns with varying budgets. Often times a national campaign can drain a SMB’s budget in a matter of days if not optimized properly, so the local campaign gets the heavier influence while the national is put on a lower budget. However, some companies require a national presence, which is why your SOW should be aimed more intensively on keyword research and conversion rate optimization rather than implementing local endeavors.

  23. Great post, thanks for that. I agree, 2 different specialties. Interested to find out who takes the lead when you would collaborate with another agency, while working for a client. Your initiatives means more time 9and cost) for the other agency, who might have some strategies in mind that you don’t agree with. Can a PPC and a CRO specialized agency have a workable relationship that is till in interest of the client?

  24. I’ve had hundreds of clicks come from the “content network“ with no conversions so I set the campaign to search only. More so, debt relief related keywords are very expensive. Most of the debt settlement companies that take peoples money and do nothing in return are always on top of the search results. It’s hard to compete with scammers.

  25. Generally the conversions from Content network are low but if you can use the power of Search Engines then probably it will be better.

  26. why is seo so important? don’t understand this aspekt?
    okay, for firms I can understand, why shall it be important. but for private poeple?
    thx for your contribution. It helps me a lot of my unknown knowledge

  27. Often times a national campaign can drain a SMB’s budget in a matter of days if not optimized properly, so the local campaign gets the heavier influence while the national is put on a lower budget. Thanks for the touch.

  28. We have been throwing away thousands in PPC, I am going to go back right now and optimize these keywords.Thanks

  29. PPC schemes are unrealistic unless you are prepared to spend quite a bit in the first place. It’s a very fast way to waste money. Good to read articles like this with clarity.

  30. I prefer writing my own content and generating revenue through Adsense. It is kind of the reverse of relying on AdWords for income, and with all of the problems you listed this seems like a good choice. It takes a bit more effort, but it is certainly more rewarding in the long-run.

  31. [...] was a question posed in the comments section of my last post on Pay Per Click optimization that I thought I’d try to address: “What are your thoughts on using CRO to improve the [...]

  32. I think that the best way to optimize PPC campaigns is to replace them with SEO investments.. It may sound crazy but SEO gives better results than any PPC campaign.. at least in my case.

  33. In this blog really share a wonderful information about PPC.
    I know many people waste huge amount of money without any profit and returns.. In this blog you explain very well how handle PPC campaign.

  34. Thanks for sharing this information. I found it very informative and it really helped me to understand the concept of pay per click

  35. Nice information. Thanks for sharing it. To success in PPC you just need to be patience and put a big effort on it. Now on average I got about $10 per day. :)

  36. thanks for this information..this is very helpfull for me,, now i understand about the secret of PPC advertising…nice info guys :)

  37. PPC is good if you know how to use it wight.. using a PPC without a good statistics tool to analyze how the traffic is going through your site after they click is a waste… combine the two, and you can’t really fail. Change your ads often…always have several ads competing at each other, and remove the ones that does not work – and do it all over again… almost failsafe :)

  38. Great Article for all PPC User although I am not very convinced of PPC Campaigns because more than 30% of all Clicks are scam and you lose much money.

  39. i was searching for such article, and found your site… great man.. thanks a lot

  40. @Jake at Home
    Ask Yahoo to change your billing from automated to manual, this way you will be able to add funds manually.

  41. Great info and very well written. Click fraud is a big problem but lets hope that raised awareness helps.

  42. [...] by noreply@blogger.com (Charlie) Look at the original post. Thanks to [...]

  43. Thank you for the article, your article is very good for me. makes me so aware of the PPC. good job.

  44. Very good analysis!

    Before starting the PPC (in fact any) campaign home work is must and it should involve,

    > Where to focus and its potential
    > How you’re going to invest in terms of effort and finance
    > What will be the risk factors and how you are going to overcome them?

    These are only few, there can be lot more.

  45. I sense that there is an opportunity for a smart entrepreneur to build a one stop shop for all your optimizations.I wish I were that person! Web page optimization is very complex and must be left to the experts, however, I would encourage marketing and organization strategist to gain some insight into how the different forms of optimization actually works.

  46. so good article! i’m using Google Adwords now. Do you think that Landing page will be effect to the Search result on sponsor links?

  47. @healthclub: Landing page is part of Quality Score, and Quality Score can impact positioning of your ad in the sponsored section, among other things. We’re not the last word, though. Research AdWords Quality Score documentation, and subscribe to a few blogs published by PPC agencies.

  48. [...] [...]

  49. I spent over $600 on “Yahoo partner networks” PPC campaign and got 1 sale. Lost all respect for yahoo after that.

  50. I am not very convinced of PPC Campaigns because more than 20% of all Clicks are scam and you lose much money.

  51. You can help reduce your PPC spend with negative keywords. We have a free white paper that explain how to find them…

  52. Our clients have found that using the geo features can be very effective and provide a much bigger ROI. They are in the service industry.

    With that said if you do your keyword research and put time and effort into the keywords you are paying for you will have alot better results.

    Dont just go with the standard keywords…

  53. With souring costs (up to £4 per click) and sometimes 100% bounce rates on google adwords i wonder if the effort, time and money invested in this form of marketing is truely worth it. The cold facts speak for themselves.

    Whilst i really want it to work google has been the most expensive form of advertising yet bringing in the least customers.

    My ads are well written, geographically set and i use negative keywords.

    A part of the problem is before a customer even clicks on my ad, it’s already been click x amount of times by competitors, other marketing companies and the odd fraudster. These aren’t customers and we shouldn’t pay for them. Also paying for a click that registers 0.00 time on my site is just ridiculous. I may as well walk down to the town center, pull out my wallet and give it to a complete stranger…smiling as i do so – atleast i know i’m giving it to someone who isn’t pretending they earnt it.

    I did a small voucher drop in one area which produced more work than google could achieve in months. Furthermore i tested door knocking for 1 hour and got 7 jobs – no cost.

    I’m considering diverting my google $$$’s to paying for a door knocker after yet another month of billing with google with 0 return.

    I know the website is good as i get customers from yell.com and thompsonlocal.com and the feedback on our online presence is incredible – some saying it was the deciding factor when selecting a cleaner.

    Times are changing and increased online advertising costs with a reduced return on investment is no longer an option for this company.

    Costs down, prices competitive = good turnover and people in jobs.

    Any company that i do business with is like an employee and every employee needs to show value. My question is where is the value with google adwords?

    Maybe a change to good old fashioned grass root marketing is the answer…. atleast in these times for this company.

  54. i find doing PPC is getting harder to achieve real results. I want to know where to learn better ways to do effective PPC optimization

  55. @Tvb Drama: here are a few resources you may find helpful:
    #1 – our blog has a fair number of posts related to PPC optimization – http://www.google.com/search?q=grokdotcom.com+ppc
    #2 – we’re fans of the clickequations blog for some pretty advanced techniques for large PPC accounts – http://www.clickequations.com/blog/
    #3 – FutureNow‘s founders, the Eisenberg brothers, write some really good stuff on PPC – http://www.bryaneisenberg.com/category/ppc/

  56. PPC really opens up when you do it right. Thanks for optimization article Brendan! This going to be great !

  57. It all comes back to association and building relationships with advertisers and promoters. PPC has take the low level home based blogger to another level. There will be another few years before this entire style of marketing takes on some real meaning and sustainable outcomes for on line business

  58. we spend our time optimizing various things but our competitors spoil all our efforts by fraud clicks.

    As Robert pointed out that we have to pay even for 0 sec of page view.
    But I want to add that even if there are some problem with PPC model but it still seems to be most effective model of advertisement on Internet.
    You compiled most of the factors that one should consider while optimizing your PPC advertisement campaign.

  59. Very useful content thank you.
    Even tho i believe from personal experience that anything you try to organize before the campaign is just in theory. What you do on the run is the most important.

    But if you manage to optimize it good enough before running it, then it will save you a lot of money and bring you more conversion rates

  60. Interestingly, I am getting more clicks on my Facebook ads than my Google Adwords. Certainly my niche is more conducive to the Facebook crowd. I’ll have to go back to the campaign optimization drawing board to get Adwords moving.

  61. so if the visitor clicks on the ad then he directly goes to the site source but is it also increases the traffic rank

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