PPC (Pay Per Click) INFORMATION
The way PPC works is you sign up with a PPC service and make a commitment to spend up to a specified amount per month. You identify a list of keywords you want to use. Then when someone uses one of your keywords your website is "considered" for inclusion in the search results. That does not mean your website will get a high ranking for all searches that use your key words but it will significantly improve your chances. The more you pay per click the more likely it is that your website will be included and get a high ranking.
Every time your website gets a high ranking in search results there is chance the surfer will click on your listing (called a click-through). You only pay for click-throughs, not for each time your website appears in search results. Your CTR (click-through-rate) is determined by the number of times someone clicks on your search results listing and goes to your site divided by the number of times your website appears in search results. If your website appears in the search results 2500 times in a month and your listing is clicked 50 times your CTR would be 2% (50/2500=.02). All click-throughs will not convert into a sale. A CTR conversion rate over 2% is considered good.
The first thing you need to determine is what portion of your profit for each sale are you willing to spend on PPC. Lets say a sale results in a gross profit of $100 and you are willing to spend $35 of the $100 to get a sale. If you use a CTR of 2% and a conversion rate of 2% you can spend $0.70 each time your listing is clicked. The following example assumes that a $0.70 PPC amount will cause your website to appear 5000 times a month. Note, there is no way to know ahead of time how often your website will appear (impressions) in search results but the PPC service you use will provide statistics that show this information.
5000 X 2% = 100 click-throughs X 2% = 2 sales
100 click-throughs X $0.70 = $70 for the 2 sales or $35 per sale.
If you use 2% as both the click-through and conversion rate (a good starting point) you can use a factor of 50 to determine how much you should pay for click-throughs (PPC). The following example show how this would work for the above example
$35
------ = $0.70
50
You will need to monitor your results and periodically adjust your PPC amount. You also may need to change some of your keywords to get better results.
PPC is not for everybody. It is beneficial mainly for websites that have a high volume product with a good profit margin. PPC can be very profitable if you have good webpage content, good keywords, and if you pay enough for PPC. You need to consider PPC sales as sales you would not have gotten otherwise so should not be stingy in the amount you pay for PPC. The big PPC spenders get are the ones that get listed in the first page of search results. They wouldn't be spending all that money on PPC if it did not pay off for them.
PPC (Pay Per Click)
