What does it take to get a positive ROI in PPC advertising?
The concept of pay-per-click (PPC) advertising is deceptively simple. First, you sign up for the services of a given platform, identify a few distinctive characteristics of your target audience in your ideal keywords, and then pay for each lead generated by any ads you place.
Turn a Positive ROI into PPC Advertising
Whether you’re running a large, well-established company or a fledgling startup, it’s a pretty nice setup. You’ll only pay for people who actually visit your chosen landing page, and you have full control over who your ad targets.
Unfortunately, not all PPC campaigns end up generating a positive return on investment (ROI). Every year, thousands of new business owners find out the hard way.
So what exactly does it take to get a positive ROI in PPC advertising and how can you get there even if you don’t have a lot of experience?
Why Return On Investment (ROI) Is So Important
ROI should be viewed as the net result of any marketing and advertising campaign period. It effectively measures whether your advertising campaign is generating more money than it is costing you.
If you spend $5,000 on PPC ads, you will need to generate $5,000 in new revenue just to break even. If you only generate $3,000, you are going to lose money. On the other hand, if you generate $10,000, you are essentially doubling your investment.
ROI is also useful because it filters out perception biases and pieces of information that may influence the accuracy of your assumptions. For example, if your PPC advertising strategy ends up driving hundreds of thousands of people to your landing page, you might mistakenly believe it’s a huge success.
But even with a massive influx of visitors, you’re not necessarily generating the kind of revenue needed to overcome the costs of running your campaign.
Income and expenditure
It depends on two factors: the money you earn and the money you spend. If you’re making more money than you’re spending, you’re in positive ROI territory.
This is why most people who focus on the ROI of their campaigns end up taking a two-pronged approach; they focus on increasing revenue as much as possible while reducing costs as much as possible.
The big picture
How can you do this?
In PPC advertising, you can focus on the following strategies as part of your overall approach to improving ROI:
- Audience targeting. Audience targeting is an important aspect of any marketing and advertising strategy, and PPC ads are no different. The better you understand your audience, the better you can target them, the more traffic you will generate and the more relevant that traffic will be.
- Smart ad buying. Smart ad copywriting, placement, targeting, and bidding will all play a role in the effectiveness of your ad strategy. Without the fundamentals, you could end up spending a lot of money on advertising that just doesn’t appeal to people.
- Adaptation. No PPC ad campaign succeeds on its first iteration. If you want to achieve the best possible results and capitalize on a positive return on investment consistently, you must remain flexible and adaptable.
Now let’s see how these overarching concepts can influence your ground level tactics.
A solid strategy to turn your PPC into a positive ROI
It all starts with a solid strategy. Before you start buying your first set of PPC ads, you should have a document that clarifies what you hope to achieve and how you are going to achieve it.
Consider the following, at a minimum:
- Call. Who is your audience and how will you engage them? What are the factors that will interest people in your advertisement and what will entice them to buy? If you don’t know what your appeal will be, you shouldn’t pay for ad space.
- Differentiation. You also need to understand how your brand is different. Chances are, many of your competitors are already actively engaged in PPC advertising, as well as other search visibility strategies. If your potential customers see your business on the same wavelength as your competitors, what factors will set you apart? What will make them choose you over them?
- A long-term vision. How do you see this campaign developing in the future? Is it something designed simply to give your business an initial boost? Or will you try to permanently dominate the competitive landscape with your PPC ad campaign?
Keyword targeting (and negative keyword targeting)
One of the most important strategic decisions you will need to make for your PPC ad campaign is which keyword you are going to target and which negative keywords you are going to try to avoid. These are the tools with which you will sculpt the targeting of your PPC campaign.
When your ads show for the right keywords and avoid showing for the wrong keywords, you’ll have a much higher likelihood of reaching the target audience you want. This, in turn, means that you will generate much more traffic and the traffic you generate will be much more likely to buy your products.
Unfortunately, there are no right or wrong answers when it comes to keywords. You’re going to need to do your due diligence and evaluate a wide range of different keywords related to your business and industry.
It can also take months of experimentation before finding a winning formula.
Custom landing pages
You should also think about your PPC landing pages. These are the pages that your visitors will notice immediately after clicking on your ad. The quality of your landing page, its relevance to your target audience, and its calls to action (CTAs) will all play an important role in the profitability of your PPC ad campaign.
If your landing pages perform considerably well, you’ll end up with a higher conversion rate and happier audience members, ultimately making every ad click more valuable.
Conversely, even the most powerful PPC traffic flow could become worthless if your landing page does not support these visitors.
PPC advertisers also need to think about the quality of their ads. It’s true that you only pay for people who click on your ad, but the quality of that ad can affect your campaign in a number of different ways.
For starters, adding quality has a big impact on audience targeting; with better wording, you can make your ad more relevant to the people most likely to buy from you.
Ad quality is also correlated to conversion rate, and the better your ads are, the more patronage you will get from Google and other platforms.
You will also need a smart bidding strategy to be successful. If you spend too much money on high-profile ads, you might end up with a heavy traffic flow, but you won’t generate enough revenue to offset that initial expense.
At the same time, if you’re too frugal, you could end up with poor quality ad space that doesn’t reach your target audience at all.
Again, this is something you’re going to have to figure out over time. Research your competitors thoroughly, look at the average value of a conversion, and try to calculate the ideal bid for an ad.
Continuous measurement and refinement
Remember that the world of PPC advertising is constantly changing. New updates, new features, new platforms and emerging competitors are just some of the threats and opportunities that will present themselves in your future.
If you want to react to these emerging changes and continue to focus on your campaign, you will need to measure your results frequently and be prepared to refine your approach.
PPC advertising is not a perfect strategy. It is not guaranteed to give you a positive return on investment, nor is it a suitable choice for all businesses. However, if used with ROI in mind and gradually tweaked to perfection, even inexperienced business owners can derive great value from this strategy. You just need to be willing to work to make it happen.
Image credit: Vlada Karpovich; pexels; Thank you