Continued from page 1
Conversion Rate % = Total Number of Conversion Actions / Total Number of Ad Impressions * 100
Or
Conversion Rate % = Total Number of Conversion Actions / Total Number of Ad Click-Throughs * 100
Task number six is defining your budget for
pay-per-click campaign. How much do you desire to budget or spend per time period or for total cost of pay-per-click campaign? Many of pay-per-click search engines offer automated budgeting mechanisms that can be initiated to control cost of your campaign. If you do nothing else in planning process, set a campaign budget and stick to it!
Task number seven is establishing your ROI or Return on Investment goal. The ROI is based on tangible benefits, bottom-line revenue increase or expense decrease, versus cost to obtain tangible benefits. In general, each organization defines ROI objectives for company investments and these should be applied to pay-per-click campaign.
Task number eight, and perhaps most important, is determining value of each keyword phrase and, in turn each visitor. The simple formula works like this. Divide average number of new customers each month by average number of monthly web site visitors to get percentage of visitors who actually become customers. If you multiply this percentage times your average profit margin on sales to new customers, you obtain a good estimate of how much a visitor is worth on first visit.
In other words, let’s assume you’re selling an item with a $25 profit margin. If 10% of web site visitors buy your product, then each visitor is worth $2.50 to you ($25.00 X 10% = $2.50). If you can bid $2.50 or less for each click-through of keyword phrase, then you are profiting on each conversion or sale.
Another way to look at this is in terms of your click-through and conversion rates. Let’s suppose we have a click-through rate of 5% and a conversion rate of 10% versus ad click-throughs. We will use same $25.00 profit margin.
1,000 impressions X 5% click-through = 50 potential customers 50 potential customers X 10% conversion = 5 actual customers 5 actual customers X $25.00 profit margin = $125.00 profit $125.00 profit / 50 potential customers = $2.50 per click (maximum bid)
Have you noticed how important it is to know value you of a keyword phrase or visitor? Without these guidelines, you are bidding in dark and asking for trouble. It is imperative that you be able to estimate your maximum bid prices to be successful in your pay-per-click campaign!
Task number nine, final task, is planning how you will measure your campaign results versus goals, objectives and targets you established. You should review if you have proper structure and tools on your web site to capture information for measurements.
For example, do you have access to your web logs? Do you have web analytic tools? What types of data do they capture and analyze? Do you have a web site page that will define a conversion? It might be order confirmation page from your web site shopping cart or e-mail subscription confirmation page.
Perhaps this seems like a substantial amount of work for planning your pay-per-click campaign. But, look at results of good and poor projects in any personal or business environment. At foundation of their success or failure was a well or poorly conceived plan. Take extra steps. Make additional effort. Your success will be rewarded with a cost effective, high ROI pay-per-click promotion campaign without breaking your bank account!
Chet Childers is a successful Internet marketer utilizing the power and quick response of pay-per-click marketing to increase website visibility and profitability. Click http://www.ThePayPerClickMarketer.com and enroll in our e-course, "Discover Tips and Secrets for Pay-Per-Click Marketing Success," or visit http://www.ChetChilders.com.
