Using pay-per-click advertising can get you traffic instantly. However, this type of search engine marketing can become costly.
With most search engines, the first few results of a search are paid placements. Sometimes the paid placements are shown on the right side of the page, while some are visible directly above the organic search results.
In order get in one of these prime positions, a person bids a certain amount of money to be posted in that first, second, or third position. To get that top spot, the bidder must have placed the highest bid for that particular search phrase. Each time someone clicks on their link, they are charged however much they bid.
Depending on which pay-per-click service used, bid winners will most likely pay a minimum of 10 cents per click. Fees can get as high as several dollars for each click. It is not uncommon for businesses to drop hundreds or even thousands of dollars per day on these campaigns.
The most important thing to remember is ROI (return on investment). While there are a lot of ROI formulas out there, consider this simple one. If you make money on one person out of 200 who visit your website, how much can you afford to get those 200 leads without eating too much of your profit?
For example, imagine you have products on your website that have an average profit margin of $25.00. If you spend 10 cents per click to get 200 visitors to your site, you have spent a total of $20.00.
Chances are you will get at least once sale out of those 200 visitors (this depends on many factors). So you have spent $20.00 to make $25.00. However, if you raise your bid and agree to spend 15 cents per click, you will have lost $5.
It’s all about the ROI.