Why Bother with PPC?

You have a great website. It meets your goals, whatever they are, and supports your strategy. All you need is traffic, and SEO will take care of that, right?


There are a few reasons why you will want to consider Pay Per Click (PPC) advertising, such as Google AdWords or Bing Ads.

The most basic reason to use PPC is to drive traffic to your website. If you sell online (e-commerce) then you want to drive [profitable] sales. The word ‘profitable’ is in parentheses because that isn’t always the objective, but more on that later.

Imagine you have just launched your e-commerce website or have just launched a new product on your existing website. You want anyone searching for that product to find your website rather than your competition. Good SEO will help to ensure Google ranks the page for that product highly, but that takes time and these days Google likes to put a few ads at the top of the search results, pushing organic results below the fold. So one reason t use PPC is to drive immediate traffic to your page.

How do you make sure your PPC is profitable? Well, you want:

Imp x CTR x Conv Rate x AOV x ANM > Imp x CTR x CPC

In other words, to make a profit (the number of impressions) times (the clickthrough rate) times (the conversion rate) times (the average order value) times (your average net margin) should be greater than (the number of impressions) times (the clickthrough rate) times (the cost per click). What this means is that if your total net margin is greater than your total net costs then you will make a profit.

You can cancel Imp and CTR from each side to simplify:

Conv Rate x AOV x ANM > CPC

This equation assumes that each customer transaction is individual, and you have to win the customer all over again the next time they are in the market. If, once you have won a customer, they stay with you then instead of AOV you should substitute the Average Lifetime Value for the customer.

If it’s going to cost more to get the click than the net margin you make (per transaction or per lifetime value) then perhaps PPC is not the right approach.

Which brings me neatly to the reason why ‘profitable’ sales is not always the objective, and a second purpose for PPC - research, especially keyword research.

SEO works but it takes time for your product or page to get to the top of search results, and you might need instant impact. If you rely on Google Analytics you’ll find that although it provides a lot of information it also anonymises certain data, including a lot of the keywords used to land on your page. These limitations make it challenging, in the early days of promoting your product or service online, to understanding which keywords are working best, or which page descriptions generate clicks, or which landing pages are optimal.

As soon as you get your wallet out and use AdWords, Google gives you more data, including exactly which keywords and ads generate clicks and which convert. You also get to see which negative keywords are driving traffic you don’t want. This means you might want to use PPC at a loss as a relatively low cost research tool to rapidly optimise your SEO.

In fact, as a general point, you should consider PPC and SEO as tightly integrated activities which work best when they are working together.

Finally, another reason might simply be to maximise visitors because the value of your business is tied in some way to the size of your database, and even loss making traffic adds value to your business and you are planning to sell.

Google AdWords News

Google AdWords is an incredibly powerful marketing tool which every marketer should be familiar with.

Last week Google announced a number of significant changes to AdWords. The big driver behind these changes is mobile - Google says that users talk about their smartphone as being ‘attached to my hip’, being a ‘butler’ or a ‘lifeline’. In other words, mobile is becoming more and more important and Google has revamped AdWords to recognise this.

Google blogged in detail about the changes here: http://adwords.blogspot.co.uk/. What follows is a friendly summary.

New Text Ads

Earlier this year Google removed the text ad column down the right hand side of the search page. This was done to make text ads more consistent across devices, and clearly prepared the ground for these new changes.

Now Google is changing how the ads look so that they are optimised for mobile devices.

We’re all used to the standard format for a text ad: 25 character title, two description lines of 35 characters, a display URL of 35 characters. So what are they changing to? TWO 30 character headlines, ONE consolidated 80 character description, and a display URL extracted from your real URL but with a customisable URL path.

So the ads are changing from something like this:

To this:

Google reckons that this could lead to a 20% improvement in clickthrough rates.

Local Search Ads Appearing in Google Maps

Fortunately this should not mean disruptive ads plastered across Google Maps.

What it does mean is that businesses that have ads with local extensions will be featured more strongly on maps, such as displaying a logo to indicate a location as well as the pin symbol. A bar below the map could show things like the user satisfaction ratings and a special offer, and tapping on the ad would take you to more information.

Image from Google blog

Image from Google blog

Coupled to the local search ads, Google has the ability to measure in-store conversions and has improved local business pages, so the ‘local’ aspect of AdWords is improving dramatically. In store conversions can simply be measured by looking at the phone location history to see whether they searched for an ad before going into the store to buy.

Responsive Display Ads

Display ads also get some key improvements to make them more mobile friendly. For a startoff, they will all be fully responsive, so there is no need to create a whole host of different ad shapes (tall, wide, square etc).

They will look like this:

Image from Google blog

Image from Google blog

Creating them has also been simplified. Just provide headlines, a description, an image and a URL and Google does the rest.

Mobile Device Bidding

It used to be the case that you set your bid for a desktop device, and could then adjust the bid for mobile or tablet devices. To simplify this and allow you to focus on the device type that is most important to you, you can now set separate bids for each or choose which of the three device types will be the default and then adjust the bid relative to that for the other two devices.

In addition, bid adjustments can now be up to +900%.


What Next?

So when will these changes appear? Google says ‘later this year’, and given that we’re not far away from half way through the year already (where does it all go?) it won’t be long before you see these changes.

That means that the time to plan for them is now!