PPC Management: When To Give Up On A Loser
Pay per click (PPC) advertising can be a dream come true. You
can get traffic almost immediately from some PPC search engines.
And it can be mighty cheap too. Next to joint ventures, PPC
search engines have been responsible for most of my online
income. I've gotten some great returns on PPC campaigns. And I
know other people who have too.
Right now, I have one PPC campaign that's making me $56.69 for
every $1 I spend. I know, that's pretty incredible. And it's not
typical. But I have another that's making me $8.84 for every $1
I spend. Yet another makes $7.73 for every $1.
But I have other campaigns that have lost me money. Making
money, instead of losing it, with pay per click search engines
involves wise management. There are many different factors that
decide whether you'll be in the red or in the black. And you
need to be aware of what these are.
In fact, there are times that even the best management of your
PPC campaign won't save it. Some of them will be losers and
there's nothing you can do about it. But you need to know when
to decide that you have a loser on your hands. At what point
should you bury it and move on?
There are a number of different factors to consider. There's no
simple answer. I can't tell you to simply abandon your PPC
campaign after 200 clicks without a sale. Or to quit after
you've lost $50.
First of all, you need to know how much your profit will be on
each sale (before advertising costs). For example, if you're
selling your own product for $47 through Clickbank, then you'll
make $42.48 on each sale after Clickbank takes their fees.
But if you sell someone else's product for $47 through
Clickbank, and you get a 50% commission on each sale, then you'd
only get $21.24.
But you need to know even more than that. You also need to
decide how much of that $42.48 (or $21.24) you're willing to
spend on advertising. In other words, what's the least you're
willing to earn on each sale? This will determine how much you
can afford to spend on advertising.
Let's assume you make $42.48 per sale. If you decide that you'd
be happy with a $20 profit, then you can spend as much as $22.48
to make each sale.
So now you know what your advertising budget is. Next, estimate
what your conversion rate will be. If this is a brand new
product you're promoting, then you may have no idea. In those
cases, I tend to use 1% as a rule of thumb. That means that 1
out of every 100 people that visit the site will buy. Let's use
1% for our example here.
So if you're willing to spend $22.48 to make each sale, and you
expect to make one sale out of every 100 visitors, then you can
afford to spend 22 cents to get each visitor to the site. This
means that you can afford to bid 22 cents on each keyword on the
PPC search engines (max).
At this point, you can go ahead and set up your PPC campaigns.
Find your keywords. Place bids. I won't cover these issues right
now because they're off the topic. The purpose here is to know
when to drop your campaign because it's a loser.
Now, just because you *can* bid 22 cents on each keyword, it
doesn't mean you should. You should bid as low as you can to get
good traffic (whatever you consider *good* to be).
In our example, let's fast forward. Imagine you've already
gotten 150 clicks, and your average bid has been 22 cents a
click. So you've spent $33, and you haven't made a sale yet.
Should you ditch this campaign?
No. *On average* you can spend $22 per sale. But that's an
average. Which means that sometimes you'll spend more, and
sometimes less. And if your conversion rate is 1%, then that's
also an *average*. So don't freak out if you haven't made a sale
after 150 clicks.
When you decide to drop a campaign though, make the decision
based on how much you're spending on it. Not the conversion rate.
When I first start a campaign, I'll often wait until I spend at
least double my advertising budget with no sales before I
consider dropping it. Maybe even triple my budget if I'm
emotionally attached to it. ;-)
But if I haven't made any sales by then, I'll usually stop the
campaign. However, you may want to wait longer if you're willing
to spend more money to see if it works. I think I'm probably
more of a conservative.
At any rate, I *rarely* end a campaign before I get 300 clicks.
300 is typically the minimum number of clicks before I feel I
can judge whether a campaign will pay off. And I will generally
only end it then if I've had *zero* sales.
Sometimes, though, you'll make a quick sale and get excited. But
then you see few or no sales after that. If you find that you're
consistently spending more than your budget for the first few
sales, then get ready to end it if you don't figure out how to
make it better.
I want you to realize, too, that when you bid less on your
keywords, you can afford to live with a lower conversion rate.
But when you bid more, your conversion rate has to be higher to
provide you with the profit you want.
I've only talked about *starting* a PPC campaign so far. But
sometimes, you may have a PPC campaign that's paying off, and
then it starts choking and gasping for air after a while.
In that case, you need to decide when to pull the plug and
retire it. Otherwise, it may eat up all the profits you've
already made.
I'll usually be more lenient in this case. Since the campaign
has made me money in the past, I'm more likely to give it the
benefit of the doubt and keep it running. I don't know if that's
a good idea or not. But sometimes, it's just hard to say goodbye
to an old friend. After all, maybe it's just a temporary
downturn.
But you still have to cut it off at some point. If I find myself
breaking even (or even losing money) on each sale for any length
of time, then I'll start thinking about ending the campaign.
In our example here, if you notice that you've been spending $45
per sale lately, then start thinking about the future of this
campaign. Try to figure out what's changed and see if you can
fix it.
How long should you wait before you abandon it? Two weeks? A
month? Ten sales? A hundred sales?
It's completely dependent on your situation. If you make 20
sales a day, then obviously worrying after only 20 sales is
unwarranted. On the other hand, if it takes you 4 months to make
20 sales, then maybe you shouldn't wait quite that long. Listen
to your gut.
In the end, be aware that PPC management is not a rigid science.
You have to use a certain amount of judgment. But try not to be
emotionally attached. If a little voice in the back of your head
is telling you that you're spending too much for too little,
then listen to it.
What I've given you here are guidelines based on my own
practices. I'm sure there are other people who do it differently
and are also successful. But these strategies work for me. And
I'm sure you can adapt them to work for you.