Too Much Traffic Causes Accidents
While reviewing my pay per click listing expenditures at
Overture this past week, I was absolutely shocked to see that
the cost of one account had more than quadrupled a few days
earlier.
I didn't recall that my product sales were unusually high that
day, however. On review, I saw that my sales were almost double
the average number, but nothing extraordinary - and certainly
not four times greater.
It took me a little while, but I finally figured out what
happened to cause this huge spike in traffic and my advertising
costs that day.
On one hugely popular keyword that receives several million
searches at Overture in any given month, I usually try to
maintain the third position, as opposed to the first. Past
experience has taught me that the third position has a much
better conversion to sales rate than the top spot.
In order to get and maintain a third place position, I bid 36
cents, which was just a penny lower than the second highest
bidder.
Bidding in this manner flies in the face of conventional pay per
click strategy, which suggests that I should bid one cent higher
than the next LOWER bidder, or 24 cents in this case. However,
the conventional strategy allows the competitor in the 4th spot
to raise their bid by just 2 cents to regain his or her third
place standing. Using my method, he'd have to bid thirteen cents
more to gain placement above my listing.
Also, by using Overture's Auto bid feature, my cost per click
will only be one cent above the maximum bid of the next highest
competitor. So, even with a maximum bid of 36 cents, I will only
pay 24 cents per click as long as the guy in the fourth spot
stays at 23 cents.
That's where my problem began. The other bidders didn't keep
with my game plan.
Bidder Number Two dropped out of the game entirely, and Bidder
Number One reduced his bid to 35 cents. This put me in first
place, paying a hefty 36 cents per click.
That might have been OK if the number of clicks I received that
day had remained the same. Assuming an average of 100 clicks per
day, my cost to advertise would have gone from $24.00 to $36.00
for the day. A month as "Top Dog" would have cost me an
additional $180.00. A good lesson - not to be repeated.
Unfortunately, in this case, all that talk you hear about the
top position receiving considerably more traffic than those
positioned lower down is true. Actually, the percentages bandied
about in the pay per click promotional material is perhaps a
little low.
I didn't receive just FORTY percent more traffic for the day, I
got FOUR HUNDRED percent more traffic for the day.
Whether your advertising budget is tens, hundreds, thousands or
even tens of thousands of dollars per month, errors like that
can have a significant impact on your business if not caught in
a timely manner.
I'm just lucky that the original top bidder missed his high
traffic volume and took back his top spot, sending me back to my
rightful, less expensive placement the very next day.
So, stay alert! While using pay per click engines is a great way
to get traffic to your site, inattention could result in a
costly 'traffic accident'.