Achieving the Best Result with Paid Advertising

If getting the best possible result with your paid advertising efforts was your goal, then it would make sense that you'd be wanting to understand and learn how to do this. Like many businesses, you will be limited by your budget. A large budget can allow you to not only pay for a lot of advisements, but to also hire a professional to manage your advertising efforts. A small budget most likely means you'll be learning how to and running your own ads and making decisions on how to advertise by costs.

So with many things to consider when working towards turning paid advertising into sales, knowledge is what will help you succeed and that's what we're focusing on sharing today.

Using Cost Per Click Advertising

Cost per click (CPC) advertising refers to how much it costs to get a person to click through to your website. Competitors bid for certain keywords, with the highest bid moving to the top of the search results, but only paying the lowest bid price on the page. Over time competition will drive the cost per click up, making it seem very expensive for the advertiser. In most cases, the advertiser with the highest margins can usually afford to pay more per click and will get that website traffic. 

In a competitive market, the cost per click can bid up high, but not for all keywords and locations. Perhaps you can identify a niche geographical, social, or keyword term where you can reduce cost per click, or pay more for more relevant visitors. A cost per click could be as little as 20 cents, or as much as $20, so spending time identifying a low cost high reward keyword term is well worth it.

Examples of CPC sites include GoogleAds, Facebook ads, Bing Ads, Amazon, LinkedIn and Bidvister.

Understanding Conversion Rates for CPC Advertising

The conversion rate of cost per click advertising refers to how many visitors to your website that it takes to make a sale. This rate maybe better for organic traffic (from a Google search for instance) or search engine advertisements such as Google Ads, when the visitor is actively searching for a product to buy. Social advertisements, such as from Facebook or Instagram, may produce lower conversion rates, as the visitor is not actively pursuing a purchase case scenario. 

The conversion rate may also differ for different search phrases and the items you are selling. For example, your conversion rate might be 1 sale for every 30 click throughs, for a particular advert for a particular product. You may also find that there is a lower conversion rate (less visitors needed before a sale occurs) for cheaper priced items than higher priced luxury goods. 

Return on Investment for CPC Advertising

Return on investment or ROI, indicates how many paid clicks it takes to make a sale. The ROI is important to know because you need to make enough margin on your sales to cover the cost of the clicks. If it costs 50 cents per click, and you require 30 click throughs to make a sale, then it costs $15 on average to make a sale. 

Some businesses spend up to 50% of their turnover on advertising. This results in them needing more than a 100% gross markup as their advertising spend is so high.  If it costs $15 in advertising to make a sale, and the item retails for $50, then it costs 30% of your turnover to make a sale. If your cost price of the item is $25, and you spend $15 on advertising per unit, then you profit an average $10 per unit. 

If you can determine the ROI for your advertising, and turn a profit, then you just need to ramp it up. Consider new geographical and social audiences for advertising and consider other advertising platforms.  Focus on your metrics to ensure that each market is returning a profit. However, if you cannot cover the cost of the advertising, or if you want to improve the profitability of your advertising, then consider what else might be affecting your sales.

If Your CPC Advertising Isn't Doing Well, What Can You Do?

Are you getting traffic to your website via CPC ads, but little or no sales? Could it be because your website is not aesthetically pleasing, lacks in functionality or is out of date? If not, we can recommend web designers who are skilled in using our website platform. Is your content compelling, in that it describes both the benefits of the product and those the purchaser will receive? Are you using high quality product photos from a variety of angles? Is your pricing too high or is it too cheap to be believed? Does the customer have trust that you will deliver your items on time, or make a refund if the customer is unhappy? Do they know how much shipping will cost and can they easily see how to purchase your product? Is there a variety of payment options available for customers to pick from?

Or are you getting items added to the shopping cart, but customers are not completing the checkout process? This may suggest the issue is related to shipping fees. When a customer suddenly learns the cost of shipping, they may decide the purchase is not worth the shipping cost, and can look elsewhere to purchase. You could overcome this barrier by offering a flat rate shipping cost or free shipping over a certain purchase total. 

Could you sell a loss leader, where you advertise and promote a product, knowing that you are not making a profit? This can be a viable strategy as you can use the opportunity to promote additional items for the customer to add at the checkout, or to collect their details to add to your mailing list. Could your advertising include a promo code, so that the customer feels like they are getting a good deal? This can not only encourage additional website clicks, but also raise sales. 

Finally, if you are in a competitive market, you may find you cannot afford the cost per click. If this happens, you will want to add certain keywords as "negative keywords", so that you don't waste your advertising spend there. Negative keywords in CPC advertising refer to words or phrases that you state you do not want to trigger your ads being shown. Therefore, when someone enters one of your negative keywords, they will be shown another business' ads, preventing your ads being shown and clicked upon. From here you will want to focus your social and geographical targets to audiences that have a higher conversion rate. 

Tags: marketing  

Posted: Thursday 8 July 2021