The idea is to pay less for PPC ads and sell more. This means bidding low on keywords, so you can rank higher in the search engine, but with your bid set too low, you may not be paying enough per click.
If you are running an online business, it's important to know how much money is coming in for every ad click. To do this, divide your number of clicks by the amount spent on advertising.
When it comes to PPC ads, businesses need to realize that they will not make money if they give their ads away for free. That is why it is important to bid less and sell more. The average cost for a click today is $1 per click, and the average conversion rate is 20%. Now with these numbers in mind, we can figure out how much we can spend on PPC ads. Let's say we spend $500 on our ad campaign.
Bidding less for PPC ads can result in lower costs and greater revenue. The reason is that PPC ads will optimize to give you the best ROAS (return on ad spend) possible, and lower bids will often provide a better ROAS than higher bids. This article explains how to find the optimal bid point and what other considerations should be taken into account when bidding less for PPC ads.
Pay Per Click advertisements will generate clicks, but will they generate revenue? This article outlines the ratios that you must understand in order to be certain that your campaigns will generate a profit.
This post will make an effort to quench your appetite for this information by explaining the figures you should be tracking, as well as what you can anticipate from your pay per click and sponsored advertising campaigns.
The Ratio of Impressions to Clicks
After running several online ads, I think the ratio that the search engines like is one percent or higher. On average, one click is generated for every 100 impressions. It has come to my attention that when my Impression to Click Ratio is less than 1 percent, Google starts to shift my advertisements farther down the page, forcing me to bid more in order to maintain my position on the first page of results. When my Impressions Per Click (IPC) are larger than 1 percent, I have seen that my advertisements seem to go up in the rankings, and I may even lower my prices while maintaining decent places. My clients and I strive for an Impression to Click Ratio of at least one percent, with some advertising reaching as high as ten percent. We recommend that you aim for that distance. If you are unable to achieve that range, you will need to experiment with other keywords and ad variants.
The Ratio of Clicks to Purchases
The amount of visitors that make a purchase from you will be determined by a variety of criteria, including your pricing, your offer, and other considerations. For the sake of comparison, we estimate that a 3 percent Click To Purchase Ratio is a good average for most businesses. Even while it might be much higher or lower than that, it provides a reasonable average to aim for. If you are having trouble reaching this target, consider experimenting with the pricing, the offer, the landing page, and the key terms to see what works.
Ratio of Clicks to Freeby
Our research shows that 3 percent to 10 percent of visitors will seek free information from your landing page if you are giving out a free white paper, e-book, or other kind of freebie. The most significant impediment to giving away free products is requesting too much information from the visitor in return. Customers that are interested in your complimentary bundle will ask for it if you require less information from them. If all you need is a first name and an e-mail address, we recommend that you only ask for that information. By requesting information such as age, residence, mobile phone number, and other extras, you may significantly minimize the amount of inquiries you will get.
If you do not meet or surpass these benchmarks, it is likely that your website does not inspire confidence in visitors. Perhaps your website is seen as untrustworthy, or perhaps the links do not function properly. If you explore and continually trying various techniques, you will be able to reach or surpass these rations.
Calculation of the Maximum Profitable Bid
Pay per click sites, like all auctions, have a propensity to entice us into paying more for clicks than we should be required to. Many of us make our bids based on our emotions. With only ten cents extra, we are certain that we will get the traffic and revenues that we need. You should always have a rough estimate of how much you can afford to spend while still making a profit before you place a bid.
To get an idea of how much you should be bidding, start by figuring out your gross profit margin on each transaction. To figure out this figure, subtract your selling price from the costs of shipping and handling, as well as the costs of purchasing or making the goods and any packaging you may have. This computation will provide you with your gross profit per transaction.
A product that costs $69.95 + $10.00 delivery costs a total of $79.95 if sold for that price plus the shipping cost. You'll pay $54.00 for that product if it costs $30.00 plus $4.00 delivery and another $20.00 in shipping and packing expenses. With that in mind, your gross profit on each transaction is $25.95 ($79.95 – $54.00).
For example, if you sell to 3 percent of the people that arrive to your site through a click-through, and you bid $1.00 per click, you will spend $100.00 for every 100 clicks. If three of those clicks result in a purchase, your gross profit on your $100.00 advertising spend will be $77.85 (three times $25.95), based on your three-click conversion rate. In the event that your advertising expenditures exceed your gross profit, you will be out of business very quickly.
You must determine how much your advertising should cost as a proportion of your gross profit, and then bid on the advertising.
Increasing the number of clicks for the least amount of money
To keep your bid expenses as low as possible, avoid using popular or generic key terms and instead opt for “niche” keywords. Here's a list of more specialized search terms. For example, if you sell digital cameras, the key term “digital camera” may be too costly for you to bid on since it is too expensive for the competition. You may normally spend far less per click if you bid on the keyword for your particular model or brand, such as “Canon Digital Camera” or “Canon S362,” as opposed to generic keywords. Despite the fact that niche keywords get less impression and clicks, the individuals who use them are often significantly better candidates for making a purchase.