Search Engine Marketing (SEM) is a term every business owner with an online presence should have basic knowledge about. Why? SEM is the process of gaining traffic and visibility from search engines through both paid, Pay-per-Click (PPC), and unpaid Search Engine Optimization (SEO) efforts. PPC and SEO are the two legs of search engine marketing that are vital to your business growth online.
PPC is a great short-term strategy for driving traffic (though many businesses continue utilizing it beyond short-term because of the returns). SEO, on the other hand, is a long-term approach that reaps benefits once your website ranks on the first page of Google. To help you decide if your business needs PPC, we will give you the run-down about the most common form of online advertising through this article.
When done right, PPC is the easiest way to gain traffic for your website by providing immediately qualified leads. With a good funnel and call-to-action on the website landing page, PPC creates a high chance of converting these leads to customers.
How PPC for SEM Works
Step 1. Set a PPC goal for your campaign
First off, you need a business website to direct users who click on your PPC ads to. You begin by setting a PPC goal for your business. Your goal could be to get users to do one of the following:
- call you
- sign up for your mailing list or
- submit a filled-in contact form (you gain their contact details to market to them in future)
To help put things into context, we’ll use a seafood restaurant business as an example. The PPC goal of our seafood restaurant is to get visitors to make a reservation at their restaurant through their online form.
Step 2. Select the keywords to achieve your goal
The next step is to select keywords that help you achieve your goal. It is important to determine the user intent behind searching for the keyword you select. For example, someone searching for “seafood” may be doing research on seafood or looking for recipe ideas (informational intent), as opposed to actually wanting to visit a seafood restaurant. This means the keyword “seafood” is likely too broad for our seafood restaurant to generate a lead from. For the seafood restaurant, a better keyword would be “seafood restaurant singapore” because a user searching for “seafood restaurant singapore” has the following possible intent:
- Look for a website to find out about seafood restaurants (more relevant informational intent) or
- To visit a seafood restaurant (which serves the goal)
In either case, this is a good keyword to get a qualified lead to the website. Furthermore, according to Google Keyword Planner, which is a tool to determine the popularity of a keyword, there are 1,000 searches each month on average in Singapore for this keyword.
Step 3. Set your bid amount
Having selected a keyword or a set of keywords, you then set a bid. It is basically the amount you are willing to pay for a qualified lead to land on your website. This is an auction system as multiple businesses in the same space are competing to get their advert on the first page. For some keywords, this results in prices of over $20 per click. For the keyword ‘seafood restaurant singapore’, the average bid is $1.25 (correct as of 30th June 2015 from Keyword Planner).
Step 4. Create your ad copy and a landing page
When setting up the ad, you also set a landing page. This is where the user who clicks the ad will end up on in your business website. Google determines the position of ads on its search results page based on an internal algorithm that takes into account the relevancy of the landing page to the keyword as well as, of course, the bid you’re willing to pay. This is known as the Quality Score. If the relevancy score is high, the ad could show as one of the top 3 search results. Lower relevancy could push you down to one of the side results or even onto the second page.
It is important that the copy of the ad clearly explains what the visitor should expect if they click on it. This is to improve the conversion rate (the percentage (%) of clicks you get compared to the number of views your ads get) for your goal by ensuring only the most qualified searchers click on it.
Why Your Business Should Invest in PPC?
1. Potentially Rank Above Competition
PPC is attractive because it potentially allows a website that does not rank organically (unpaid) via SEO on the first page of Google, to show up above their competition on the first page. This is important because studies show that the first page of Google receives 71.3% of the clicks of all searches for the keyword. The second and third pages get about 5% each.
2. Only Pay for Clicks, Not Views
The best thing about PPC is that you only pay Google when someone clicks on the ad you have created. So your ad could show up 1,000 times but if only 10 people click on it (a conversion rate of 1%), you only pay Google 10 * $1.25 or $12.50. As a business, you should be looking to maximize the conversion rate for your ads but all those views (Google calls them impressions) also serve to increase brand awareness for your business.
3. Set a budget to maximize ROI
If you are getting a lot of clicks (which is great if a large percentage of clicks generate revenue), you will find your advertising expense quickly getting out of hand. This is where budgeting comes in. You can set a daily budget so that your ads stop showing once your limit has been reached. This ensures you stay within your means while maximizing your returns.
4. Get qualified data for other marketing channels
PPC can also be used to determine the most lucrative keywords for your business. You can then aim to rank on Google for those keywords organically through SEO. If your conversion rate for ‘seafood restaurant singapore’ is lower than ‘seafood restaurant singapore west’ for example, your SEO campaign could aim to rank for the latter long tail keyword rather than the former. If you’re hosting an offline event for marketing that you’re not sure would generate enough interest, run a PPC campaign for the event to test it out before running the actual event.
PPC Does Not Guarantee Success
Always be aware that a click on the ad does not guarantee new business and additional revenue generation. The business website landing page the visitor arrives on, plays a huge part in converting visitors to customers.
It should ideally promote an action towards your goal. For the seafood restaurant, this action is a reservation that could be achieved via a clear call-to-action. Having a ‘Make Reservation’ button together with a concise presentation of relevant information such as menu, pricing, and promotions would help visitors make up their mind and act on making a reservation.
How To Determine if PPC is Good For Your Business
The easiest way to calculate your return on investment (ROI) is by placing a dollar value on your goal.
For example, seafood is generally an expensive meal and we can assume that at least 2 people (since meals are rarely taken alone at restaurants) will show-up per reservation. Based on this, we can take the return per reservation to be at least $80. If the seafood restaurant spends $12.50 for 10 clicks and even ONE of them makes a reservation, the restaurant would end up making $80 – $12.50 or $67.50 from their pay per click campaign.
This means their Cost per Acquisition (CPA), which refers to the expense of getting one customer, is $12.50. As a business, you need to create a spreadsheet to tabulate all the costs incurred to complete your sale. For the seafood restaurant, this could include the estimated cost of cooking ingredients, chef and utilities spend per meal. To make a profit on the reservation, your CPA needs to be greater than Revenue minus Costs (e.g. $80 – $50 = $30 > $12.50). Generally, the smaller the value for CPA, the better your profit margin will be.
Why Bother With SEO?
While PPC is well and great, don’t forget that you will continuously be incurring expenses on it to acquire new customers. As a business, over time, you should aim to reduce your marketing expenses or to re-invest the capital in trying out other keywords that might also be able to generate traffic. By simultaneously investing in SEO, you may incur up front costs, but over time, your PPC expense will reduce.
Search Engine Marketing is a key element to pushing a business that has an online presence today. Ignoring it due to a lack of knowledge and time is not an excuse. It is understandable that as a business owner, you have a thousand and one things to do, so consider hiring an agency that is transparent and motivated to drive your search engine marketing efforts on your behalf.