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August 13, 2009

Investing money in online advertising always carries some level of risk. Whenever you increase a bid price, it is a calculated risk that the additional spend will produce more profitable sales. 

 Of any form of advertising, PPC carries the least risk since success metrics are available almost immediately. Even so, there is a temptation to minimize all risk.

Even though the following 5 tips are all low-risk & high reward, they are often considered too risky by weak-kneed advertisers. 

 These are the exact risks you should be taking if you want to strengthen your profits.

1.  Be liberal with your daily budget

Are you making direct sales through PPC advertising? If so, what use do you have for a campaign budget? Keywords often have seasonal and/or news-related spikes in traffic. When setting a conservative budget, you risk missing out on the revenue this additional traffic would generate.

The potential sales loss of a constrained budget poses more risk to your bottom line than some crazy clicking event of unqualified traffic. You can always scale back your bids if the traffic decreases in profitability. An unexpected surge in profitable traffic, on the other hand, is usually hidden in historical reports of lost impression share. Your budget should probably be at least double your average daily spend.

2.  Play in the same pool with your SEO

There's enough traffic for both PPC and organic listings. Some advertisers are afraid they'll waste money if they bid on keywords that rank well organically -- such as their brand or product name. Yes, you will probabably pay for some clicks where the visitor would have otherwise clicked on your free listing. But you will also get some additional clicks where the visitor would have clicked on a competitor ad or another organic listing.

The result of bidding on your organic keywords is typically a net profit. If you aren't convinced, do your own test. Bid on your organic keywords for a week. See how many additional visitors came to your site from those PPC keywords versus the organic counterparts. Take the PPC cost for these keywords and divide it by additional conversions you got. If this is still an acceptable CPA on the marginal sales, continue the practice.

3.  Keep optimizing your sales funnel

A profitable sales funnel should be considered a starting point, not finish line. Yes, that new ad might decrease your CTR. Yes, that new landing page might decrease your conversion rate. Yet if you are consistently keeping the good and throwing out the bad, you will ratchet up your success to increased profitability. Don't be afraid to test new things.

4.  Bid on competitor brand & product keywords

It may seem obvious, but the word "competitor" comes from the word "compete." This is the same terminology used in professional sports. The goal of the competition is to win (get the sale). Yes, sometimes the opposing team gets mad when you make an interception. The ball was, in fact, meant for their own team. Yet there is no disputing that interceptions are perfectly within the rules of the game.

Don't be a PPC pansy. This is a real life competition and the strong survive. I'm not advocating breaking the rules or doing anything unethical such as putting on the other team's jersey... that would be a trademark issue. But if your ad wins fair & square for a competitor keyword, you've done well.

5.  Be willing to delay your profit until the backend

On highly competitive search terms, you may be tempted to wonder how your competitors can afford those bids and still make a profit. Well, most of them can't -- at least not on the front-end sale. In fact, many advertisers plan to actually lose money on the initial sale. How can they afford this? They've got a profitable backend sale funnel.

If you can cover your marketing costs with your frontend sales, you are doing well. Now that you have a relationship with these customers, additional sales over the next days, weeks, and months are essentially free money (after your fulfillment costs, of course). Build up your backend product offering. This is where the big profits are made.

When your customer value increases, you can afford to increase your bids to fuel the additional traffic & sales.

We've got a few additional strategies to make your AdWords advertising drive more response & profit. Our CEO, Timothy Seward, has prepared his top 3 "undercover" tactics that we consider the cream of the crop. (Hint: there's a large-screen eight minute AdWords training video when you opt-in).

Get the three free AdWords strategies here!

We've recorded a few more AdWords strategies and posted a six-minute video to help you get better results with your online advertising.

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