According to recent research published in Forbes, the number of companies using pay-per-click (PPC) advertising (Google, Yahoo/Bing, Facebook, LinkedIn, Twitter) is estimated to be nearly 5 million… and growing every year.
The reason for this growth is simple—there are LOTS of leads to be generated, sales to be made and revenue to be earned from PPC. In fact, $51 billion was spent on Google alone in 2015.
But, there is a problem.
Far too many businesses are using PPC like they have used advertising in the past (think crop dusting a message far and wide on billboards, radio, TV, newspapers, etc).
As a result, they are seriously reducing the profitability of this lucrative source of new business.
Do you want to do better? Here are 3 crucial components to maximizing your company’s PPC strategy – and thereby, your PPC profitability. Use these steps religiously to increase your results.
1. Use Highly Specific Targeting
It is understandable to want as many leads as possible. To do so, it would make sense to cast a wide net.
However, doing that is a huge mistake.
The problem is that the more you target everyone, the more you actually reach no one.
To be effective using pay per click marketing to attract more qualified leads, you must begin with a highly specific prospect in mind.
Think about radio stations for a minute. Imagine you own a radio station and you decide you want to attract as many listeners as possible… so you cast a wide net.
You play current pop music, a little hip-hop, some hard rock, some country music, a little bit of big band and swing music… hey, you want to attract EVERYONE.
You see where this is going… by trying to be all things to all people, you actually attract fewer listeners.
Instead, you must figure out which types of prospects (call them buyer personas) you want to attract… then develop a specific campaign for each that speaks their language and is most attractive to them.
This highly specific targeting will help inform…
- What you say in your ad. For example, the most resonant message might be “save money” for a college student, but “save time” for the busy CEO.
- Where your ads are shown. You want your ads to be seen where the specific type of prospect hangs out. For example, websites visited by a millennial single are dramatically different than those visited by a stay-at-home mother with 3 kids. The same can be said of C-suite executives from agri-business compared to the financial services industry.
Unless you determine ahead of time who you are trying to reach, what is important to them, and where they spend their time online, you are wasting your advertising dollars.
2. Enter the Mind of Your Prospect
This takes the above targeting step a step further. It’s not enough to segment prospects by their demographic or psychographic profile.
You must take a deep dive into their mind.
You must understand their drives, desires, motivations, fears, pains, and how they think.
Often we talk about how we have a B2B business… or a B2C business. Those distinctions are helpful, but if you drill down a little further, you will find at its core that advertising and marketing are actually a B2P endeavor—Business to people. Some even call it B2Me.
For example, at the end of the day, at its most fundamental level, why does someone buy a particular company’s software?
To get things done:
- More done with less effort or time
- To relieve pain
- To satisfy a dream/desire
It is not enough to say “Buy our software to help your business (or help you personally).” You need to address the how and the why – how it will help, and why it will provide what they truly want or need deep down. Only then will you maximize the attraction and resonance of your message to the right people.
If you don’t have this information (and you aren’t alone if this is the case), we typically suggest conducting 20-25 minute interviews with past or present clients, asking them questions that directly address these topics – encouraging them to also provide insight into where they do their own market research, what qualities they look for in a product, service or partner, what obstacles they encounter throughout the buying process, etc. When in doubt, simply ask!
3. Know Your Numbers
In business, companies carefully track their revenue and their expenses to insure a net profit. With pay per click advertising, you can and must do the same thing.
The beauty of PPC advertising is that you can determine not only which campaigns are most profitable, but also which ads and which keywords are, too. With this knowledge, you can maximize the ROI on your advertising investment.
Do you know your numbers? Or are you just spending X every month and assuming it’s profitable?
Here are the numbers you need to know and track:
- How much is a lead worth to you? Different types of prospects are worth different amounts to your business. Once you establish those numbers, you can then be prepared to answer the next question.
- What is the maximum amount you can spend for a lead to ensure a sufficient ROI? You should spend different amounts to obtain different prospect types, depending on their value.
Many businesses may know the first number but not the second.
Here’s an example of how to work backwards to determine the maximum you should spend to get a lead (and ensure the best ROI):
- A particular type of customer is worth $5,000 to your business (Average Lifetime Value)
- It takes 20 marketing qualified leads to get 1 customer. That means each MQL is worth $250 ($5,000/20)… and that you can’t spend more than $250 to obtain one if you want to turn a profit. The ROI you want will determine the maximum you should spend.
- It takes 25 clicks on our ads (which are visitors to your website) to get 1 MQL. That means each click/visitor from PPC is worth $10 to you. It also means the maximum cost per click you can spend to break even is $10 ($250 value divided by 25 clicks).
- If you determine you want a 400% ROI, you can’t spend more than $2 per click to obtain a visitor via PPC (spend $2 but have $8 of margin for ROI).
- You cannot maximize, let alone ensure a positive ROI unless you know your numbers. With the numbers, you can turn your PPC advertising into a magical slot machine (put in $1 and get out X dollars every time).
If you follow the 3 crucial components (specific targeting, understanding how your specific prospect thinks, know your numbers), then you are on your way to making PPC a highly profitable source of new business.
Unless, of course, you just want to continue throwing money toward this form of advertising and calling it the cost of doing business!