Advantages of Using Pay Per Click
There are three advantages to bidding on keywords in the pay-per-clicks:
1. You get effective advertising, because you only pay when someone actually clicks through to your site.
2. Your listing will get posted quickly-anywhere from a few hours to a couple of days at the most-meaning you can start profiting from increased traffic and sales almost immediately.
3. In order to rank in the No. 1 position, all you have to do is outbid your competitors, which is usually only a matter of a few pennies per click.
Important Tips For Pay Per Click Advertising
Done right, pay-per-click advertising can be very profitable. However, if you're not careful, you can lose a lot of money with your PPC advertising. Here are some tips to help you ensure your campaigns are profitable:
1. Avoid keywords that are too general. More general keywords will attract a lot of traffic, driving up the cost of your PPC campaign and converting few visitors to sales because general search terms aren't specific enough to attract the right audience.
2. Ensure that the sales process on your site is converting visitors to buyers before you launch a full-scale PPC campaign. You don't want to be spending money on getting the traffic if your site can't produce sales.
3. Make sure you calculate how much you can afford to bid on keywords to guarantee you still turn a profit. To determine how much you can afford to bid, you'll need to understand the value of each visitor to your site. You can do this by determining the number of sales you'll get, the profit you'll earn per sale, and the number of unique visitors your site will receive during a set period of time. It's generally easiest to calculate these numbers on a monthly basis.
Calculate Visitor Value To Determine You Pay Per Click Bid Values
Here are three easy steps that will help you determine the value of each individual visitor to your site:
1. To determine your visitor conversion rate (that is, the percentage of visitors who buy from you), calculate:
No. of sales ÷ number of visitors = conversions per visitor
Example: 5 sales ÷ 123 unique visitors = 0.041 = 4.10% conversion rate
2. To calculate your net profit per sale, calculate:
(Gross revenue - total expenses) ÷ number of sales = net profit per sale
Example: $145.00 Gross revenue - $67.00 total expenses = $78 profit ÷ 5 number of sales = $15.60 net profit per sale
3. To determine the value of each of visitor to your site, calculate:
Net profit per sale x visitor conversion rate = individual visitor value
Example: $15.60 net profit per sale x 4.10% visitor conversion rate= $0.63 is the individual visitor value
Once you understand the value of your visitors, you'll be able to set your maximum bid for keywords. For example, you may determine that each individual visitor to your site is worth 63 cents in pure profit. This means you can afford to bid a maximum of 53 cents per click to guarantee that you'll generate a good profit margin.
The value of your visitors may also help you determine which PPC search engines you'll use, as the minimum bid on keywords in some search engines may be higher than in others.
Which Pay Per Click Engines Should You Use?
There is no doubt that the two best PPC services are offered by Google and Yahoo Search (formerly known as Overture). In the next two sections, I will provide you with more details on both of these two services.
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