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Ok. It’s been a long week already and it’s only Tuesday. I am a day late and it makes me a bit upset, but as the French say C’est la vie!

So let’s take a look into bidding in the pay per click marketing arena. So if you are asking yourself how important is bidding? Well it is absolutely vital to your campaign, if you are over-bidding you are getting prime placement, but may be getting erroneous clicks. On the flip side if you are underpaying you are getting lower position and fewer clicks. I know you are saying, I already know this… But what if I told you that in order to effectively manage your campaign you need to find that sweet spot CPC in order to be spending wisely.

I am talking about Pay Per Click thresholds. In other words what is the most you are willing to pay for a conversion from a set of keywords. So let’s talk more in depth on how to figure out what your threshold is. The formula to find your CPC threshold is simple:

Total Value of Conversion * Percentage advertising spend * Avg Conversion Rate Percentage = CPC Threshold

So now you know the formula. But I know as I originally did years ago when starting a new, is how do i find out my advertising spend and when starting from zero how should I estimate conversion rate percentage? Well a good baseline for advertising spend is no more than 15% and a sound conversion rate can be based on an assumption initially off of if you were to sell 100 of your widgets how many would approximately sell and that would be your conversion rate until you get about 30 days of baseline data to tell you otherwise. Granted using this assumption might cost you a little more in the short-term, just keep in mind you are bidding on keywords and just because you spend a little more now doesn’t mean you aren’t spending wisely, you will gradually taper your spend to a wise and effective amount.

In my experience I have seen numerous companies just spend and spend to get that number one position in PPC however I will be quite honest I have found that getting your ads in the 3-6 position range which puts you on the right side provides a better conversion rate. The top ads unless extremely niche and exact match targeted provide a lower conversion rate and higher CTR, in other words an unwise spend, there are other ways to pay to just get clicks! I don’t know about you but I would take fewer clicks and more conversions.

So with this all being said, I will just re-iterate the importance of finding your CPC threshold and maintaining it to spend wisely and keep in mind even if you are selling a Rolls-Royce product stay on top of managing your spend or you will exhaust your daily budget faster than a speeding bullet without getting the conversions your business needs

Edited by canadafred: copy/paste spam upsurgemarketing com/blog/upsurge/pay-per-click-threshold/

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