At the forefront of a marketer’s mind is the exposure of one's products or services to an audience that is either interested already or is likely to be interested in them.
Ad Networks like Google™, Yahoo™ and MSN™ can facilitate both of these types of demographic. Those people that are on-line and have an interest already can be engaged through normal search marketing and those that are likely to have an interest can be touched through exposure on related websites.
Search marketing is where an advert is delivered to an Internet user actively searching for a particular product, service or topic. Many products are known by name or in some cases by a code or ID of some kind. This is specifically relevant with books ( ISBN codes), electrical equipment and branded goods such as iPod Nano™ and Ralph Lauren Polo Shirts. Services are a little less obvious but the principles remain the same, search terms used (called keywords) will relate to the service in question.
Ad Networks provide a service where adverts are positioned on related websites, in most cases there are 2 primary forms of this advertising.
The first relates again to keywords, when an Internet user visits a website within the Ad Network, which in this case is called a “Targeted Network” or “Context Advertising”, the web page is scanned by the Ad Network for related adverts. Hence, a website discussing “Health care for pets” may display adverts related to pet insurance, pet food and other pet products.
The second is related to vendor requests, this is when the advertiser is more targeted to particular websites and can cherry-pick the sites, and in some cases, pages and locations on page where they want their advert to be displayed. In these cases the cost of showing the adverts is a little higher and charges for click throughs' are almost always levied.
Within most of these networks, marketers can also refine their demographics further based on age, sex, location, days of the week, time of day and technology being used e.g. PC or Mac based browsers, Phones and PDA’s.
When planning an Ad Networks campaign, the first question is what kind of campaign is being run. Is the marketer looking for immediate sales or is it a lower impact branding exercise?
The next consideration, and this is important, when dealing with paid search marketing and context advertising, is Profit-Per-Click. Unlike the terms pay-per-click or cost-per-click, profit-per-click is when you work back wards from what a sale is worth and apply it to your click through and conversion rates.
If your on-line marketing consultant or SEM provider is not discussing your products or services profitability, they are not doing their jobs!
Profit-Per-Click is the best model to ensure that your spend will generate profitable results. It works as follows:
Say your product sells for £1,000 and has a gross profit of £400.00. Now, to start with, we need to apply an average of click through rates. This can be anything between 1% and 5%, less than 1 is simply not good enough and your advert or keywords are wrong or your competition is over paying. More than 5% is unlikely so keep it within this range.
Now we have to guess a typical conversion rate, that is paid visitors that end up buying our product. Again a good range at this stage is 0.5% to 3%. Conversions below 0.5% are likely with very high value products/services or where competition is showing much lower prices. Conversions above 3% certainly do happen, but again, this is the best starting range.
We now just need to create a matrix to show our profitable levels and therefore maximum costs per click.
| Conversion Rate | Clicks Req. | Break-even Cost-Per-Click |
| 0.5% |
200 |
£2.00 |
| 1% |
100 |
£4.00 |
| 2% |
50 |
£8.00 |
| 3% |
34 |
£11.76 |
This table shows that we would require 200 paid visitors at £2.00 per click to break even at 0.5% conversion, whereas we would just need 34 visitors at a whopping £11.76 per click if our conversion rate was 3%.
The lower click through cost don’t give us much room to make any money, where as the higher conversion rate gives us plenty of breathing space.
Your SEM Company or consultancy should be discussing conversions with you and keep you abreast of ways to optimise your campaign and website to create better and higher conversion rates.
They should be discussing demographics with you to try and refine advert placement and views.
Finally your supplier should be looking at both keywords and potential target sites. The keywords are important to understand the frequency they are used and the competition chasing those words and phrases. The target sites should be scrutinised from a number of new and returning visitors perspective and look for placement targeting rather than site wide adverts.
Find out more about keyword research, link partners and website associations with the Understanding Search Engines DVD.
