PPC IN THE PAST
Pay-per-Click (PPC) advertising used to be relatively easy. 15 years ago you didn’t need to know much about the technology, because it was vastly simpler and required a fraction of the choices (and decisions) that are available nowadays. There was also much less PPC competition, so your ads (whether good or bad) had a higher probability of driving sales because consumer expectations were much lower. Nowadays, if your entire marketing process is not as smooth and intuitive as consumers have come to expect, they move on to a competitor.
But the biggest advantage of PPC of the past compared to today is cost. Back in the early days, people scoffed at the notion of paying a few pennies or a nickel a click. Particularly if you had effective SEO generating clicks for no cost (other than the labor necessary to gain higher rankings). However, new guys to the PPC game can’t even imagine that clicks could ever have been that inexpensive.
Nowadays, the cost per click in all industries has skyrocketed. Furthermore,. the strategies to make PPC more productive (more sales with less cost than when starting a new campaign) have gotten considerably more sophisticated.
The net result is that some number of average small businesses became disenchanted with PPC stating that “It doesn’t work anymore” or that “It’s too expensive.” Well, it’s certainly true that it’s no longer working for the person expressing the statement that it’s not working and it’s quite true that it’s more expensive. But what’s missing from such complaints are “Why” did the costs go up? And the short answer is simple: PPC works.
PPC does increase sales for those that know how to use it. In fact, it’s increased sales so substantially for so many businesses that they’ve been moving record amounts of money into digital advertising for years. But the guys who are winning with PPC are not doing the same type of advertising that was done 15 years ago, or 10 years ago, or even 5 years ago. In fact, the amount of ever-increasing ad choices and opportunities that Google has provided to better serve sophisticated players has had a dampening effect on their biggest potential market: small and medium-sized businesses.
OVER-SIMPLIFICATION OF PPC VS. REALITY
In response to becoming somewhat out-of-touch with small to medium-sized businesses, Google has been attempting to woo more of them back through educational videos, such as the one above. At just over 8 minutes, it does pack a lot of information into a relatively short amount of time.
Personally, I think these videos are a valuable contribution to the marketing and advertising landscape. However, valid criticism points to the tendency (or necessity) for these types of videos to over-simplify concepts to such an extent — for the purpose of attracting new Google ad buyers — that they don’t alert these same new ad buyers to the reality that in many competitive industries, new players may start out losing money. And if these new advertisers don’t step up their game quickly, their experience will be disappointing.
In my opinion, the first thing any business owner or advertiser should confront when entering into the current PPC arena, is that it requires work. If you think all you need to do is post some well-worded ads online and people will come flocking to your website to buy stuff in sufficient volume that it will surpass the cost of advertising right away — well, you may also be a Google Ads complainer-in-the-making.
The reality is traffic can be generated immediately. Make no mistake about it, you can post ads today and start seeing website visitors right away.
But the cost of turning that traffic into sales may be unprofitable at first. And for businesses that sell lower-cost products or services, the cost for every first sale may never be profitable. Hence, the marketing game becomes one of balancing the cost of new customer acquisition vs the lifetime value of each customer, so that the business can make real profits on the latter sales.
REALISTIC PPC ADVERTISING GOALS
When we contemplate advertising goals for a business, we already presume the high-level objective of increasing revenue and reducing costs over time.
Sort of like when many of us buy a car, we take for granted that we want it to be able to transport us from point A to point B. Since all cars that are in operating condition support that objective, we focus on more specific car purchase goals. Perhaps we want a car that’s economical. Or, maybe we want a car that’s highly rated for safety. Or, maybe we need a car that has the most storage capacity. Or maybe we consider environmental factors. Or maybe how it looks is the primary objective. These are just a few examples of specific yet practical decisions unique to someone contemplating goals related to making a car purchase.
In the realm of business, when we contemplate advertising to increase revenue and reduce the cost of leads and sales, there are fundamental measurements that are monitored for all ad accounts to reflect basic ad performance, often referred to as “Key Performance Indicators” (KPIs).
Although KPIs vary per business, they can include things such as:
- Time Periods (Example: How many leads or sales per week or month?)
- Geography (Example: What area is generating the greatest profit?)
- Audience (Example: Which demographic is driving the most revenue?)
After considering such basics as above, your specific advertising goals can be informed by additional fundamentals such as:
- Your industry (Long sales cycle? Short sales cycle?)
- Your competitive positioning (Are you a market leader? Or a new business?)
Some more specific basic goals might be to:
- Grow profits
- Expand Market Share
- Increase the lifetime value of customers
- Build brand equity
Note that “grow profits” in this sense is not identical to the highest-level objective of “Increasing revenue and reducing costs over time.” That higher objective is already presumed and is part of a strategy that contemplates a longer time frame because there’s a natural dynamic tension between growing business and reducing cost. For example, any business that wants to boost revenue as fast as possible can just spend more money on a new and non-optimized ad campaign. This can be executed with the goal of driving as many new sales as possible, regardless of Return on Ad Spend (ROAS).
But such an approach would be in a natural state of conflict with reducing ad cost and increasing ad efficiency since that takes time. And the more time the better.
Hence, you can’t have both in the beginning.
In fact, in a normal state of professional PPC application, the ad costs at the beginning of a new campaign are going to be the most expensive. The question then becomes, “How much can we bring that cost down and how fast?”
If you’re newly advertising in an established market against competitors who have been optimizing their PPC campaigns for years, you’re going to be at a disadvantage. They’re going to be paying less for their online ads and generating more results.
- On the other hand, what if you’re competing against less sophisticated advertisers in your industry?
- What if your PPC competitors are doing minimal ad testing and minimal ad optimization?
- What if your competitors are complacent with their current PPC results, regardless that their costs are going up, because they are still making money?
- Or better yet, what if they made the decision to reduce PPC labor by “not” optimizing their advertising because it’s “good enough”?
Any of those types of PPC competitors represents a much greater opportunity to surpass them in a shorter time frame because their competitive guard is down. And if they are rather lax about monitoring their own performance, they may not be watching competitor performance. This means that by the time they get surpassed by a more sophisticated and/or aggressive competitor, they may not be able to catch up because they’re the one that is now at a disadvantage and may also be resistant to learning and/or investing in the most modern ways to make PPC advertising productive.
PPC GOALS TO DRIVE MORE SALES
The ultimate goal is to sell stuff.
And selling more stuff naturally begs the questions:
1) How can I get more leads?
2) How can I get higher quality leads?
3) How can I increase the number of non-converting leads to converting leads?
4) How can I get leads to convert faster?
Unless you have a low-cost product that consumers can purchase with minimal evaluation, a more fundamental goal is to move people from low purchase intent to high purchase intent. Or, moving even earlier in the marketing process, moving cold traffic through a funnel that turns some of them into warm traffic and some of those into customers.
In other words, PPC goals need to be defined along the consumer decision path, or through a marketing funnel; not just the end result of new sales.
Although you never want to lose sight of the ultimate goal of selling stuff, if your focus is always on converting only the people who are mostly like to buy today, then your PPC strategy will be more expensive and less effective because for most businesses, there are fewer people ready to buy now when they first learn about you then there are prospects who would be willing to buy from you a little later if they became more aware of your services and benefits over a time period. (And that time period can vary with each individual).
So, to emphasize the obvious, a goal of developing more prospects early in the sales process, also known as “top of the funnel,” is just as important as the bottom of the funnel wich emphasizes “buy now” PPC ads. Stated another way, there will be more willing “warm” buyers today if you developed them earlier.
Otherwise, your sales volume and revenue may become stagnant and in fact, may actually decrease, since the nature of business and particularly advertising is that the costs are slowly rising and industries are getting more competitive.
The key takeaway here is that if you focus only on sales as your primary KPI, then you may not be paying enough attention to the earlier part of the process which cultivates prospects and drives them toward sales.
PRACTICAL PPC EXAMPLE
As a practical example — and one that you are likely familiar with — is advertising a lead magnet or some informational content to find prospects interested in your general product or service. Depending upon what you are selling, you might choose a lower-cost PPC strategy such as YouTube ads or Display ads targeted to an appropriate demographic to find prospects who are in an exploratory process. A tried and true goal here would be to get them onto your email list so you can build a relationship with them by providing value to them related to their purchase journey.
But regardless of whether they opt-in to your email list or not, you can use PPC retargeting ads to get in front of them again as many times as necessary to solicit their further interest. And if they’ve already learned something about your business, then they’ve already graduated from being a cold prospect to a warmer prospect.
Whether your average prospect needs to see your brand 3 times or 10 times or even more before they consider your brand relevant and on their radar screen for a purchase decision, you will find your “Buy Now” offers will be more meaningful at that point then if they hadn’t touched your brand at all.
PPC GOALS SUMMARY
Anything you can do to foster growth in the early part of the sales funnel will ultimately result in more sales. That’s not to suggest that the end of the funnel should not be continually optimized. It’s just that too heavy an emphasis on the last part of the marketing funnel at the expense of the earlier phase of the sales process can mean that your leads and sales may be more expensive and less plentiful.
You should have clearly defined PPC goals for each part of your funnel.
Avid hiker, bicyclist, motorcyclist and long-time advertising pro. Founder of Skyworks Marketing, Nonprofit Fire and Our Ventura TV (cable TV). One career highlight was working on a small team that built a business from nothing to over $100 Million in 3 years. Skyworks Marketing provides video advertising and lead generation services. We create custom marketing funnels that provide the highest-quality leads and sales.