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The Pitfalls Of Using Pay-Per-Click

by acbuddy

I will just come out and say it. Pay-per-click is the most
frustrating form of internet marketing known to man . Most
websites use at least some pay-per-click to attract traffic to
their site. Other sites use nothing but pay-per-click to attract
traffic to their site and expend a lot of money doing so.

What is pay-per-click (PPC), you ask? Well, go to Google, and
then type in a keyword or phrase that you want to search for.
Then, at the top of the search results, you will see a section
for what is called sponsored links or sponsored results. These
sponsored links are paying a certain cost per click to be listed
in this special section at the top of the listings. Each one of
these websites pays a certain fee to Google each time someone
clicks through to their site.

Each website that uses PPC has to place a bid on how much they
are willing to spend per click for a certain keyword. The highest
bidder is placed in the number one position, the second highest
bidder is placed in the number two position, and so forth. Also,
each bidder specifies how much they are willing to spend per day.
Once their daily budget has been exhausted, the clicks stop until
more money is added to the account.

Google is not the only search engine that has a PPC service
available. Overture also has a service, as does Miva, and several
others. Each service is tied to different search engines. If you
go with Google, your website will be listed on Google, AOL
Search, and Ask Jeeves. If you sign up for Overture, you will be
listed on engines such as Yahoo, MSN, Netscape, and several
others. Miva is tied to approximately 6 different search
engines.

The costs are expensive, especially if you are bidding on a
highly sought after keyword or phrase. Keywords related to auto
insurance, or mortgage quotes, can cost anywhere between $1 - $20
per click or even more if you want to be ranked in the top
position. If the keyword you want to advertise for is not too
popular, the click costs will be much less. Usually, doing
pay-per-click will boost your Google PageRank by 1 (PageRank is
scored on a scale of 1 to 10), but it certainly has never
actually helped me get anywhere near the first page of Google.

It is possible to spend thousands dollars on clicks and make
zero sales of the product or service you are selling. Conversion
rates are usually 1%-3%, meaning that only 1%-3% of the people
who come to your website will actually order what you are
selling. So, you need to take that into account when developing
your marketing strategy.

The problem with PPC advertising is that most people using a
search engine are only looking for information, and are not
planning on buying any products or services. So, you can spend
tons of money to get clicks, but you will likely only convert 1%
- 3% of those clicks into sales, and sometimes you will get
absolutely zero sales.

I am not saying that the search engines do not bring business to
your site. They absolutely do. That is why it is good to achieve
a high ranking on the search engines within the free part of the
listings. Even though you will still only convert a small
fraction of your visitors into paying customers, at least you are
not wasting money on every single click. So, getting to the top
of the search engine listings without having to pay for each
click is paramount for your online business.

PPC advertising is not necessarily inappropriate for every
online business. If you are selling an expensive item ($100 or
more), you can turn a profit as long as your per-click costs are
somewhat modest. But generally speaking, you will spend more than
you will make.

The only time PPC is truly helpful is for businesses that sell a
service where a recurring fee is involved. For example, dating
websites charge their customers a recurring monthly fee to be a
member of their site. So, if you own an online dating service, it
makes sense to use PPC and not worry about losing money on
attracting new customers, because if they stay members for the
second month, you will be able to charge them again, thus making
your website profitable. If they stay members for a year or more,
then you really come out ahead.

You need to have a lot of cash to burn in order to compete with
the bigger businesses who are spending thousands of dollars per
month for their clicks. If you are operating a small business,
you need to diversify your internet marketing efforts by
optimizing your website and increasing your link popularity so
you can climb to the top of the search engines without having to
pay for every click you receive.

Also, you should consider having an affiliate program so that
other websites will promote your business for free as long as you
pay them a commission for any referrals they produce. The best
way to approach internet marketing is to use several different
methods that when put together result in an optimal cost
situation for your business and attract a significant amount of
targeted traffic to your website.

Jim Pretin is the owner of <a
href="http://www.forms4free.com">http://www.forms4free.com</a>, a
service that helps programmers make an HTML form

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