Posted May 28, 2008 2:00 pm by with 3 comments

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By Dave Rigotti

Many companies, who in the past, relied heavily on discounted bid prices due to the lack of competition, are finding it to be more and more difficult to push through the noise (and higher costs) of search engine marketing. In this article, I’ll discuss how advertisers can reduce the costs of clicks, optimize their campaign, and justify higher spend for maximum performance.

So you think your competitors are driving bid prices up. Now what? The first thing you should do is relax, and think before you act. It might seem simple, but your much more likely to make better decisions while relaxed, rather than stressed, worries, rash, etc. Once relaxed, you’ll want to perform a campaign audit. Take a look at the last 1, 3, 6 month trends. Focus on average rank, click through rate, and cost per click. Are the CPCs actually increasing? It could be possible that your audience is suffering from advertisement fatigue and is just not noticing your ad. This will lead to decreased click-through-rates and, ultimately, higher prices for the same position. Try running a few different ad copies for a few weeks (I’d recommend no less than 2, unless the keywords have an exuberant amount of volume) and see if the bids decrease.

If not, then you’ll want to think about you’re landing page. Have you made any significant changes, such as changed the amount or text of the content? If so, it’s possible Google may have reduced your quality score, which will therefor reduce rankings, forcing higher bids to receive constant traffic.

If those two don’t reduce the costs of the clicks, then yes, it’s quite possible competitors are bidding up your keywords. Time to go to plan B. If you’re more concerned with receiving cheap clicks and less concerned with quality and quantity of traffic, build out your tail end keywords. However, building out tail end keywords is extremely time consuming for the money it saves. There are great programs out there which can assist in creating keyword lists, such as SEO Book’s.

Now, if you’re still unable to reduce costs, it might be time to look at your analytics. Justifying the spend might seem lame, but it can actually lead to a drastic increase in revenue and profits.

Most sales companies look at cost-per-lead, when a much better metric is revenue per click or profit per click. For example, in most mortgage companies a lead for a $120,000 mortgage and a lead for a $416,000 mortgage are just that – leads. However, the $416,000 mortgage will bring much more profit to the company, which may be enough to justify spending more for clicks on those keywords which bring the larger mortgage leads, like “jumbo mortgage.” Or maybe a certain keyword brings in leads with the consumer having higher credit score, meaning it’s much more likely to convert into a sale. Either way, looking short at just leads

And finally, I’m shocked at how many companies are not performing multi-variate and A/B testing to increase the conversion of your landing pages. In other words, you should constantly be trying to “beat” old landings pages conversion rates by testing new, and hopefully better converting, ones. This can be done rather easily through the free tool provided by Google, called Website Optimizer.

If all else fails, it’s time to move on from spending so much with that one advertiser. Decrease, or eliminate, spend of underperforming keywords and transfer that spend into something else. Make sure you’re bidding on all of the search engines, for example, (via adcenter). There are some great alternatives, such as StumbleUpon and FaceBook.

This is an entry to Marketing Pilgrim’s 3rd Annual SEM Scholarship contest.

  • Great tips and reminders 🙂 It’s always good to have someone tell you what to do once again. Landing pages are a huge reason why people bounce, stay, buy, refer etc.. and if you’re not constantly making them better, you’ll likely lose out to your competitors that are.

  • All my clicks is free.

    Elections guy’s last blog post..Obama wins Oregon primary

  • Those are some great points Dave. As cost-per-clicks continue to rise, it has become imperative to focus on the quality and effectiveness of landing pages. Long gone are the days when it was good enough to spend 50 cents on a click, throw a respondent onto a deep link within a website, and hope they find their way and convert.

    As online marketers spend $2, $3, and more on clicks, they need to apply a laser sharp focus on what happens after the click. The cure for rising cost per clicks is increasing conversions. And the best way to increase conversions? Create and test high quality landing pages.