Before you start a PPC campaign, figure out what a customer is worth to your business, and what you are willing to spend to get that customer. For example:  “A customer is worth about $100 to my business, so I am willing to spend $50 to get that customer.”

Since no business can convert every lead, use a formula based on a conversion rate to determine what you can pay for leads. In this example, if you can convert 1 in 10 leads into paying customers, you’d pay $5 per lead.

With this simple formula as a guide, here’s why PPC plus analytics can be a successful marketing vehicle for entrepreneurs.

1. Search Engine Marketing (or PPC) works with small budgets. Author and entrepreneur Seth Godin recently said  “The big mistake (marketers make) is thinking that their job is to spend money to get attention. If they think that that is what their job is, they will never ever succeed in marketing.”

PPC can be extremely effective for small budgets.

Targeting.: You can use PPC to target visitors at all stages of the buying funnel. Start by focusing on the key words people type in when they are ready to buy. The lower in the funnel, the higher conversion rate you should expect. When you add geography, time and language, you have a surefire way to pinpoint your most qualified customer.

Matching. Avoid broad match or you’ll be paying for unqualified clicks that will just drain your budget. Start with a modified broad match to get higher relevance. Since PPC is an auction format, price is driven by demand/value. You can’t overspend when it’s self-serve.

There is no direct correlation between budget and results. If you get a big infusion of cash and you can triple your PPC budget, it won’t necessarily triple the volume of same quality of leads.

2. Test lots of messages: The days of committing to ‘one version’ with print brochures are long gone. PPC is a great way to test content and combinations of words and messages. Design tests to measure if you’re increasing relevance of keywords to ad copy to landing pages.

Think whether the promise from the ad is delivered consistently on the landing page and in the headline and body copy. We’ve found rearranging copy in a headline or changing the description line from prose to a customer quote can increase click-through rates by 8 percent or more.

3. Test lots of markets. Our online collaboration tool is used in 165 countries and is available in eight languages. We market directly to these different audiences using the appropriate language. If an ad is working in a certain market, we’ll test the same copy in another market but, remember, there are subtle nuances in each language. For example, the French word for “management” (gestion) implies “financial” management, so we’ve added extra descriptors in our ad copy to ensure we’re not paying for clicks from French visitors looking to get a handle on their personal finances.

It’s a good practice to have trusted individuals who know the native language review your copy and not only rely on Google Translate.

4. Tests quickly point to the right direction. More often than not, the simplest, briefest version of your page will be the most effective. Always start with some basic best practices, create your hypothesis and then test everything – headline, buttons, video, CTA placement and so on. It’s a sure-fire way to validate what you’ve learned.

Give your tests enough time to reach a conclusion, then build a new test based on your findings. Keep at it even when you think you’ve nailed the perfectly performing campaign and you’re exceeding your expectations.

5. Numbers trump opinion and emotion. When funds are tight and every lead counts, using data instead of your opinion to make decisions is a lifesaver. We use Google AdWords and Bing Ads, along with some sophisticated tools like GA Content Experiments and Optimizely combined with our own analysis, to measure which market segments are the most valuable. We double down on those and turn off those that are underperforming.

More Benefits of PPC

#1 Speed

PPC works on a bidding system.  You can competitively bid so more people see your ad and the better you are at this science, the more your ad will appear and the less you will pay every time someone clicks the ad and goes to your website.  This means if you put an ad up today, you can get traffic today from that ad!  No waiting!  And you wanted to be top of the list?  With competitive bidding, you can – immediately.

How about new product releases, the new daily deal for your shop or online store?  Change any ad for any season or reason and the change is immediate (note: most ad carriers take a few minutes to a couple hours to approve ads, but it’s a quick turnaround).

#2 Targeting

Don’t you wish you could target only certain types of people from certain places with certain interests with your advertising and not have to pay for people who don’t care to see your ads?  Well, with PPC you can!

Depending on the medium used to show your ads, you can target gender, language, geography, times, and so much more.  Using Facebook, you can target only people who like a certain company, i.e. you are FedEx® and you want to target all the people that “liked” UPS® to give them a better deal.  You sell Powerbars™ and you want to target all Americans over age 25 who like any kind of sport.  Done.  You can include or exclude times or places; with LinkedIn you can target only senior executives or instead, accountants.  The possibilities are almost endless and just as awesome!

Here’s a quick look at what you can target (or exclude) with a few of the main PPC advertising means out there.

  • Google: location, gender, age, language, keywords, websites (particular and categories), time of day, type of computer/mobile device.
  • Facebook: location, gender, age, time, language, interests (this a huge one: both particular and general), type of computer/mobile device, & whether they are fans or even friends of fans!
  • LinkedIn: location, company, job title (function and seniority), school, skills, group, gender, & age.

I bet your advertising mouth is watering as you begin to imagine the possibilities these targeting tools have for your business.

#3 Results

Are Immediate and Cost-Effective

No internet marketing tool brings more immediate results.  If you bid correctly and design your ads right, you will get traffic to your site; and if you have a decent website and sales pitch, you are going to sell!

The typical click-through rate (CTR) for a decent ad campaign is anywhere from 1-5% (the ratio of people who see your ad to those who click through).  The average website conversion rate for a decent website and proposition is about 2-5% (ratio of visitors to your website to those who convert (buy your product, fill out your contact form, etc.).  So do the math.

Take the lowest average (always the safest option).  If 1% of your ad viewers click the link to your website (1 out of 100), and 2% of them convert to what you are selling (1 out of 50), you need 100 ad views times the amount of people on your website it takes to convert to a sale (50); which means 5,000 people need to see your ad for you to sell a product or generate an interested lead via your website.

Seem like a hassle?  Well, try knocking on 5,000 doors and compare the hassle.

The beauty of PPC is you won’t pay for the 4,950 people who don’t click your ad; you will pay for the 50 who actually visit your site.  Like handing out free coffee coupons to get them into the shop.  It works!  Consider your product value.  Depending on the exact targeting of your ad, you will probably begin paying about $1-2 per click, and if you’re good or have good people working for you, they will half that cost in a few weeks by optimizing your campaign (another blog for another time).

So, in the beginning, you’ll be paying $50-100 per sale or new lead; in the end about $25-$50.  (Note: CPCs (cost per clicks) vary.)  How much are you paying the salesman to knock on 5,000 doors?  (A rhetorical question.)