What Does it Take to Turn a Positive ROI in PPC Advertising?
The concept of pay-per-click (PPC) advertising is deceptively simple. First, you sign up for the services of a given platform, you identify a few distinguishing characteristics of your target audience in your ideal keywords, then you pay for each lead generated by the ads you eventually place.
Turn a Positive ROI in PPC Advertising
Whether you’re running a large, well-established company or a fledgling startup, that’s a pretty sweet setup. You’re only going to pay for the people who actually visit your chosen landing page and you have total control over who your advertisement reaches.
Unfortunately, not every PPC campaign ends up turning a positive return on investment (ROI). Every year, thousands of new business owners figure that out the hard way.
So what exactly does it take to turn a positive ROI in PPC advertising and how can you get there even if you don’t have much experience?
Why Return on Investment (ROI) Matters So Much
ROI should be considered the bottom line for any marketing and advertising campaign period it effectively measures whether your ad campaign is generating more money than it’s costing you.
If you spend $ 5,000 on PPC ads, you’ll need to generate $ 5,000 in new revenue just to break even. If you only generate $ 3,000, you’re going to be losing money. On the flip side, if you generate $ 10,000, go essentially double your investment.
ROI is also helpful because it filters out perception biases and pieces of information that might influence the accuracy of your assumptions. For example, if your PPC ad strategy ends up generating hundreds of thousands of people to your landing page, you might falsely believe that it’s a massive success.
But even with a huge influx of visitors, you may not necessarily be generating the type of revenue necessary to overcome the costs of managing your campaign.
Revenue and Expenses
Depends on two factors: the money you make and the money you spend. If you make more money than you spend, you’re in positive ROI territory.
That’s why most people focusing on the ROI of their campaigns end up having a two-pronged approach; they focus on increasing revenue as much as possible while also reducing costs as much as possible.
The Big Picture
How can you do this?
In PPC advertising, you can focus on the following strategies as part of your “big picture” approach to improving ROI:
- Audience targeting. Audience targeting is an important aspect of any marketing and advertising strategy, and PPC ads are no different. The better you understand your audience, the better you’re going to be able to target them, the more traffic you’re going to generate, and the more relevant that traffic is going to be.
- Smart ad buying. Intelligent ad writing, placement, targeting, and bidding are all going to play a role in how effective your advertising strategy is. Without the fundamentals down, you could end up spending a lot of money on an ad that simply doesn’t appeal to people.
- Adaptation. No PPC ad campaign is successful with its first iteration. If you want to see the best possible results and capitalize on a positive ROI consistently, you need to remain flexible and adaptable.
Now let’s delve into how these big picture concepts can influence your ground-level tactics.
A Solid Strategy to Turn Your PPC to Positive ROI
Everything starts with a solid strategy. Before you begin buying your first round of PPC ads, you should have a document that clarifies what you’re hoping to achieve and how you’re going to achieve it.
Think about the following, at a minimum:
- Appeal. Who is your audience and how are you going to appeal to them? What are the factors that are going to make people interested in your advertising and what’s going to make them make a purchase? If you don’t know what your appeal is going to be, you shouldn’t be paying for ad space.
- Differentiation. You also need to understand how your brand is different. There’s a good chance many of your competitors are already actively engaged in PPC advertising, as well as other search visibility strategies. If your potential customers see your business on the same page as your competitors, what factors are going to make you stand out? What’s going to make them choose you over them?
- A long-term vision. How do you see this campaign developing into the future? Is this something designed simply to get your business some initial momentum? Or are you going to try and dominate the competitive landscape permanently with your PPC ad campaign?
Keyword Targeting (and Negative Keyword Targeting)
One of the biggest strategic decisions you’ll need to make for your PPC ad campaign is which keyword you’re going to target and which negative keywords you’re going to try and avoid. These are the tools with which you will sculpt the targeting of your PPC campaign.
When your ads appear for the right keywords and avoid appearing for the wrong keywords, you’ll have a much higher likelihood of reaching the target audience you want. That, in turn, means you’re going to generate much more traffic and the traffic you do generate is going to be much more likely to buy your products.
Unfortunately, there aren’t any right or wrong answers when it comes to keywords. You’re going to have to do your due diligence and evaluate a wide range of different keywords related to your business and your industry.
It might also take months of experimentation before you figure out a winning formula.
Custom Landing Pages
You also need to think about your PPC landing pages. These are the pages that your visitors are going to notice immediately after they click your ad. The quality of your landing page, its relevance to your target audience, and its calls to action (CTAs) will all play a significant role in whether your PPC ad campaign turns a profit.
If your landing pages are considerably well executed, you’ll end up with a higher conversion rate and happier audience members, ultimately making each ad click more valuable.
Conversely, even the most powerful stream of PPC traffic could become worthless if your landing page doesn’t support those visitors.
PPC advertisers also need to think about their ad quality. It’s true that you’re only paying for the people who click on your ad, but the quality of that advertisement can affect your campaign in several different ways.
For starters, add quality has a big impact on audience targeting; with better wording, you can make your ad more relevant to the people most likely to buy from you.
Ad quality is also correlated with conversion rate, and the better your ads are, the more favoritism you’re going to get from Google and other platforms.
You’ll need a smart bidding strategy to be successful as well. If you spend too much money on high-profile ads, you might end up with a significant stream of traffic, but you won’t generate enough revenue to make up for those initial expenses.
At the same time, if you’re too frugal, you could end up with low-quality ad spaces that don’t reach your target audience at all.
Again, this is something that you’re going to have to figure out over time. Research your competition carefully, review the average value of a conversion, and try to calculate the ideal bid for an advertisement.
Ongoing Measurement and Refinement
Remember, the world of PPC advertising is always changing. New updates, new features, new platforms, and emerging competitors are just some of the threats and opportunities that are going to arise in your future.
If you want to respond to these emerging changes and continue keeping your campaign focused invaluable, you’re going to need to measure your results frequently and be prepared to refine your approach.
PPC advertising isn’t a perfect strategy. It’s not guaranteed to give you a positive ROI, nor is it an appropriate choice for every business. However, if used with ROI in mind and gradually polished to perfection — even inexperienced business owners can get a lot of value from this strategy. You just need to be prepared to work to get there.
Image Credit: Vlada Karpovich; Pexels; Thank you
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