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Strengths and Weaknesses of Pay-Per-Click Ads

 January 29, 2010 / 1 Comment

Lately I’ve been discussing the role of Pay-Per-Click (PPC) strategies in an effective SEO campaign. For those new to this, PPC generally uses an auction based pricing system for purchasing visits to a website based on specific keywords. Prices for keywords go up as the number of advertisers goes up because the space available for advertisers is limited. Paid for links are then shown as “Sponsored Links” along with the organic results in Google searches and advertisers are charged a market price when someone clicks and visits their site.

To make some sense of this the average cost per visit for the keyword “Seattle real estate” is $5.03 or an amazing $100 for 20 visits. Wow, seems expensive to me but if a website is converting visitors into leads and closings at a rate that produces a positive return on investment, even though that site is probably not maximizing profit, it can make sense especially if work is being done to improve organic rankings in the interim.

Thinking about it, here are a few reasons PPC is appealing…

1. Immediate results. Start a PPC campaign right now and you can be sending visitors to your site for a specific search term by the end of the day.
2. Easy to calculate return on investment. At the end of the day marketers and site owners want to be able to crunch the numbers and report their return on investment. I can understand this and believe this is the biggest reason there is such a large disconnect between PPC vs. search engine optimization (SEO) spending despite the real opportunity that “SEO drives 75%+ of all search traffic, yet garners less than 15% of marketing budgets for SEM campaigns. PPC receives less than 25% of all search traffic, yet earns 80%+ of SEM campaign budgets”. What effective marketers need to do is weigh the daily ROI decisions against the yearly and long term ROI to make a clear decision. If it is any indicator, the #1 organically ranked website for “Seattle real estate” has traffic valued at $37,400/month.
3. Keyword testing for SEO. PPC allows sites to bid and drive traffic for specific keywords and then analyze the conversion rates based of those keywords. Keyword testing is useful to examine if “Seattle real estate” or “Seattle homes for sale” converts visitors into leads and at what percentage. This can be useful to give direction as to how the best use of resources for managing an SEO campaign can be spent, you should find out a little bit more from experts before opting for the services.

And the downside of PPC…

1. Lower conversion rates. The overall conversion rate or the rate at which searchers take a desired action on a site is higher for unpaid search results than the rate for paid (4.2% vs. 3.6%). On Google, 72.3 percent of users surveyed felt that organic results were more relevant, while only 27.7 percent rated paid results as more relevant.
2. Not as many visits for a given keyword. 30 percent of search engine users click on paid listings, leaving 70 percent who are clicking the organic listings or refining their search.
3. Infinite investment required. Immediate results are a double edged sword, site traffic stops just as abruptly as it starts. There is a constant infusion of PPC spend needed to maintain traffic levels.

I specialize in finding the very best online marketing strategy for real estate professionals and am very interested in hearing your success and struggles for the benefit of everyone, please share! Until next time.