Is Your Paid Search Advertising
Generating Positive Financial Results?
by: Kevin Gold
As an online business, you may be familiar with or
currently utilize “pay for performance” search engines
to send visitor traffic to your website. Also known as
pay-per-click, PPC or paid search, it has literally
taken the online marketing world by storm especially the
two largest players, Overture and Adwords.
A 2004 “New Methods in Search Marketing” study by
Piper Jaffray stated that “paid search constitutes more
than 87% of U.S. search market revenues.” This
staggering statistic begs the question, “Are advertisers
achieving a positive return on their paid search
investment?” In other words, are sales being generated
or is money just being spent?
The answer to this question may stem from
understanding the role of the two critical performance
metrics generated by all paid search campaigns (1)
click-through rate and (2) website conversion.
The click-through rate is defined as the percentage
of times a paid search ad is clicked on out of the total
number of paid search ad views within a given period of
Click-throughs (i.e. Total Visitors) / Impressions =
Click-through Rate (a.k.a. CTR)
For example, if your paid search ad is seen by 10
users and one user clicks on your ad, the click-through
rate is 10 percent.
Website conversion is defined as the percentage of
users who visit your website and complete your primary
objective (i.e. purchased a product) out of the total
number of users who visit your website in a given period
Sales / Click-throughs (i.e. Total Visitors) =
Website Conversion (a.k.a. sales conversion)
So what role does each play in understanding the
effectiveness of a paid search campaign?
Standard practice among advertisers is to concentrate
on writing ads that achieve a high click-through rate to
send more visitor traffic to their website.
Unfortunately this general assumption, “more traffic
equals greater positive results”, is flawed.
Consider this. Which click-through rate is better?
• A 20% click-through rate for a paid search ad that
achieves zero sales (0% website conversion.)
• A 0.2% click-through rate for a paid search ad that
achieves 10 sales (10% website conversion).
The answer is obvious. The click-through rate,
especially for newly setup PPC campaigns, is relative –
it is the website conversion rate resulting from
visitors clicking through a particular paid search ad
that defines success or failure.
Successful paid search advertisers take a different
approach. They start with the end in mind by asking,
“what primary objective do I want a visitor to complete
on my website?” and then they work backwards. They
identify the type of visitor and buying behavior that
will most likely result in a completed action (i.e.
sale, registration, etc.)
In addition, they perceive their ads as automated
salespeople who “qualify” visitors. Regardless of a high
or low click-through rates, the focus is on generating a
positive return from the advertising dollars spent.
For instance, let’s review two different ads. Ask
yourself, which ad best qualifies visitors?
A. Pride Scooters
Low prices and huge selection of
scooters and other mobility equipment.
B. Pride Scooters
From $1850 while stocks last.
Houston, Texas, USA.
If you selected B. you are correct.
Ad B. qualifies visitors based on their buying
behaviors and customer type most likely to purchase a
Pride Scooter from the business’ website.
First, the ad states a price point (i.e. from $1850)
to attract visitors seeking the website’s premium
product while disqualifying ones seeking discounted or
lower-priced scooters. A user researching scooters does
not have to click-through the ad to find out a general
Second, the ad targets a geographic region since the
majority of people who buy scooters demand an actual
test ride. If the company is located in Houston, Texas
then users from other locations will not feel compelled
to click-through the ad. (Ideally a
geographically-targeted PPC campaign like using
Adwords Regional-targeting works best in this
In essence, ad B.’s goal is to pay “per click” for
only visitors most likely to purchase their product.
This ad attempts to “filter” unqualified visitors
thereby increasing the return on investment per
Ad A. instead spends money on attracting and
generating click-throughs from all visitors and relies
on the website to filter qualified versus unqualified
ones. This is not a wise economical approach especially
if no “visitor exit strategies” are pursued.
Last, successful paid search advertisers rely on
testing different ads to determine which appeal
generates the best website conversion for a particular
keyword. They rely on actual visitor feedback to help
them determine which appeals are most effective. Once a
positive return is achieved then focus is shifted to
increasing the click-through rate for the best
converting keywords so more sales can be realized.
So “Are you spending money to bring just anybody to
your website or visitors ready to buy from you?” Think
about ..is Your Paid Search Advertising Generating
Positive Financial Results for your website?
|About The Author
Kevin Gold is CEO of Enhanced Concepts, specializing in turning website
visitors into leads or sales, co-editor of
WebSalesability.com and published writer. Get a
free report, “12 Sure-fire Ways to Increase Your
Website Sales” and an exclusive 5-day website
conversion email course by visiting