Monday, May 14, 2007

Keyword bidding

Bob,
Our strategy has been to maintain the number one position for
our keyword phrase. We do not want to be considered #2.
What is the advantage to being in any other position?
Brian
---
Brian,

If your objective is to maximize traffic then you are
right, the top position is the only place to be. The
number one position generates the highest percentage
clicks. Each subsequent position (2,3 and so on)
generates a lower and lower number of clicks.

However, if you are trying to generate sales or a conversion
of any kind, you want to maximize sales not traffic. This
is, of course, tracked by Googles' conversion code. This code,
obtained from your account, is placed on the thank you page
that is only displayed after your sale (or conversion).

Once in place the conversion code counts only those views
that have completed that transaction at your site or
conversion. Now Google can divide your total cost of
advertising by the number or conversions and give
you a cost per conversion. Now you know what ads are
actually generating sales and whether it is profitable or not.
This calculation of cost per conversion paints a different
picture than cost per click.

Cost per conversion
shows you not only what text ads are
generating your sales but gives your strategy for the
position you should bid for. If you know how much you
are able to pay per sale for advertising, then you know
whether you can afford the number one position or not.

The problem with the number one position for a given
keyword is that although it generates the most traffic,
it often can generate a higher percentage of less serious
viewers as well. This means your percentage of
sales per clicks should go down as your traffic goes up
for the higher positions and higher cost per click of your
ads.

This whole process is of course taking place in an dynamic
environment of competitive bidding, but the overall relationships
of conversions, cost per click and position stay the same.
Simply staying with the number one position without tracking
conversions is missing the real value of ppc management.
Further, by tracking conversions you are able to venture into
keywords that are more generic. If you track conversions you
are constantly aware of the true value of all of your traffic.
Let conversions determine your strategy, not ego.
Bob

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