Pay attention to your ad quality. Each search engine that uses a quality score will let you know your ad quality is substandard. And it’s very important because the higher your ad quality, the lower your keyword bids will be. You’ll save money and increase ROI with a higher ad quality, and your ad could rise higher in the lineup, ensuring that you get more click throughs. Is that awesome or what?

Here are three things you can do to increase your ad quality:

• Choose the right keywords - There is nothing like using the exact keyword necessary to reach someone interested in your product. Know the keywords most appropriate for your business or ad campaign and use those keywords.
• Keep your budget in mind - Don’t spend too much or go overboard. You’ll end up spending more on lower value keywords and destroying any ROI you hope to get.
• Place your keywords in tight ad groups - Make sure that your highest converting keywords are together in one ad group.

Implement these very simple ad campaign management strategies and you’ll see your ad quality improve.

Do you know your peak seasons? You should. And it helps to know when the start and when they end because when it comes to advertising, how much you spend is vitally important. But just as important is how much revenue you bring in the door as a result of that advertising.

If your peak season is Christmas, for instance, you know that you can count on a certain amount of business based on the economy and the mood of the marketplace. But if you don’t advertise to bring people to your shop then you likely won’t get as much business as you would have. You probably have a budget to help you stay on track, and that’s a good thing. But what about your slow seasons?

Do you keep spending the same amount of money on advertising during your slow seasons? If so then you are probably losing money.

No matter how much money you spend, there is no guarantee you’re going to get new business based on that advertising spend. Therefore, it makes sense to scale back on your advertising during the slow season and use that money for advertising for your peak season. But you don’t want to stop advertising altogether. What you want to do is spread your budget out across the entire year.

Here’s what it looks like: Let’s say your advertising budget is 15% of last year’s revenue, which was $100,000. So you know you’ll spend 15,000 on advertising in the coming year. You can do it in one of two ways:

1. Month-to-Month Comparison - Your advertising budget is set at 15% of the revenue for the same month last year (i.e. June 2009/June 2008).
2. Monthly Adjustments From The Whole - You take your 15% and move it up or down for each month depending on your expected revenue

There are advantages to doing it either way, of course. If you choose the first method and your revenue in July of last year was $5,000 then you know you’ll spend $750 in advertising for that month. It’s an easy way to keep track of your spend. By the end of the year you will have spent 15% of your total yearly revenue from the previous year on your advertising efforts.

On the other hand, if your base is 15%, using the second method, what you want to do is figure out your average month. Take your total revenue - $100,000 - and divide it by 12, which comes to $8,333.33. That’s your average revenue for any given month so for months that you earned that much, or close to that much, in the previous year you’ll spend your 15% of total advertising revenue for the year during that month. In other words, you’ll spend $1,250 on advertising for any month during the year that hits around that revenue figure for the corresponding month of the year before. Example:

Last year you brought in $8,050 in January, $8,290 in March, $8,445 in May, and $8,300 in August. For each of those months you’ll spend $1,250 in advertising. But what about months that are above or below those revenue figures?

You’ll need to establish a window for each percentage of ad spend. For instance, you’ll spend 15% for expected revenues between $8,000 and $8,500. Make percentage adjustments for each $500 window above and below that. The percentage can be any figure you want but make it the same for both above and below. So if you adjust the ad spend by 2% for each $500 window, do that for the window below $8,000 ($7,500-$7,999) and the window above ($8,500-$8,999). Based on these windows you’re ad spend will be 13% and 17%, respectively.

How much you adjust for each window and the size of each window above and below your average revenue figure is up to you, but you want to be consistent in your approach. It’s a little more complicated doing it this way but it’s a good way to control your ad spend.

If you sell a product that appeals to a specific demographic then you can target that demographic in your pay per click campaigns. Each of the search engines have the ability to target your ads towards a specific demographic. Google calls it demographic targeting. AdCenter calls it incremental bidding. What you do is simply tailor your keywords bids toward the defined demographic that you are targeting. It works.

Let’s say that you sell feminine fashions targeted toward women ages 18-25. You can tailor your bidding for the important fashion-related keywords that you are targeting so that you bid on the demographic that is important to you. For instance, let’s say you sell a line of mini-skirt. You can bid .50 on “mini-skirt” and up your bid for that keyword to $1.00 for the 18-25 age range. If women ages 18-25 are more valuable to your business than women in the 30-40 age range then it makes sense. You can still attract the older women through your keyword bidding, but by using a higher bid for the younger target you are establishing that demographic as more valuable and the search engines will place your targeted ads appropriately.

If you are new to pay per click advertising you may be struggling with deciding the size of your budget. Even experienced advertisers sometimes struggle with these issues so there is no shame. To be sure, you should limit your budget just so you don’t exceed your ability to pay the expense.

The reason you want to limit your PPC budget is because sometimes an ad will fail to get the type of result you’d expect it to get. When that happens you are simply losing money. You want to cap how much money you have the ability to lose so that you don’t end up casting a line into the water only to have the fish snag the bait and rip the pole out of your hands.

So much budget is too much?

Well, I’ve always believed you should start small. For most campaigns, $5 a day is adequate until you can get a handle on just how much you’ll pay for your advertising. You can always, of course, increase your budget as you need to, but one rule of thumb is to take a percentage of your overall advertising budget and devote that to your PPC budget.

The Yahoo! Search Marketing Blog had a great post yesterday on budget smoothing. What that means is they run your ads throughout the day to spread your budget out over the whole day so you don’t run through the budget before the day is out. That’s why you may go up during certain parts of the day and not find your ad running. Truthfully, all the search engines do it.

There are ways to keep those ads running longer. Yahoo! Search Marketing Blog recommends increasing your spend limit or selecting less popular keywords that don’t cost as much. Those are good recommendations, but there are other ways to keep your budget in check as well.

One way is to use the phrase match and exact match keyword match tools. And you can also use negative keywords to tell the search engines not to display your ads if certain keywords show up. For instance, if your targeted keyword phrase is “silver bullet” then you can use “silver spoon” as a negative keyword phrase to keep your ads from showing up for that phrase.

Put a little more thought into keyword matches and try to think like a searcher. What will they see when they search for certain phrases? Is that what you want?

Jeremy Mayes recently discussed the ad placement option in Google AdWords’ Content Network. He seems to think this is going to be good and, in his words, more efficient. But will it?

I think it might. The gist of the new feature allows advertisers to specify a particular web property they want their ads to show up on only when a certain keyword appears on a page or to raise your bid when a particular keyword when it appears on a certain web property. With the last option your ad will appear across the entire content network, but clicks will cost you more on the property that you specify when setting up the campaign. This allows you to make value judgments about particular content sites within the network. It’s actually a pretty useful feature. But how should you use it?

As stated above, there are two ways to use this feature. First, if your keyword is a low-volume keyword but there is a specific website that it would work extremely well for because of its narrow niche then you can specify that you want your ad to show up on that site on pages that use your low-volume keyword.

The second way to use this feature is to identify specific websites where a keyword is extremely valuable and to offer to pay more for clicks from that website. If you notice that you are getting a lot of clicks from a particular web property and that those clicks are converting well then you might use this option. Lower your bid across the content network but use the placement feature to keep your bid at the higher amount on that web property that is leading to greater conversions.

Here’s an interesting chart showing the average CPC by vertical.

It’s interesting that the CPC for all of these industries is in an upward trend except for the automotive industry. I wonder if gas prices have affected this. If the automotive industry is declining because of lower auto sales and smaller vehicles selling more while larger vehicles selling less then that is very telling for the economy. But even more telling is the increase in every other industry.

The mortgage and auto finance industries have increased - tremendously. Dating, travel, and retail have only slightly increased. I believe these numbers may also reflect more competition as a whole in each of these industries. The travel industry has always been competitive, but fewer people are traveling these days since the cost of fuel is rising. That probably explains why the travel industries CPCs are not skyrocketing. On the other hand, to avert foreclosure, many homeowners are refinancing. That would equate to a huge increase in the competitive field of mortgage financing, driving CPC prices up.

When you plan your budgets for advertising and you are in an industry where CPC is going up, you need to account for that fact. As CPC goes up, you will get fewer clicks for the same number of dollars in your budget. Will that affect your conversion rate and ROI? You need to know.

The Yahoo! Search Marketing Blog recently told its readers not to shoot for the No. 1 ad spot in every instance. I can’t think of any better advice for a search engine pay per click blog to give. In other words, the could just have well said, “We love your money, but not so much as to see you throw it down the PPC drain and never get it back.”

The search engines have an incentive for seeing you be successful. If you make money on your PPC campaigns then you’ll spend more of it on advertising.

The No. 1 spot, as Noah Belson says, is not always the best spot. When bidding on your keywords, only bid on the keywords that will deliver you the most conversions. General keywords will usually cost you more and will usually provide you fewer sales conversions, draining your budget and not giving you any sales, lowering your ROI. You might even end up with a negative ROI.

Do your keyword research carefully and figure out which keywords are most profitable for your campaign and use only those keywords. Then bid on them optimally so that your ads run longer. This will increase your chances of realizing a positive ROI.

You’ll hear marketers often talk about long tail keywords. Many of them will recommend that you focus your PPC campaigns on the long tail keywords simply because they are less competitive. But should you follow this advice?

Think about this. A long tail keyword may be less competitive, but the reason it is less competitive is because fewer people are searching for it. It will also be less expensive to bid on. There are several things to consider before you decide to bid on those long tail keywords:

• Budget - How large or small is your budget? If you have a small advertising budget then the long tail keywords might be more affordable for you. They could be a good place to start. But if you have a larger budget then you might consider bidding on the general keywords to tap into their popularity.
• Importance - Importance of keywords to your niche is a very important consideration. If a long tail keyword doesn’t match your business model then it doesn’t matter how competitive or inexpensive it is. It makes no sense to target the wrong keyword. On the other hand, if a long tail keyword is the perfect keyword for your business where the generic keyword might be too broad then it really doesn’t matter whether you spend 10 cents per bid or $1 per bid, the right keyword is the right keyword.
• Business goals - What are you trying to accomplish with your PPC campaign? Are you looking for conversions or opt ins? What are you selling or promoting? Does it appeal to an audience that is more likely to search for the long tail keyword or the general keyword?
• Targeted repelling - It is just important to repel the wrong people as it is to attract the right ones. Does the long tail keyword do an effective job of convincing the wrong market not to click on your ad? If not then it may be the wrong keyword. If so, on the other hand, then it may be the right keyword to target provided that other factors are considered.

These are by no means the only considerations you should have, but these are important to consider when determining whether the long tail keywords hold value for you. It may be that you want to target some long tail keywords and the general keywords that are more expensive to bid on. Take a look at all the angles and make a decision based on what is important for your business.

You may have heard of demographic bidding, but what is it? In a word, demographic bidding allows you to specify a particular age group or gender for your ads. If you sell feminine products, for instance, you don’t want to market them toward men so why not use demographic bidding to narrow the audience to which you target your ads? You can take advantage of demographic bidding in two ways, through keyword-targeted and through placement-targeted campaigns.

Keyword-targeted ads will appear on content network websites based on the keywords that you choose. For example, you might choose “feminine hygiene” as your keyword phrase. Your ad shouldn’t appear on content network sites that are targeted toward a male audience.

Placement-targeted allows you to select specific sites that you want to see your ads appear on. For instance, if you want your ad to appear on a specific website geared toward women and you know that website allows ads from the content network then you can tell Google AdWords to show your ads on that website. This allows you to tap into the target market that you know exists on that niche website.

To take advantage of demographic bidding you simply add a % of your bid for a particular demographic group that you want to bid on. So if you want to target your ad toward the 50+ age group then you’d enter your bid (let’s say, $1.50) for your keyword then add a percentage (let’s say 100%) that you are willing to pay extra in order to capture that target market. Whenever your ads appear for that target market then you’ll pay up to $3 per click instead of $1.50 for the non-targeted keyword clicks.

Keep in mind that these ads will only be shown on sites where demographic information is tracked. If a website doesn’t have stats on their users then it won’t apply. But many websites do track demographic information so this could help you.

If you find your PPC campaigns reaching their daily or monthly budget caps sooner than you’d like then perhaps you should tweak the settings on your campaigns to make them run longer. Here are a few ways you can stretch your budget our further:

• Budget Per Day - If your monthly budget is running out too soon then try setting a budget per day. If your monthly budget is reached in the middle of the month and you’d like your ads to run all month long then a daily budget can stretch that out. You’ll have fewer ads running each day and when you reach your daily budget the ads will stop running for that day. But they will run every day throughout the month.
• Set campaign settings to stretch the budget out - You can also set your campaign settings to pace your ads throughout the budget period instead of pausing the campaign when you reach your budget. If you set your settings to pause when your budget is reached then your daily budget might be low enough that you reach it mid-day. Your ads will then stop running at that point when you hit the budget mark. But if you set your campaign settings to run your ads throughout the day then you’ll miss some opportunities in the middle of the day but your ads will not pause until the end of the day. They will be paced throughout the day based on your keyword bids.
• Use negative keywords - By including negative keywords in your campaign settings, you’ll keep your ads from appearing for keywords that you do not want to bid on. This will cut down on unwanted clicks.
• Narrow your match types - Instead of setting your campaigns for broad matches of your keywords, narrow your match types. This will also cut down on the number of times that your ads run and eliminate unwanted clicks.
• Establish a time of day - Is your peak conversion time in the evening or the middle of the day? You can set your campaign settings to keep your clicks active during your peak conversion times. Establish a time of day that your ads run and eliminate unwanted clicks. This will also save your budget for that time of day.

If you want to make the most of your pay per click advertising then you need to start tracking your conversions. Google AdWords makes that easy with its free conversion tracking tool.

As explained on the Inside AdWords blog, by tracking your conversions by keyword you can narrow down which keywords are converting better for you per landing page and per product. Then you can use that information to bid on keywords that deliver more ROI. You can actually bid higher on those keywords that you know convert more sales and bid lower on those keywords that don’t. It’s a very powerful tool for the serious advertiser.

Google AdWords has recently updated its conversion tracking tool to help advertisers do a better job of watching their conversions and increasing their ROI (isn’t that good news?). You can now define and track types of conversions. Just click on the Conversion Trackink link in your account to use the tool and start optimizing your landing page and your ads for better conversions.

You may notice from time to time that your minimum bids move. If you’ve had a PPC campaign that all of a sudden stopped because your ads no longer met the minimum bid for the approval process then you’ve likely been frustrated by that. Yahoo! Search Marketing has a solution for you that will help you keep an eye on that minimum bid.

When you log into your account you should see a notification that lets you know your ads no longer meet the minimum bid. Let’s say you bid 10 cents for your keyword and the minimum bid is 13 cents. On your user interface within the advertising management system, you’ll see your actual bid and a red note one field to its left telling you that your bid is too low. Right below the red type you’ll the the actual minimum bid necessary to keep your ad active for that keyword.

What you do is log into your account and click on the Keywords tab. If you haven’t seen that before, it’s because that’s a new tab. But it lets you see all the keywords for your PPC ads no matter which campaign they are associated with. That’s a cool tool. Now you can see the minimum bid information described in the last paragraph. You can either raise your bid or let your ads pause for awhile. An easy way to manage all of your keywords at a glance.

Another cool feature of this new tab and new reporting tool is that your ads do not automatically go inactive right away like they do with Google AdWords. Instead, you have a grace period during which if you raise your bid to the minimum then your ads will never pause. You won’t lose a beat. If you do not raise your minimum bid, of course, then your ads will pause, but you at least have the grace period.

While your ads are pending inactive, you can raise the bids for your keywords to the minimum necessary to keep them active, but the minimums are just that. They are not minimum bids for competitive purposes, only minimum bids to keep the ads active. So be sure to remember that.

I’ve given it a lot of thought and I’ve come to the conclusion that it doesn’t always pay to bid on your own brand. Sometimes it does; sometimes it doesn’t. So when should you not?

Well, there are no hard and fast rules. Every situation is different so we can’t say definitively that you should should always or should never bid on your own brand. But there are principles that we can employ.

For instance, if you have the top organic listing and no one else is bidding on your brand then you might very well be throwing money away by bidding on your brand. You could draw clicks away from your organic listing. On the other hand, if you do have competitors bidding on your brand then you need to bid on it as well. Otherwise, your competitors could be stealing clicks away from your listings. You need to protect your turf.

Another thing to consider is your affiliate policy. You should put it in writing that your affiliates cannot bid on your brand. There is nothing in the law that prevents them from doing so. If you don’t have a written policy for your affiliates then you’ll find yourself in the position of trying to stay ahead of your own affiliates for your brand name. While you’ll see your business increasing through the success of your affiliates, you could also be paying out more in commissions if you let them beat you in the bidding process. To prevent that, have a written policy that stops them from bidding on your brand and make sure the penalty is a loss of affiliate status if they do so. Protect your brand at all costs.

You know all about pay per click, but what is pay per action? Pay per action is the new model of advertising that has yet to be implemented, but I expect it to start becoming more popular over time. Essentially, pay per action allows the advertiser to bid on certain self-defined actions. Like pay per click, you’ll get to bid based on the value of the action and compete with other advertisers on a like-action basis. The actions that you bid on depend on what you want ad clickers to do once they arrive at your website.

For instance, are you trying to get them to sign up for your free e-zine? If so, then you’ll bid on that action. If you want them to make a purchase then you’ll bid on that action. If you don’t care what they do when they get to your website as long as they get there then you might bid on the consumer simply clicking your ad. Whatever action you define is the action that you’ll bid on.

How will you make money on pay per action advertising? Well, much like you do with pay per click. You pay X amount of dollars for your advertising and you make X amount of dollars in revenue as a result. The difference is your ROI. But how do you measure ROI on actions that may or may not directly influence it?

An example might be a video that you have produced for marketing purposes. You bid .05 for every consumer who clicks to watch your video. But the video’s goal is to get people interested in your website landing page. They go to the landing page and buy a book. Let’s suppose that of every 20 people who click to watch your video (translates into $1 ad spend), 50% go to your website’s landing page to read about the book you want them to buy. That means you have to spend 50 cents just to get people to read your sales literature. Out of those that visit the landing page, let’s assume that 10% buy the book, which sells for $10. Let’s break it down:

• You pay .05 per click
• 20 people click your video to watch
• Your ad spend is $1
• 50% of video watchers go to your landing page
• That translates into 10 visitors who read your sales literature
• 10% of 10 visitors translates into sales (1 person) at $10 a pop

Conclusion: You spent $1 to make $10.

You can do this kind of analysis with any action. But first you have to define the action and set a price. The bid price should be related to how much the action is worth to you. In the above scenario, I would raise the bid on the action to see if I get any more sales. I can double my bid and end up spending $2 for advertising. If I don’t sell any more product them I’m still profitable even though my profit won’t be as large. But if I sell just one more book based on the new ad spend then I’ve increased my profit:

• $1 ad spend = $10 in sales; $9 profit
• $2 ad spend = $20 in sales; $18 profit

The key is to find the optimal bid price that will allow me to maximize my profit. If I keep raising my bid price to see at what point my sales start to decline or level off then I’ve found the optimal bid price and I’ll leave my bid per action at that price.

Managing a pay per action campaign, when that option becomes available through the current advertising companies, will be much like managing a pay per click campaign except that you as advertiser will have more control in defining the actions that are important to you.