One of the biggest struggles for new pay-per-click advertisers is budgeting for the long term. Too many advertisers think they have to outbid every competitor and take the top place in rank. But that may not be the best plan.
Studies show that second, third, or fourth is actually the best rank for many keywords. The highest bidder may have a recognized brand or a big pocketbook, but your goal as advertiser is to calculate your ROI and increase that to its maximum. That may mean lowering your advertising budget.
Scenario: If you pay $1.00 per click and receive 200 clicks in one month then you’ll spend $200 in advertising. If you can expect eight sales from that at $20 per sale then your income is a mere $160, a losing proposition. But let’s say you drop your bid by 25 cents. You now pay .75 per click and drop from the top position to the third PPC position. If your click throughs drop to 110 and you make 6 sales then your ROI from that ad is $37.50. That’s not a great ROI, but it is better than losing $40 per month.
Don’t think you have to be the top ad with every SERP. You may actually do better in the long run by bidding lower and decreasing your total budget, thereby increasing your ROI.
