Case study and Top 10 holiday search terms June July 04
Top 10 holiday search termsFeatures: "Top 10 holiday search terms across the Espotting network for the week 29/6 to 5/7
1. Car hire
2. Hotel
3. Holiday
4. Cheap flight
5. Travel guide
6. Camping
7. Short break
8. Cheap Hotel
9. Last minute holiday
10. Package holiday
Provided by Espotting "
http://www.clickz.com/experts/search/results/article.php/3391681
Let's look at an example of an online retailer's Web site conversion rate, and its relation to the PPC advertising bids.
Retailer X sells dress shirts online at $300 each (nice shirts!). Assuming a 10 percent profit margin, he earns $30 per shirt. His Web site's conversion rate is typical of online retailers today -- roughly 2 percent (according to Shop.org). For every 1,000 visitors, Retailer X sells 20 shirts for $6,000. He earns $600 in profit from those sales.
By dividing the $600 profit by the 1,000 visitors, we know the break-even bid is $0.60. So Retailer X's average CPC on Overture or Google AdWords must be $0.60 or less.
Another way of looking at this is by cost of customer acquisition. In this example, the 1,000 visitors at $0.60 CPC cost $600. Divide the cost of the campaign by the number of acquisitions (20). The cost per action (CPA) is $30.
Retailer X's overall PPC advertising campaign must be played under the $0.60 bid ceiling. The higher the bids get, the less of the audience the retailer can reach.
Trouble is, many important keywords already show bid prices over a dollar. Overture's bid price tool shows "dress shirt" sells for $1.13 in position one, and positions two through four cost more than a dollar each (at time of writing).
So far, on some rather obvious keyword targets, Retailer X is out of the game before he even starts.
But this example is based on a 2 percent conversion rate. What would happen if Retailer X could increase the conversion rate to 4 percent, or 10 percent? Obviously, he could increase his bids. At a 4 percent conversion rate, he can support a $1.20 bid and his CPA drops from $30 to $15. Suddenly, Retailer X can compete for the top spots again.
At 8 to 10 percent conversion rate, the PPC advertising campaign becomes extremely profitable. Improving the site's conversion rate is the key to Retailer X remaining competitive in paid search advertising.
With bid prices in some markets increasing quickly, companies that haven't yet launched PPC advertising campaigns are taking a serious risk. Bid prices could increase to a point where, by the time Retailer X starts experimenting with search advertising, it will be too costly to learn. It'll write off the medium altogether due to poor results and a seemingly insurmountable conversion rate deficit.
Worse, chances are Retailer X's competitors are already engaged in PPC advertising and working to improve their site's conversion rates. When Retailer X gets in the game, competitors' head start may provide them with a strong advantage.
There are exceptions to the rule: customer lifetime value, day-part bidding, conversion rate in various positions, and so on. But exceptions don't define the rules. A relationship exists between bid price and conversion rate. That's beyond debate, regardless of the simplified example presented.
The importance of improving your site's conversion rate cannot be overstated. Don't wait until PPC advertising prices become prohibitively expensive to focus on increasing conversion rates.
Marketers who are engaged in a formal conversion enhancement process have increased in their Web sites' conversion rates, sometimes dramatically (a 2 percent conversion rate increasing to 22 percent in at least one case). Conversion rate improvements are achievable if you commit to the process. If bid prices continue to rise, more marketers will be increasingly be forced into making that commitment.
Search Ads Beyond Google & Overture - Live from SES San Jose
--------------------------------------------------------------------------------
Chris Sherman starts off by saying that there is life outside of Google and Overture. He says that this panel will focus on the opportunities outside of Google and Overture
Peter Hershberg from RepriseMedia was up first, he is here to talk about the other types of engines. Paid listings distribution across the Web is covered by Google (53%) and Overture (45%). So the other 2% is about 2 million searches and the prices on Google and Overture keep climbing. The inventory of search ads is shrinking. So we have Tier II Search (FindWhat, Enhance, LookSmart, Kanoodle, Search 123) and Verticals (Business.com, Industry Crains, TravelZooo, Gamblling.com) and the Shopping Engines (Shopping.com, bizrate and pricegrabber).
The value of working with the alternative PPC engines are:
- More volume
- Lower minimum CPCs (as low as a penny) a good way to test
- Less competition
posted by Jen @ 11:55 AM
<< Home