the cost per acquisition (CPA). So, for example, if it costs you $2 per click to reach a number one slot
in search results and your budget is for $100 per month, then you can only afford about 50 clicks per
month (volume). These 50 clicks per month don’t equate to a great volume, therefore, you might
consider a slightly lower ranking in the SERPs that will generate more volume within the budget that
you have to spend.
On the other hand, there is an exponential decrease in the number of clicks that you’ll receive as
you decrease your ranking position. In general, there is about a 20 percent difference between the
first and second ranking slots on a SERP. Each ranking slot below that increases the difference, so
some experts estimate that being ranked first on a SERP might produce at least 10 times the traffic
generated by a tenth-ranked site.
Using this information and your budget availability, you can decide whether it’s cost effective to stay
in a lower position, or if bidding for a higher spot would net greater click potential. Here’s the bigger
question, however. Ranking higher will result in much more traffic, but does the additional traffic
result in more goal conversions? If not, then spending the extra money to reach the top ranking slot
is probably a waste of money.
Carrying over our preceding example, if you’re paying $2 per click for a top ranking that generates
50 clicks per month, but only 1 percent of those visitors make a purchase from your site, you don’t
have a good conversion rate. But if you were to change your keywords a bit to make them more
specific and then reduce your cost per click to $1 for a slightly lower rank (let’s say a number three
ranking slot) that generates 100 clicks per month, and those 100 clicks also resulted in a 1 percent
conversion, you’re still reaching more conversion goals, and therefore making more money with the
lower rank than you would be with the higher rank.
So how exactly do you forecast search volumes and the cost associated with those volumes?
It’s best to start by researching a keyword list that includes 100 to 300 keywords and phrases. Use a
varied keyword list that includes both broad and specific terms. And during your research, use both
personal investigation and keyword selection tools to determine the click volume and the cost per
click for each of those terms. Using this information, you can then estimate search volumes and the
cost of those search volumes, but additionally you can estimate other performance metrics that will
help you to determine both the cost and the value of the keywords that you’ve selected. Those additional
metrics include:
- Projected Impressions
- Estimated Click-Through Rate (CTR)
- Estimated Clicks per Month
- Average Cost per Click (CPC)
- Estimated Budget Requirements
Using this information, you can increase the effectiveness of the budget that you invest in your PPC
program. For instance, keywords with lower CPC rates typically have less competition than more
expensive ones. If you can select some of these keywords that are more efficient for creating goal
conversions, then you’ve invested less in your PPC program for better results.
One thing that’s important to understand, as you’re estimating your search volumes and the budget
that you’ll invest into your PPC program, is that all of these projections are based on historical data.
This means that you should collect data about your keywords and use it to improve your PPC program
effectiveness over time. Additionally, you should know that there are many other factors —
seasonal changes, sales, competition, and even landing pages — that can affect your actual performance
results. This is just another reason you should plan to constantly monitor and revise your keywords
and phrases and your PPC marketing efforts.
Forecasting search volumes and budget considerations is just the first step toward creating a PPC
program that both meets your needs and fits within your budget. In addition to initial forecasting,
you will also need to conduct ongoing keyword testing.
Keyword testing is the process by which you examine keywords and how many searches they’re
included in, as well as what the competition for those keywords is. Once you’ve completed that
research, you begin to implement your keywords on your site very slowly, monitoring the results
of your site traffic and goal conversions after each new word or set of words is added.
It’s a time-consuming activity, but keyword testing has the potential to improve your PPC program
results if you take the time do it properly. Through careful testing, you can learn what your most
effective keywords are; then you can use those keywords to improve your position and impressions.
One way to start the testing process is by understanding exactly what you are testing for. Are you
testing to see how effective your most recent ad copy is? How do landing pages hold up in attracting
and keeping site visitors? If those landing pages are experiencing a lot of bounces, you may need
to work with them to create more stickiness. Other questions you may want to answer to ensure
you understand what you’re testing for include: Are visitors reaching goal conversions? Does ad
placement really make a difference?
As you’re considering keyword testing, you may decide that you just don’t have time to efficiently
forecast your PPC traffic. However, not taking the time to do the testing could result in wasted
budget dollars. People add keywords to their pages, but that doesn’t mean that all keywords and
PPC programs will be effective. It’s necessary to go through the proper testing steps to ensure that
your PPC program is as efficient and effective as possible.
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