How To Invest In PPC Marketing Without Losing Your Shirt

If I told you to invest $1,000 in Google PPC right now to promote your business, you would tell me I was an idiot.

And quite right too. I haven’t given you a single good reason to invest your hard earned cash.

So here’s a question: is whatever you are selling worth buying? (this is a great question to ask yourself from time to time)

What’s your margin (the difference between what it cost to buy and what you sell it for less any tax)?

The amount you come up with is your maximum marketing budget.

Time Is Not Money

If you invest that money in marketing and you sell at least one item you won’t lose money.

(yes, you will lose time plus any business overhead – but you will also have gained a new customer and retained your shirt!)

The alternative is to spend nothing on marketing, in which case you are unlikely to sell anything at all.

All unsuccessful business owners fit into this camp.

They don’t value marketing.

So how do you convince yourself that marketing is a good thing?

There are three ways to pay for marketing:

  1. Time (your time)
  2. Time + Money (your time plus your money)
  3. Money (your money only)

Almost all small business owners I talk to (unsurprisingly) go for the first option.

And they mostly stay broke.

A few opt for option 2 and become successful (or broke).

This involves thinking about your market, then paying money to broadcast your message.

The foolhardy go for option 3 – which is to outsource everything (don’t do it unless you are happy to entrust your money to a stranger).

So you can either choose option 1 where you are most likely to stay broke or give yourself a chance of success with option 2.

 But Free Traffic Does Still Work Doesn’t It?

Yes, it’s true that someone with social marketing skills and great content creation can build a strong presence (and I would highly recommend that route to compliment the paid route), but it is getting increasingly tougher to show up in search engine results because Google are starting to squeeze the area where free listings are displayed.

In fact, if you are showing up for a ‘buyer intent’ search phrase, then 40% of the results on page 1 are now devoted to paid ads.

Take a look at the history of how page 1 went from 100% free to 40% paid.

  1. Google launches in 1998 and every page is ad free (hooray! – they win market share very quickly)
  2. Google add paid ads to the side bar of search results and make them obvious by giving them a different coloured background (the public accepts this and Google remain the dominant player)
  3. Google add paid ads to the top of search (pushing down the top 3 free slots to positions 4, 5 and 6)
  4. Google introduce the ‘carousel’ display ads and the organic (free) listings drop even further down the page (they are now below the ‘fold’ on smaller screens)
  5. Google remove the coloured background to the ads in the sidebar and replace it with a tiny ‘Ad’ flag

The writing is on the wall. The search engines need to keep their investors happy, so the trend is likely to erode free listing results further.

 

But Paid Traffic Costs A Fortune

You can pay less than a penny a click or over $100. It all depends on the popularity and buyer intent of the keywords you are targeting.

And that comes down to how much time you are prepared to research your market.

Or more precisely, understanding the mindset of your audience when they are thinking about the possibility of making a purchase.

It all comes down to the buying decision journey.

There’s A Big Problem

And that almost always starts off with some kind of problem.

Even luxuries often start this way.

Take a holiday for example.

The reason someone goes in search of a holiday can start with the ‘problem’ of where to go during their annual leave.

Or what to do as the year runs out and they still have a number of days leave to take which they would otherwise lose.

Once that process has started. It follows that they have a choice of staying at home or going away.

And this is precisely where you can get in cheaply.

What’s the thought process going through your prospective buyer’s head?

Put yourself in the position of that ideal customer and imagine what they would be thinking (and what they are going to do about it).

I know it’s basic marketing 101, but this type of thinking is still way beyond what most businesses are currently doing.

And that is, target pre-buyer intent keywords.

And then do something even more remarkable – don’t try to sell them anything.

What You May Not Realise About PPC And List Building Costs

Let’s take this a little further.

First you need to find out your average customer yearly value.

This will tell you how much you can afford to invest in marketing to that customer.

This system relies on your ability to collect their details and re-market to them again and again.

So the first job of your PPC campaign is to collect their name and email – or even just email if you want to maximise engagement.

(in fact there are even better ways of doing this, which I will cover in another instalment)

Because we are targeting less popular keywords, our advertising costs will come right down.

And we will be building a list of prospects that we can market to again and again – without needing to pay for them again and again.

Here’s an example. Month one investment of $100. Selling a recurring item to 10 prospects for $3 a month.

Return on investment is therefore $30 (i.e. a loss of $70 on our investment).

This is the point where most people give up because they are losing money.

Month 2 sees another investment of $100. The return is double (because you resell to the first group of prospects) $60.

By the time you get to month 4 your monthly return is $120, yet you are still only spending $100.

By month 12 your return will be $360 a month for a $100 spend.

Obviously this implies a 100% customer retention rate, but you get the point.

PPC advertising works when done with a good strategy, plenty of testing and a little forecasting.

Get it right and you can scale it up as big as you want.

That is what successful businesses do.

And once you start you soon realise there is more to online success than Google.

Meanwhile you may want to take a look at some PPC campaigns I am testing on Facebook.

Quentin Pain

Quentin Pain is an author, speaker, and writer on entrepreneurship, business start ups and growth. He is a 'Dummies' series author and founder of a number of books on business and marketing.