RANT: Pay Per Click Doesn’t Work (for everyone)
There was a time when Google PPC worked for everyone! It was brilliant, you’d pay less than 50p per click and you were guaranteed to get new clients and customers. How times have changed…
Just the other day a business owner told me “I tried PPC, it didn’t work for me, waste of money!”.
As the industry has grown, PPC has become very competitive. You’ll have hundreds of businesses bidding for clicks, increasing the cost-per-click and decreasing your chances of getting noticed. You’ll be lucky to get less that £50 per click in some industries.
I always thought that PPC works in almost all industries and on any budgets. I thought that the failure lies with the business or the person running it. The failure could be as a result of:
- No clear goals
- Over ambitious goals
- Not defining measurable KPIs
- Executing campaigns incorrectly
But I’ve now decided that PPC isn’t for everyone.
If you talk to a ‘PPC Expert’ they will tell you “PPC will work for you, 100% guaranteed ROI, you just need to pay me ££££ to set you up and manage the account”. But don’t buy their Snake Oil just yet, there are a large number of factors you need to consider before investing in a PPC campaign:
- do you have the budget to compete?
- is there enough relevant search volume for what your selling?
- will you ever get good ROI?
The first two points a simple, but the third point (ROI) is more controversial.
Lets do some PPC Math
PPC success is basically just math. PPC stops working when the costs to acquire a customer using PPC is greater than the income generated by a customer over their lifetime (PPC Cost > Profits).
This is especially true in commoditised industries, if you’re selling something that is (or like) a commodity, PPC won’t be very profitable. Other businesses selling the same product/service will bid up and increase the cost per click to the point where there are almost no profit margins.
You’ll find that many competitive industries do not initially profit from PPC, they may even suffer a loss. These bigger businesses rely on other tactics to make PPC profitable, they may count on the customers lifetime value with focus on retention and customer loyalty.
So how can you compete with companies willing to take a loss on PPC, just to increase brand awareness and bank on customer retention??? Not everyone can! I see new competitors popping up against my PPC campaigns all the time, they don’t usually last long because they don’t factor in the long game, they just give up after a month or two.
How to PPC effectively in a competitive market
This rant has turned into a significant article now… so I might as well end with a few tips. For most businesses PPC is EASY! Not everyone need a big budget with a PPC manager and complex strategy, some businesses just need a simple campaign set up and away they go. But if you’re in a competitive industry where PPC profit margins are tight, here’s a few tips:
- consider the long game, not just the 1st sale (customers lifetime value)
- externally increase your profit margins (allowing you to increase your CPC)
- get a better converting sales funnel to reduce your CPA
- optimise your PPC campaigns
- accept low profit margins for increased brand awareness
If CPC and conversion and value creation are aligned, it will be profitable. If they are not, you need to optimise your PPC campaigns and get more value out of your clicks.
I hope that made sense. Any questions?
