Measuring Online Advertising Return on Investment
Online advertising can help your business generate extra sales enquiries from potential customers. Yet it be hugely expensive. So consider the online advertising options available, how they work, the critical success factors, and the potential drawbacks....
How to Squeeze Every Penny Out of Your Advertising Budget
By far the most common type of online advertising is pay per click advertising. There are also many other forms of online advertising, including pay per lead, traditional banner advertising, paid directories, classified web advertising, web links, video advertising and many more. For small firms with limited marketing budgets, the challenge is knowing which type of advertising will produce the highest return on investment. However, advertising and promoting products and services online can become hugely expensive, because many webmasters simply don't understand the options and pitfalls. Consequently, many business owners have 'dabbled in pay per click' advertising, and got no sales leads in return. Perhaps you have already paid to advertise in a 'business directory' and got very little interest?
How Does Pay Per Click Advertising Work?
Pay per click advertising it's a form of online advertising, which allows you to bid on any key phrase that users type into major search engines. Your advert usually appears in the 'sponsored results', (and only appears if the user has typed in the search term you have actually bid on). You only ever pay when someone clicks on one of your adverts. Once they click on your advert, they will be redirected to your own company website. There is an unlimited range of key phrases to choose from. Advertisers will only be interested in bidding on key phrases that match up to their product or service offering. Every key phrase has a market value, which is dictated by its popularity. The top position has the highest bid, the second place the next highest bid, and so on.
As a general rule 80% of users only bother to bother with the first three sponsored listings results. This means the 'cost per click' rises exponentially in the top three positions. Auctions for key phrases are in real time and never stop. Over time, the market value for each key phrase stabilises at a certain cost per click, based on competing advertiser's collective commitment to spend money on a search phrase.
Such is the dominance of semantic advertising, that traditional forms of online advertising, (such as paid inclusion and banner advertising), are rapidly dwindling away. There is clearly still a role for paid inclusion across 'authority' websites. Adverts posted on quality, related websites are likely to convince your target audience to click through to your own business website. However, the ability to track and profile a user by their search history, then semantically match and display an advertisement, is incredibly powerful. Thanks to semantic advertising, web users search patterns have now become the most influential factor to a web advertiser.
Critical Success Factors
If you knew that for every £1 you spent on pay per click advertising, you would be guaranteed to get £2 back in sales, you would just keep throwing money at the campaign. Of course, the reality never works in this way. Despite having tracking tools, (which compute 'average cost of clicks' and 'number of click throughs), many business owners fail to see any return on investment. They get fed up, and convince themselves it could never work for them. So why is it working today for millions of other commercial organisations?... The critical success factors are as follows:-
Hiring an Online Advertising Agency
It is possible to outsource complexities of online advertising to a third party. If you are considering employing the services of an online advertising agency, qualify their sales claims and credentials carefully. Internet marketing is largely an unregulated discipline, in which anybody can position themselves up as an 'expert'. Check for any professional qualifications of their employees and ask for references from satisfied customers. Don't just take their word for it. Actually speak on the phone to their existing customers, whom are willing to share their experiences.
Remember that online advertising media consists of a variety of different techniques, channels and price ranges. Your agency should have the common sense to apply the appropriate advertising channel to your business. For instance, if you can only sell your products or services locally, it would be a poor use of your money by paying to let your pay per click advert to appear outside your geographic catchments. It is possible to be highly selective and targeted towards specific postcodes and towns. This will save vast sums of an advertising budget from unnecessary clicks.