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The Ups and Downs of Pay Per Click Advertising

by 123WebConnect

Pay Per Click AdvertisingPay Per Click advertising has proven to be an effective way for many marketers to drive targeted traffic to their web sites. However, there’s long-term risk in becoming too reliant on Pay Per Click for traffic. The problem is that because PPC programs like Google’s AdWords act as a real-time auction, it is possible for the cost per click (CPC) to rise unexpectedly.

Let’s look at a concrete example of this. Say you’re buying clicks for “wedding caterers San Francisco” and you’re paying about $2.50 a click. You’ve analyzed the data and have determined that at this price, the clicks are worth it because the value of the leads generated from these clicks exceeds the cost. Now, things are going along just fine and then one morning, you find that your CPC has risen to over $3.00, a 20 percent increase. This can happen for a variety of reasons, but the most common is that there is suddenly new competition that is interested in that same word, and they’re willing to pay more.

Even if you’re a Pay Per Click expert, there’s little you can do to prevent others bidding up the price. You are vulnerable because the price changes constantly based on competition. Your prices can spike and do so very quickly. Contrast this to how SEO works. If you make an investment in ranking for your top keywords in the organic listings, it is much less likely that a new market entrant that doesn’t understand the business is going to be able to displace you quickly and take away the traffic you are getting. Organic listings are usually not achieved by new entrants that are just getting started. Even throwing money at it (as they can do in PPC) doesn’t work very well. And, even if this new competitor does ultimately beat you in the organic rankings, it will likely happen over time. You can watch the rankings for your top keywords and see if competitors are gaining ground.

So, our advice is to appropriately balance your investment in Pay Per Click and Search Engine Optimization. In the early days of building Web traffic, it might be necessary to buy traffic. Or, you might be running a short campaign to collect valuable data about which keywords work. However, over time, you should work towards establishing your organic rankings. This investment has a better rate of return in the long-term and is much more defensible.