In 2013, Google made 58.8 billion dollars on advertising. It is safe to say that Google is taking over the world, and you are paying for it. The PPC model is at the heart of this subtle take over. Keyword bids continue to rise as their demand increases. Take for example the word “insurance”. The average bid for the keyword “insurance” is up to 55 dollars per click. To me that is absolute madness. How does the average business owner expect to see great returns on such a hefty investment?
Avoid the Great Bidding War
Imagine if you had gotten into AdWords in the early part of the millennium (AdWords was introduced in 2000, self service accounts became available a couple years later). AdWords was a new platform. Bids were low and therefore the opportunity to maximize your return was high. If you look in the right place you can find that this opportunity has re-presented itself to us. In 2006 Google bought YouTube, and just over two years ago they added TrueView (YouTube) Advertising to the AdWords family. Much like where PPC was 10 years ago, opportunity is ripe in TrueView. The same bid for the keyword “insurance” would cost you no more than 10 cents on TrueView. Compared to 55 dollars on PPC ads, that ain’t half bad. For you PPC buffs thinking you can jump right into this and find success, you need to slow your roll a little bit. While TrueView is managed in the Adwords platform it is a whole different ball game. You have to put in the offseason work before you get into a regular season game. The main reason for the difference in strategies is linked back to the difference in models: PPC (pay per click) vs. PPV (pay per view).
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PPC vs PPV
Situation 1: PPC
Let’s take a look at what your cost per click will look like in a Pay Per View model. If we look at a phrase like “Real Estate Investing,” we find that keywords can be pricey. That specific keyword is around 8 bucks per click. The average cost per click for related keywords is above $20. That’s absurd. If you had a 1% conversion rate, which is actually pretty good, that means for every 100 clicks you get 1 conversion. Based on a 20 dollar CPC you would be paying $2,000 big ones to acquire a customer.
Situation 2: PPV
Now let’s look at this from the the PPV point of view. This information comes from one of our clients. If you look at their campaign, the total cost was $95.10. From that cost they had 83 clicks. That is a cost per click of $1.21. Comparing this to situation 1, if you get a 1% conversion rate it would take $121 to acquire a customer. If you gave me the choice between spending $121 or $2,000, guess which one I would choose?
In a pay per view model you are paying to steal someones attention. Think about it, these people are not searching for your product with an intent to buy something. They are on YouTube to watch their video. You can use the perfect keyword or the perfect placement to put your ad in front of the perfect person (someone who should be your future customer), but if your ad sucks they are just going to skip your ad and move on to their video. They will not click your ad, they will not go to your website, and they will not become your customer.
What Does it All Mean?
There are two morals to the story. The first, I believe, can be described in the words of Mr. Robert Goulet (or Will Ferrell on SNL), “You wouldn’t hire a clown to fix the John.” In other words do not believe for a second that just because you know PPC that you can do PPV. Second, while PPC is great, it does not offer the opportunity that is currently available with TrueView. I don’t know about you, but I like lower costs, free traffic, and the possibility of higher returns.
Just Because You Know PPC Doesn't Mean You Know PPV
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