Many of you have asked us why our program doesn’t emphasize pay-per-click advertising. Since the question is both very good, and very popular, I’d like to take a moment to explain some things that many people are not aware of.

It’s clear that small business owners all over the country are astute and familiar with the latest trend in advertising, but they need a little insider information to help clear up this confusion. As someone who spent more than 3 years working for a venture capital backed company that focused on selling PPC campaign management solutions, I feel it’s my duty to spill the beans on the failings of the model.

Background – How does PPC Work?:

PPC advertising, in short, allows businesses to bid on key words and phrases that people might enter into a search engine. Though the rules are complicated, in its simplest form, the more you bid, the higher your ad places. You are billed by the search engine for every time someone clicks on your ad.

The Benefits of the PPC Model:

The best part of PPC advertising is that you’ll see instant gains in the number of visitors to your site. You can turn it on and off at will, and you can target specific things like competitor names and products.

What’s the Catch?:

The major failing in this model can be traced to one root cause. There is no price break given to resellers. Despite the fact that nearly every other industry on the planet offers resellers a discounted price, Google, Yahoo! and the others simply do not. The PPC service providers have to earn a profit to stay in business, and usually this means higher costs passed on to the advertisers. Since many PPC service providers mark up the cost of the clicks as part of the service, it means you pay more for the clicks they generate than you’d pay if you set it up yourself. For example, the company I mentioned before would add a 50% mark-up on the cost of the clicks generated, so a $1.00 click becomes $1.50, taking a much bigger bite out of your wallet, without adding value.

Making this problem worse still are two remaining factors. Part of the complex raking algorithms includes evaluating the topical relevance of the site that the ad is sending customers to. Most of the providers, including the aforementioned company use single-page landing sites to receive the customers sent from the ad. Since these are only a single page, the relevancy scores are typically lower, so the search engines make you pay more for each click. After all this, you have to battle with the fact that a landing page has lower conversion rates than well-designed websites. So in short, you pay a premium price, on top of a marked-up price, only to get fewer customers.

It is also very important to realize that the goals of the PPC provider are not necessarily the goals of the advertiser. The advertiser is looking for more customers, but the PPC provider doesn’t typically get paid on the volume of customers sent, but rather on the volume of visitors sent. The metrics typically used to measure success of a PPC campaign are things like Click-Through-Rate (CTR) which measures the ratio of impressions (number of times the ad is shown) to clicks (number of times the ad was clicked). That has very little to do with the rate at which those clicks turn into customers, and that’s where the real problem starts to occur because the business owner doesn’t need visitors, they need customers.

So PPC advertising is bad?:

Actually, NO! It can be a very, very valuable tool, if done properly, and in conjunction with other efforts. There is a big difference between using PPC to supplement your online advertising, and making it your only source. The Prospect Genius approach is different in 4 major ways:

• Our microsites are highly relevant, so your clicks are cheaper.
• We do NOT mark up the clicks.
• The PPC campaign is strictly supplemental to the standard offering
• We provide ROI tracking

We find great value in using the PPC strategy to target competitor names and brands, and other items that are very difficult to meaningfully work into your microsite, but the real value is in the ability to tell how many customers are coming out of the program because that’s what really matters!

Conclusion:

I am sure by now you’re eyes have glazed over, so I’ll leave you with a final summary. PPC, when done carefully and as part of a greater online advertising campaign is a valuable tool. However, you can lose your shirt if you aren’t careful.

We love your questions, and are here to help. If you want answers to anything that’s even vaguely related to our service, feel free to post to this blog, or email us at info@ and we’ll be happy to help.