So for the last 5 weeks, we’ve been talking all about the great benefits of pay-per-click advertising.  We’ve covered things like the fact that PPC doesn’t require any contracts, you can spend as much or as little as you want, and it’s highly targeted.  Of course, you can’t overlook the fact that you only pay if it works.  While it’s pretty clear that PPC is a great way to drive traffic to your site, there are drawbacks.   This week, we’ll start with the first of 3 problems with pay-per-click.

PPC Drawback #1: The costs have gone up over the years.  I remember when Google first introduced pay-per-click.  It was only a nickel a click.  Oh, remember the good old days?   These days, I find it difficult to even make a profit because PPC tends to be so expensive.  In order to know if PPC is right for you, you have to first know how much margin you have on your products.  Let’s say you sell a product for $100.  You buy it from China for $50 after all of your costs.  You have a $50 margin to work with.   Basically, if you’re spending more than $50 on advertising to sell one unit, you’re losing money.  When the costs were only $.05, you could drive hundreds of people to your site and still have sufficient profits left.  Today, if you’re paying a dollar a click, you might spend $100 to sell your $100 product.  Obviously, you can’t keep that up for very long.  You have to either tweak your website so that it gets higher conversion rates or you have to minimize your PPC costs.  There are many ways to do this.  In a few weeks, our Wednesday series will turn to all of the ways that you can increase your site’s conversion rates.  For information on how to decrease your PPC costs, please see our earlier series on PPC campaign optimization.  Until next week…

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