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PPC - How is this possible???

by cup243
14 replies
  • SEO
    • |
Hi, could somebody tell me how is it possible that some people can pay $2 per click in Google Adwords??? Only to equal that you would have to have a conversion rate of 5% and $100 sale price. I know with some keywords like bad credit and such it may be achievable, but with keywords like 'keyword research tool'??? Thanks.
#ppc
  • Profile picture of the author cup243
    Apart of buyers who will make a second purchase later on...
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  • Profile picture of the author smileverse
    It depends on the marketing plan, budgets of the advertiser. Not all advertisers having the benefit, even though they have offered a high pay per click. However, it actually a marketing strategy or a deep plan to move forward with the profits. And i have tried a lot to find such high paying keywords but finally found some keywords related to eCommerce which pays me more.
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  • Profile picture of the author Lucid
    It's supply and demand. It's the cost of acquiring a customer. This is different in different industries.

    For example, lawyers pay big bucks to attract new clients. They advertise on radio and TV. How much do you think they pay per client with these methods? In this case, a few dollars per click is nothing and it's more targeted. I know, I have a couple of clients who are lawyers and they pay $5 and up without blinking an eye. Why? Because it's profitable for them. Same for a couple other clients paying $1 to $3 per click. It's not the CPC that's important, it's the revenues generated from those clicks. As long as the returns are good, they'll pay whatever it takes to get those customers. Because their competitors are doing the same.
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    • Profile picture of the author cup243
      Originally Posted by Lucid View Post

      It's supply and demand. It's the cost of acquiring a customer. This is different in different industries.

      For example, lawyers pay big bucks to attract new clients. They advertise on radio and TV. How much do you think they pay per client with these methods? In this case, a few dollars per click is nothing and it's more targeted. I know, I have a couple of clients who are lawyers and they pay $5 and up without blinking an eye. Why? Because it's profitable for them. Same for a couple other clients paying $1 to $3 per click. It's not the CPC that's important, it's the revenues generated from those clicks. As long as the returns are good, they'll pay whatever it takes to get those customers. Because their competitors are doing the same.
      That's right, it depends on the industry - keywords.

      But with "keyword research tool" ??? Just to equal the $2 they pay for click, they have to get a conversion rate of 5% and $100 sale price.

      I just wonder if there's something I'm missing, that I can learn from, my goal is simply to be as profitable or more than these people paying so much CPC.
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      • Profile picture of the author ukcarl
        Originally Posted by cup243 View Post

        That's right, it depends on the industry - keywords.

        But with "keyword research tool" ??? Just to equal the $2 they pay for click, they have to get a conversion rate of 5% and $100 sale price.

        I just wonder if there's something I'm missing, that I can learn from, my goal is simply to be as profitable or more than these people paying so much CPC.
        The fact is if you are bidding on keywords, you aren't just bidding on 1 you are bidding on hundreds or thousands of terms some will cost more than others.

        Its a case of testing and finding which ones give you a positive ROI, the term "keyword research tool" may be where the volume is but there is still loads of volume in the longtail which will inevitably be much cheaper for the average cpc.

        The fact is people are making money but be prepared to spend some money to test in competitive markets
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  • Profile picture of the author Cyber Rankings
    It depends on the offer, if it's a monthly thing you may find that the average users stays subscribed for 8 months with a monthly fee of ($50) meaning each customer is actually worth $400 to the business.

    That's just a random example but shows how sometimes it's easily worth $2 a click
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  • Profile picture of the author Rafay Zafar
    The ones paying high cpc are proper/big businesses with great products and services, an optimized sales funnel and an array of back-end products. In most competitive industries, advertisers are either breaking even or making a loss upfront through ppc. However, since their customer retention rate and average customer lifetime value is high, they can pay good money for a click because once the customer enters their sales funnel they will be milked for a long time to come. In short these advertisers are not affiliates and are looking for long term profits NOT for a quick sale.

    dont believe me? try this
    1) enter the query 'sell structured settlements' into google.com (US search results)
    2) click on Peach tree financial's ad. the actual cpc for this keyword is $50+ for the top 3 spots. I have done adwords in this market.
    3) check out the sexy landing page. Notice the banner just above the form. They are offering a $50 gift card if you have proper documentation.

    For softwares and other digital products, there are little to no overheads so you the margins are very high making it possible for software companies to bid high on relevant keywords.
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    • Profile picture of the author Lucid
      Originally Posted by Bad___Boy View Post

      try this
      1) enter the query 'sell structured settlements' into google.com (US search results)
      Telling people to do a search for something and telling them to click on an ad is unconscionable. Especially when you know that those doing so have no intention of buying the product and costing that advertiser potentially hundreds of dollars just by this one post.

      I urge everyone not to do this.

      As for "keyword research tool", or any other keyword for that matter, the competition has determined that's the market rate for it. The market has deemed it's worth it. Now, that doesn't mean they all pay $2. Only that you would have to pay $2 given your QS. Those with QS of 10 probably pay more in the neighborhood of $1.
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      • Profile picture of the author xiro25
        The people who are paying 5 dollars per click Either:

        a. Big business with so much money they really dont know what is going on.

        b. A really smart person or business that has really high conversions or has a really deep sales funnel.

        Think about it. I pay 5 dollars a click and if I get that person to sign up to my list that person now has a much higher value overall to me than just a once offer deal. I can now market to that person over and over.
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  • Profile picture of the author thepresence
    Cup,

    I don't think that you are missing anything necessarily. It is quite a lot of money to pay. However, most of these people, as mentioned above, are paying for customer acquisition over the long haul.

    For example, I have noticed one prominent SEO company advertising everywhere lately? The term "SEO" on adwords costs about $10 per click. So, they are paying quite a bundle to get a customer because they get them over the long haul and in the end the customer is paying them $99/month.

    Clearly, they have deemed it worth it but it takes some deep pocket initial investment though!
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  • Profile picture of the author nicktyler
    You think $2 is alot?

    http://www.wordstream.com/articles/m...nsive-keywords
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  • Profile picture of the author mosthost
    It's called 'recurring revenue' in many cases.
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  • Profile picture of the author Aussie_Al
    I would also point out that while Google may quote you $10, $2, whatever per click - if you have a high quality score and a great click through rate you can get those same clicks for significantly less: 20% or 30% on what the standard CPC is.
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  • Profile picture of the author kindsvater
    It's all a matter of math and whether the ultimate revenue exceeds to ppc costs.

    .
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