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Home > FREE Marketing Tips > Performance Marketing

How To Generate Profitable Traffic And Sales
With Pay-For-Performance Internet Marketing

One of the smartest and safest marketing strategies that any business owner can utilize is the strategy of only paying for performance. Pay for performance marketing means your marketing dollars are spent only on results: additional sales and profits.

For example, paying for performance might mean paying a commission to a salesperson when each new sale is made. By only paying for positive performance, you are guaranteed to profit because you have already calculated how much you can afford to spend for each new sale. In addition, you minimize wasting any marketing dollars because every cent you spend has either given you a sale, or will give you a sale in the future.

One of the most effective online strategies for generating sales is by attracting targeted traffic to your Website and converting them to sales with "Pay-Per-Click" (PPC)Search Engine Advertising. In fact, PPC can and should become an indispensable part of your businesses sales-generating arsenal.

An Introduction To PPCSEs

The Internet's best pay-per-click search engine is...

Google AdWords(tm)
Google AdWords

Google is the world's leading provider of Pay-Per-Click (PPC) search engine advertising on the Internet and reaches more than 80% of active Internet users.

According to the Jupiter Media Metrix "Online Advertising Effectiveness" study, advertisers receive the highest return-on-investment (ROI) from pay-for-placement search when compared to other forms of advertising. Every month over 200 million people use search engines like Google to find products to purchase on the Web.

PPC allows you to tap into the searches occurring in your industry and put your site directly in front of customers searching for what you're selling. You set your budget, set the price you are willing to pay for each sales lead, and pay only when your customers click through to your site. You are guaranteed to receive "hot prospects" because you only pay for performance – pre-qualified clicks and visitors.

ROI

Here is an example of what can be accomplished with PPC. The owner of a small, highly-profitable software firm has built his business success almost entirely with just 2 marketing tools.

  1. Having a Website where he offers a free 30-day trial version of his software.
  2. Purchasing traffic from PPC providers like Google and Yahoo!

He spends over $3.50 per click for precisely-targeted keywords and makes a high return on his investment. In fact, for every dollar he spends on keywords, he makes $5.00 to $7.00 back. This calculates out to being approximately a 500-700% return on investment. Needless to say, he makes a very nice profit from this simple, yet effective marketing strategy.

Another client wanted to "test the waters" and see if PPC advertising was really all that it was cracked up to be. We researched keywords, set up an Overture (now Yahoo!Search Marketing Solutions) account, wrote the advertisements, and waited to see what would happen after the traffic came pouring in. Our client soon reported his first month’s results: "For just $2,000, we generated 16,100 new visitors in 30 days, 28% became prospects (roughly 4,500). We converted 15.3% to sales. Great numbers!"

Strategy: How To Profit From The PPCSEs

The reason that PPC providers like Google AdWords generate such impressive results is because they allow you to pay for performance in the form of precisely targeted visitors to your Website – people who are actively looking for exactly what you are offering. So, the strategy is to drive traffic to your Website by bidding on keywords that are related to your product. The more precise the keyword, the better results you’ll have, and the less you’ll pay to acquire each new sale. Think like the person who is using a search engine to find products like yours and discover which keywords s/he will use.

For example, if you have a bicycle shop with a mail-order and Internet division that sells mountain bikes, parts, and gear, you may want to bid on the keyword "bicycle." Naturally, many people who are interested in buying a bicycle would search for the keyword "bicycle." This is one of the most cost-effective ways to build a great list of lifetime customers.

Notice when you type in the "bicycle" keyword at the Overture.com search engine you find that JensonUSA.com bought the 1st ranking. Here is their advertisement...

  1. Complete Bikes, Parts and Accessories
    JensonUSA carries the complete bikes, frames, parts and accessories you need for successful road and mountain cycling.
    www.jensonusa.com (Advertiser's Max Bid: $0.26)

At the time I wrote this article (January, 2003), this advertisement for the keyword "bicycle" cost just 26 cents per visitor – and over 340,000 people searched for the keyword "bicycle" that month.

How To Profit With PPCSEs

26 cents for a Website visitor can be either a bargain or a complete waste of your money depending on if your Website converts them into sales and lifetime customers.

Let's say you find that the conversion rate (CR) of your Website is 1%. This means that 1 out of every 100 people who come to your Website from Overture.com buy a product. Let's calculate the cost for a sale...

100 visitors X 26 cents per visitor = $26 dollars per sale

This can be an expensive price to "buy a new customer", or it can be reasonable depending on what you do with them...

If your average sale from the traffic generated from the Overture.com keyword "bicycle" is $50, you’re probably going to lose money on the deal. If your average sale from Overture.com traffic generated from this keyword is $300, with a gross profit of $60, you've made $38 on the first sale – congratulations!

Buy Precisely-Targeted Keywords

Purchasing the very popular and expensive "general" keywords such as "bicycle" or “software” can be a losing proposition because general keywords are… too general. They’re just not targeted enough. Generate targeted traffic by "casting a wide net” of laser-focused keywords that you pay only 5-20 cents for and get your visitors to RESPOND. Here are a few examples of highly niched - laser-focused (and inexpensive) keywords that this bicycle should purchase...

mountain bike

(570,965 clicks @ $0.29 each)

mountain bike gear

(253 clicks @ $0.06 each)

mountain bike part

(2243 clicks @ $0.15 each)

mountain bike accessory

(899 clicks @ $0.16 each)

mountain bike shoes

(452 clicks @ $0.20 each)

mountain bike clothing

(444 clicks @ $0.05 each)

mountain bike store

(405 clicks @ $0.18 each)

trek mountain bike

(1429 clicks @ $0.05 each)

giant mountain bike

(1303 clicks @ $0.05 each)

kona mountain bike

(1162 clicks @ $0.05 each)

cannondale mountain bike

(547 Clicks @ $0.05 each)

Here are the results of searching the keyword phrase "mountain bike gear" at Overture.com...

  1. Mountain Bike Gear at REI.com
    REI.com is the place for quality outdoor equipment and apparel. Whether you camp, hike, ski, climb, paddle or fish, REI has what you need. www.rei.com
    (Advertiser's Max Bid: $0.06)

Did you notice the cost per visitor?

Only 6 cents!

Let's calculate your cost per sale and profit if you are paying just 6 cents per click.

100 visitors X 6 cents per visitor = $6 dollars per sale

If your average sale from the traffic generated from the Overture.com keyword "bicycle" is $50, now you’ll probably going to make money on the deal. If your average sale from Overture.com traffic generated from this keyword is $300, with a gross profit of $60, you've made $54 on the first sale. If you continually “re-market” and “re-sell” products to your list of customers, you'll multiply that profit amount many times over.

The moral of this story = TARGET!

Use these general rules for successful marketing with the PPCSEs…

  1. Stay away from the general keywords that are very popular and expensive.
  2. "Cast a wide net” of laser-focused keywords that are more targeted, cost less, and offer a higher conversion rate. A "Win-Win-Win" situation.
  3. Get your visitors to RESPOND.

Get Response And Sell To Each Client For A Lifetime

One-time sales will not build a successful highly-profitable business. The critical factor with any marketing plan is that you must cultivate lifetime customers that buy from you many times. You can accomplish this with the PPCSEs by getting your visitors to respond, and then consistently marketing and selling to them. This strategy will also maximize every dollar that you spend on PPCSE keywords to further increase your profitability.

For example, your Website's "Most Wanted Response" (MWR) may be to have your visitors buy a bike, or a bike accessory. For every one person who buys, another ten "almost bought", so you should also use a "Back-Up Response" to convert the people who don't buy on the first visit. To accomplish this successfully, you need to market to them again and again until you convert them into a new client. Give them an incentive to give you permission to market to them over a period of time through e-mail or postal mail. This can be accomplished with the following "Back-Up Responses"...

  • Offer a free e-mail newsletter
  • Offer a free catalog
  • Offer a sweepstakes to win a free bike
  • Etc.

Periodically sending them seasonal and special offers, valued customer discounts, and other incentives to purchase. Build a trusted relationship with your customers and they will buy for a lifetime and refer others to you.

Conclusion

One of the smartest and safest marketing strategies that any business owner can utilize is the strategy of only paying for performance. One of the most effective online strategies for generating sales is by attracting targeted traffic to your Website and converting them to sales with the "Pay-Per-Click" Search Engines (PPCSEs).

Article by Matt Hockin, Owner of Interactive Marketing. Call 541.280.3363 for a free orientation on how to increase your sales and profitability with sales and marketing systems optimized for your small to medium-sized business.

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