Pay Per Click for Targeted Results
Jerry Kenefake, Founder and President, Mypromostore.com
When I made the decision six years ago to move my business from what had
been primarily a regional company to a model almost exclusively focused on
online merchandising and sales, I knew I needed a new marketing strategy to
support that change.
Mypromostore.com is a one-stop
shop for almost any promotional product you can imagine. Because many of the
items we sell are commodity-like—the sale of which is strictly price driven, it
becomes difficult to truly grow our business on sales of those items. A high
level of personal attention and value-added services have set us apart from
most of our competitors and helped us win in price wars. However, our real goal
has been finding a way to leverage the enormous customer base available through
the Internet—identifying niche customers within that vast universe who are
seeking our higher-margin products, driving them to our site, and converting
them into sales.
Enter the world of sponsored links and pay per click advertising.
In our realm of products, if we can't advertise it, we can't sell it. Pay
per click advertising is proving to be a very effective way to spend our
advertising dollars to reach our niche. Internet sales are up 325 percent this
year, and our average order size has doubled.
Most of our target customers are small- to- medium-size companies with some
amount of marketing budget (either formalized or not). They are not as
concerned with price as they are with such issues as delivery times and the
quality and appearance of products. Many don't want sales calls at their
office. If they need something for a trade show twice a year, they want to
handle it online and with a phone call—not with a pesky salesperson banging on
the door. For us, spending advertising dollars on sponsored links is a much
more appealing way to reach our cutomers. And, it's much more effective than
"dialing for dollars" or trying to get an appointment with the decision
The other tough part is we don't really know whom to target. We can reach
out to a marketing person, but it may be the vice president of sales, the
presiden'ts assistant, or the spouse purchasing the items. It varies a great
deal from case to case. Pay per click works especially well because it helps us
identify the customer—regardless of job title—who will buy our higher-margin
products, such as computer bags, leather portfolios, etc. But there has to be
enough margin in the sale for pay per click to make sense; you can easily eat
up all of your profit in the cost of getting the customer to your site.
The cost of a new customer for us varies according to product category. But
there is a rough formula we use to determine how much money we can or should
spend on advertising to get the customer. For example, on a $10 item with 40
percent gross margin, we immediately know that we don't want to spend $4 to
advertise that item. As a general rule, we want to spend no more than 10
percent (or one dollar on a $10 item) for advertising.
With sponsored links, we have 6,000 key phrases for which we advertise, and
all are bid independently. With the available tracking software, on a
keyword-by-keyword basis, we can know who came into the site; of those who came
in via a certain keyword, such as "imprinted coffee mugs," how many
pages on the site they visited; which visits are turning into phone calls,
e-mails, and orders; or who just browsed. As such, our online advertising has
turned into a great lead-generation tool. Every day our customer list grows as
people contact us for product information. If we can get someone in our niche
category to contact us personally—by phone, e-mail, or sample requests—we know
that we can convert 25 percent of those inquiries into sales.
Conversely, if we're advertising for a key phrase but not getting people to
our site through that phrase, or getting them to the site but not converting
them to a sale, we can track that too. Over time, the cream rises to the top
and you can analyze and adjust dollars accordingly to areas yielding the
greatest results. And, you can determine why a particular area is not doing
well. Is the price out of kilter? Are the graphics inferior? Typically, you can
zero in on the problem, determine what's wrong, and cut spending on
low-producing phrases. You also can look at average sales for a product
category in relation to advertising dollars spent to see what's worked better,
perhaps adding more of a particular product or different types of similar
For the best results, we've also discovered the importance of making our pay
per click advertising as accurate as possible to attract the customers we want.
We may only have one chance to impress a potential customer enough to make a
purchase. We try to keep our site attractive and user friendly, our products
current, and the prices right. For every dollar of revenue we get through pay
per click, we've determined that we'll get anohter fifty cents the following
year—half as much again through repeat business that we don't have to pay for.
That's how the business is really going to grow.
© 2006 Ewing Marion Kauffman Foundation. All right
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