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Why your conversion rate determines the success of your PPC campaign
2010-02-18: Ouch, in setting up a Pay Per Click (PPC) campaign for a client, I noticed quite a few reasons why someone wouldn't buy from their website .. conversion issues. So I've advised holding the ad campaign rollout until these issues are fixed.
Here's the big picture. In Google's Adwords PPC system, you suggest what you are willing to pay every time someone clicks through to your website from your ad. You write the ad, obviously, and you tie that ad and price to one or more keyphrases.
Your position on the page, actually whether you get displayed at all, is determined partly by whether you've bid high enough compared to your competitors. The other side of that formula is ad quality, but let me deal with that another time.
Therefore, the ad bid price for that ad at that time for that keyword is set by the market. It's basically set as high as the market can stand.
Let's just work that through. If you sell a product worth £100 which you buy for £50, you've £50 maximum to spend on servicing a client. If your bids are £1 you'd better sell one for every 50 clicks. Your conversion rate would have to be 2%.
What if your competitor has a better website and their conversion rate is 4%? Every time they spend £50 they get two sales, so actually they can bid £2 per click and support a higher position for their ad than you.
Remember, their conversion is better than yours, so customers think their site is better than yours.
So their ad is higher than yours, and their site is better than yours according to customers. Why would anyone ever buy from you?
The secret of a great PPC campaign isn't the PPC campaign, it's conversion. Because if you can get your conversion to be 5% you can beat your competitor with higher bids, make their campaign unprofitable and take their business.
One way to work out what's stopping people buying from your site is to do a quick usability study. Having a handful of users pretend to buy from your site will highlight 90% of your problems quickly and easily. Another way to do it is to ask for a critique from maybe three web professionals.
Out of interest, I love doing usability studies and have probably 100 testers ready to be selected by age, gender, work, interests and so on to check out your site. Get in touch if that's of interest.

By John Allsopp
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