30/05/2022
Once you have defined specifically the conversion you seek and determined the value of that conversion, it is time to experiment and collect data on how many clicks it takes to obtain a conversion. The search engines have already collected the data on how many hits you can expect for a particular keyword at a particular bid. This information will be available to you. Your job is to determine how many conversions you can get from those hits.
How many conversions you get from a certain number of hits is a factor of the effectiveness of your ad and your landing page. Theoretically, there is some optimum number of conversations that can be obtained from a campaign if you design both your ad and your landing page perfect. Obviously, the extreme upper limit is 100%. If every single one of your clicks results in a conversion, you would have a 100% conversion rate.
In reality, however, you will never even come close to that. There will always be someone who clicks on your ad and does not take action, if for no other reason than their computer freezes up or they lose their Internet connection right after clicking on your ad. Even without mechanical failure, it is just not human nature to take action on everything considered. Even with a theoretically perfect ad and landing page, perfectly tied to the keywords or keyphrases, there will be many visitors who take no action. There is really no way to know for certain what the theoretically optimum conversion rate is for a certain keyword or keyphrase; but, with some research of how other similar campaigns are doing, you can get some idea. Your job then is to approach that optimum conversion rate as close as you can. You do this by making adjustments to your ad and your landing page to improve the number of conversions.
Regardless of what the optimum rate may be, you at least want to achieve a rate that puts you in profit. That is, you want to at least achieve the number of conversions necessary that your profit from the conversions will exceed the cost of the clicks. Once you reach profit, you can experiment even further to attempt to reach the optimum conversion rate and increase your profit even more.
Before you have the opportunity to collect any data on your results, you need some starting place to set your bids for your keywords and keyphrases. As a rule of thumb, to be safe, you should initially expect no more than one conversion in two hundred (200) clicks. (This is lower than average; but, just starting out, you should expect lower than average.) Thus, to start out, you should set your bid at least 200 times smaller (.5%) than the value you have attributed to your conversion. If a conversion is worth only $10, then you should not bid more than $.05 per click initially. After you collect some data on your results and you find that your conversion rate is better than .5%, you can up the bid. But, until then, to be safe, you should not exceed this ratio.
Some of the search engines have a $.10 minimum for the bids you may place. Others have even higher minimum bids. With these search engines, you need to have a conversion that is worth at least 200 times the minimum bid – unless you are very confident that you can exceed the 1/200 conversion rate right out of the box. Thus, to get your feet wet with PPC Search Marketing, you should start with your most valuable conversion. This gives you more room for experimentation.
