Pay Per Click for Franchisors and Franchisees

Posted on July 06, 2011 by Melissa Lim

Should You Advertise Using Pay Per Click Ads?

If you are looking to get involved in the franchise industry, you need to know about the options available to you for internet marketing.  Internet marketing will help you to drive visitors from various web sites or search engines to your web site to view your products and services.  The more people you get to your web site, the more opportunities you have to convert those visitors to buyers.

Search engines such as Google, Yahoo! and Bing provide one source of traffic.  These search engines provide search results to millions of people every day.  If your web site is listed in the results for keyword phrases related to your business,  you can drive traffic to your web site and increase your sales.

All three of the search engines provide two areas of search results.  The top areas (normally shaded) and the area on the right side are called Pay Per Click Ads (PPC) or Sponsored Ads.  The results below the sponsored ads are called the middle listings or organic results.

How the Pay Per Click Ads Work

With pay per click ads, you pay the search engine every time someone clicks on a link to your web site.  Your position in the ads is determined by a bidding system whereby the companies that bid the most get higher positions in the ad results.  The closer you are to the top, the more traffic you get, but the more money you will pay.

For example, if you type in Google the search phrase "car warranty", you will see 3 results in the shaded area.  The top company might be paying $6 per click through, the 2nd result might be paying $5.90 per click, and the 3rd company might be paying $5.50 per click.  For 100 clicks to their web site, the first company would pay $600, the second $590 and the third $550. 

Benefits

The biggest benefit of PPC advertising is that you will have a presence on the first page of the search results immediately.  Once you set up your account with Google, create your ad and link it to your web site, you can have an ad appear within minutes.  With organic search results, it could take a few months to get your web site listed on the first page of Google. 

Another benefit is that you can set your budget and spend to whatever you want.  If you budget $500 per month and only $75/day, your campaign would run until your budget is exhausted.  If your budget runs out, your ads won't be visible until the next month.

Our philosophy is to do some PPC marketing while you are working on your organic marketing so you can maintain a presence and generate cash flow while you're working on the organic results which is a flat monthly rate.

Are Pay Per Click Ads Worth the Money?

 This is the big question.  Normally, when we discuss the value of pay per click advertising, we need to understand what your normal sale is going to be.  In other words, let's say you run a PPC campaign and your bid is $2 per click through.  Let's say you are selling a widget for $10 and your cost is $5, so you make $5 for every widget sold.  The average conversion rate for a web site (the percentage of people who actually buy) is 2%.. So, for every 100 people, you might get 2-3 orders.  Therefore, if you spend $200, you will get 100 clicks and let's say 3 orders (a 3% conversion rate).  With a profit of $5 per widget, you made $15, but spent $200. This isn't great business.  However, for a service that nets you $500 on average, PPC is great because for every $200 you spend, you might get 3 sales for a total of $1,500.

Determining your price points and profits will determine whether or not Pay Per Click is a good fit for your business.  If you need help with understanding this in more detail, please visit us online at www.starklogic.com or call us today.

Author Biography

Rich Stark is the CEO of Stark Logic, a full service internet marketing firm that has helped over 500 companies for over 15 years. Mr. Stark has frequently given webinars on the changes in web marketing including search engine optimization and changes in local search marketing as well as insight into effective marketing practices for web sites and design.  If you need help with your marketing strategies, you can learn more by visiting us at www.starklogic.com or call us today at (888) 915-6442.