How do I calculate how much I should pay per click on per keyword?

[Joseph_Hill]

I'm going to publish an e-commerce site. One of the ways that I plan to do is advertisise with Google adwords or other advertising networks.
I'd like to know what is the maximum price I should pay per click each keyword. Are there any ways that people are using to determine this?

 

[SEOPub]

Google will give you suggested CPC's in the Keyword Planner. In my experience, they are usually low-balled numbers. As a rule of thumb on a new campaign, I assume that I will need to add at least 20% to the suggested bid price.

Even that is just an estimate. You really will not know until you start a campaign and begin testing ads, keywords, and bidding. There is a lot that goes into it. If you have a really good Quality Score, for example, you can get away with lower bids. If your QS is in the dumps, you are going to have to overpay.

 

[elcidofaguy]

elcidofaguy

If you are bidding more than what G suggests for PPC then for sure you are doing something wrong!!! You need to focus on your adrank score which is based primarily on two factors - Keyword relevancy on your ads and landing page....

Therefore what works for me is to have lots of ads per keywords and landing pages as then that will increase your adrank score which means much lower bidding costs for 1st position....

Further you need to be real careful on which keywords you use... I only use targeted ones which has less traffic and not vague general ones.... also your ad copy text is critical... You should avoid throwing money in the wind on curiosity clicks so what works best is to state your UPS and further your product/special offer pricing if applicable.... Also your costs for targeted keywords can actually be lower given less search volume but brings a higher ROI... So do your research, monitor your campaign and amend accordingly... choose and filter those keywords...

Remember each click costs, so you need to maximize your ROI.... PPC is definitely not an easy game to get into and yes indeed it feels like gambling ;-)

 

[oldnickb]

The difficulty with PPC is that you need to know your metrics beforhand. You can have what you think is a great offer only to discover that you have had 300 clicks and no sales. PPC is the easiest way to lose handfuls of cash if your site isn't right.

My advice would always be to start with one of the less expensive networks until you know what your conversion figures are. If you need 170 visitors for each sale the amount you can afford to pay will be dramatically different than if you are achieving 1 sale for every 50 visits.

The first thing you need to do is craft an attractive ad. You should be aiming at an ad that is clicked by at least 5 - 10% of the people it is shown to. The higher you can get that figure the lower your adwords cost. This needs careful targeting of your keywords. You also need to track the click so you know that it is responsive. You can get an ad that attracts a 20% click through only to discover that none of them buy, wheras you have an ad that is only getting a 3% clickthrough but almost all of them buy.

PPC is time consuming because you need to continually monitor and tweak your ads, your keywords, your maximum prices etc. It will also depend on how successfully you capture your visitors emails and whether they are responsive to future offers. You should also look at retargeting so your ads will be shown to visitors again as they surf the web.

This all takes time but eventually you will be able to predict your customer life time value or at least their annual value so you will know that on average each customer is worth x per year, you need y clicks to get 1 customer therefore each click is on average worth x divided by y.

When you start you need to base your bids on a campaign by campaign basis so you know that you are at least going to break even. The guys with the really high bids either know these figures to 2 decimal places or are new and clueless.

Until you have been going long enough to calculate these figures PPC is like playing a fruit machine. You know you will win sometimes...

 

[DaveKash]

Hi there, will be glad to help

There a number of ways to find out the Cost Per Action. What do I mean, this is the cost per sale. This is the total amount of revenue you earn from an affiliate sales dovoded by the total number of clicks. For example if i am Promoting product A from Clickbank, and I have a landing page sending me to product A and I receive a $50 for each sale I make. Lets say I send 100 clicks to my landing page, and I make 2 sales. That is $100. That means my cost per subscriber is $1.00. In general you will want your Cost Per Action To be greater than your Cost per click. So if this is what my data tells me , I would search for a CPC campaign for less than a $1.00.

Now how do you find the average cost per click? easy, just find out the total number of clicks you receive using a tracker (I recommend hypertracker) and find the total amount you spent on the ad. Divide the total ad spend by the total number of clicks, and there you have it your CPC. I always recommend tracking the clicks you receive as you can use your data to make better business decisions. So always track your clicks and your data.

Now all the big ad companies, Adwords, Bing, Facebook have the average cost per click values displayed so you can easily find the data, but I always recommend tracking the clicks yourself.