September 3, 2009 by Matt Thomas
#2: Cost Per Click
Okay, this is a big one, as obviously cost per click can make or break any PPC campaign. Let’s stick with the dog food example for the time being to illustrate this. The cost per click of a keyword is determined by the competition for that keyword. A hugely generic keyword like ‘Dog Food’ will naturally have a lot of people bidding on it and so could easily cost over £1 a click for a top five placing.
With a sack of dog food costing about £15 (probably with a profit margin of £7), your conversion rate is going to have to be incredibly good to break even, especially with the potential for irrelevant searches we discussed in the last post. Realistically you aren’t going to be making a profit.
Add a few modifiers to the keyword however, and the cost per click will come down significantly, ‘buy dog food online’ or ‘buy eukanuba dog food’ will have far fewer people bidding and so will be significantly cheaper, possibly around 30p for a top five. Suddenly you have more than three times the clicks to play with and your chances of making money have improved significantly.
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