The Pay-Per-Click Winning Formula

I though that I'd use today's post to add a quick primer about how to use Pay-Per-Click (or PPC) at a profit.

PPC is represented by services such as Google Adwords, where you pay an amount every time someone clicks on the advert and follows the link to your site.

When I started using PPC I found it very hard to balance the books, that is, to make sure that my profit was more than my outgoing spend.

Constructing sensible Google AdWords ads is worthy a manual in itself (and many have been written), but there is a simple process which can be used to check that ads are effective and profitable.

1. Set up an ad with a small budget (say $10 or $20)
2. Run the ad and record how much money for you make from the conversions.
3. If unprofitable, drop the ad.
4. If profitable, increase the budget and keep running.

Well, the real thing has more variables, especially as ad prices and profitable can change over time, but that gives you a flavour.

So, what's the formula I mentioned?

You need to work out the maximum you can spend to receive for a click, and still be in profit.

Or, to put that in the form of simple maths:

Hope that doesn't lose anyone.

Basically, work out how much a click costs, and how much the same click is worth. That will tell you if your campaign is profitable.

If not, you can tweak the ad, the pricing, or move onto another ad.

Want to add some of your own hints for AdWords and PPC? Go ahead. Join the discussion below.