That’s actually a trick question.
But one that comes up a lot when talking to people about pay per click (PPC) advertising.
My answer is “It depends and it doesn’t matter.”
First, there’s no doubt costs per click are rising online. Gone are the days where competitive keywords can be purchased for $0.05 per click (at least on Google).
But are they getting too high?
The more important question to ask is “What is the lifetime value of a customer to your business?”
One client of mine sells a $20-$30 board game. For that company, paying $1, $5 or more per click is way too high. They’d need to have a ridiculously high conversion rate to be profitable paying that much per click. Plus, most customers buy one or two board games and that’s it. They don’t come back for more so the lifetime value of each customer is pretty low. For a client like this, the strategy is to find less competitive keywords that can be bought for $0.05 to $0.25 or so per click.
However, paying $1, $5 or much more may be well worth it for those in the legal or financial industries. There are advertisers in those fields paying $50 or more per click. That sounds like a lot, but if the lifetime value of a new client for your law firm or investment firm can easily be $1000s or more, then you may very well be able to afford paying that much per click.
So are costs per click getting too high? It really doesn’t matter because it all depends on what a customer is worth to you and how well your back end sales system can convert those clicks into paying customers.
Once you know those numbers you can start to make some good judgements about what you can afford to pay per click.
- Facebook PPC vs Google PPC: Which Is Right For Your Small Business?
- Facebook PPC: Why It Has Savvy Marketers Drooling All Over Themselves
- Two Ways To Look at Google’s $5.7 Billion Q4
- Why Isn’t the Facebook PPC Advertising Program More Popular?
- 3 Reasons Google AdWords Still Kicks Facebook PPC’s You-Know-What