The Key to Deciding if Pay Per Click (PPC) Advertising is Worth It for Your Company

by Marcus Sheridan

Adwords vs. adwords expressI find it amusing that many in the inbound and content marketing space look down upon pay per click advertising almost as if it’s a black sheep in a world full of perfect marketing practices, never to be “fooled with” by such skillful (and altruistic) professionals.

Let me be blunt for a second:

If anyone ever gives you a blanket statement such as, “All PPC advertising is a waste” then they are a fool and you should ignore everything else they tell you from that point forward.

Here is the reality:

PPC is great for some companies.

PPC stinks for other companies.

Catch my drift?

Yes, just like any other marketing “practice,” the results may vary—especially with factors like industry, product, price point, competition, and ad efficacy all coming into play.

This being said, if you’re debating as to whether or not your company should be using PPC, I’d ask you to consider this simple truth:

If PPC is making your company money, then it’s worth it.

Really, that’s the key, and truth be told, it’s a key many folks lose touch with.

Over the past few years, I’ve had hundreds of people ask me why my swimming pool company uses PPC (Google Adwords) despite the fact that our inbound traffic is prolific and we get so many visitors each day. My answer to this question, as mentioned above, is always very frank:

“It makes us money.”

In fact, I’ll tell you exactly how much money PPC made River Pools from 2009-2012. If you look at the photo below, you’ll see some very important metrics—metrics that are only possible because we use advanced analytics (in this case, what you’re looking at is HubSpot’s software).

River Poos PPC spending since starting with inbound marketing in 2009.

River Pools PPC spending since starting with inbound marketing in 2009. If you can’t see the photo well, just click to enlarge.

From 2009-2012, River Pools received about 62,000 visitors from PPC. With the average click amount (max bid) being $1, the amount spent for the PPC in total was about $62,000. This may sound like a lot of money to some, but the key metric to understand is the fact that these 62,000 visitors lead to at least (from what we’re able to track) 28 pools sales, which equates to about 1.4 million dollars in revenue, or roughly $400k in net profit—which is a HUGE return on an advertising spend of 62k.

In other words, PPC advertising is EXTREMELY profitable for River Pools. Granted, it’s not enough to keep the business afloat by itself, but it certainly supplements (this is the goal) our other efforts to complete what is a very profitable inbound marketing campaign.

The ROI of PPC Advertising

This fact brings me to another critical point—ROI.

Just like other types of marketing, ROI (return on investment) is a HUGE deal, and no company should dismiss the value of PPC advertising until they’ve taken the time to measure out the results and at least give it a try. Nor should a company feel guilty that they have to use PPC in the first place, which, as I mentioned earlier, is a surprising  and odd trend. Whether you’re a B2B, B2C, service, or product—if PPC works it works, and that’s the only thing that truly matters.

There are many other components to PPC advertising success that I could talk about today, but I’m not. My goal here was a simple one—I want my fellow inbound and content marketers to embrace all advertising mediums that lead to profitability. PPC is just one of many that fall in this bucket, but it surely should never be ignored, especially with its incredible marketing potential.

Your Turn

I’d love to hear from readers that have had success or failures using PPC advertising online. What’s your industry? What were the results? What did you learn? And if you have any general questions about PPC, don’t hesitate to ask.

So jump in folks, your comments could truly help other readers in the process of trying to make this decision for their company.

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{ 31 comments… read them below or add one }

Jason Hull June 4, 2013 at 8:39 am

Marcus–

I appreciate the point that you’ve made; however, I want to point out one measurement issue that may confuse your audience. When you said that the pool company had spent $62k for $1.4 million in revenue, that’s not necessarily a profitable exchange. It all depends on the marginal cost of the pool installations. You built 28 pools as a result. If the cost to build each pool was greater than $47,785.71, then it was not profitable. I’m sure that wasn’t the case with the pool company, but you don’t want your readers to conflate revenues with profits. Otherwise, they’ll be paddling down the river of “we’ll lose a little on each sale and make it up in volume!” business model.

The key to PPC (or any other advertising) is that the advertising per new sale cannot increase the marginal cost of each delivery to the point where it exceeds the revenue brought it.

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Marcus Sheridan June 4, 2013 at 9:56 am

Jason, really appreciate your point, and I should have mentioned that—which is why I went back in and added it to the post.

Appreciate you man!

Marcus

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Jane Steen June 4, 2013 at 9:03 am

Great points, Marcus, as ever.

Our company, North Shore Photography, has found that Adwords is both great AND stinky.

For the side of our business that sells landscape prints, PPC hasn’t worked at all. We calculate a £90 spend in Adwords per week to get £48 in sales (!), even with testing very specific ads using a lot of negative keywords. Possibly this is because people’s personal taste in artwork is so diverse that, whatever we do, we reach too many consumer who don’t like our style. Needless to say, we’ve stopped our Adwords campaigns in this area.

But for the commercial photography side of our business, PPC has yielded great results. One thing that worked particularly well in testing is the inclusion of pricing in our ads, specifically to screen out businesses who can’t afford us. We get very specific, on-target leads and generate £100s of profit for £20-30 Adwords spend per month. Perhaps it’s easier to meet all the requirements of a commercial customer than those of someone who wants to buy artwork for their wall.

Thanks again, Marcus, for all your help and wisdom.

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Marcus Sheridan June 4, 2013 at 9:56 am

Jane, I LOVED this because you showed how, in essentially the same “industry,” PPC has 2 wildly different results. This is the essence of testing and finding PPC ROI, and y’all have done a great job doing just that!!

really appreciate your comment,

Marcus

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David Chism June 4, 2013 at 9:11 am

Great post, Marcus (as usual). This was actually a post I was hoping you’d address awhile ago. Glad you read my mind!

I bet that the ROI is higher than the numbers you posted too. Because installing a pool is a complex sale, it takes longer for people to make a decision. Paid search and Remarketing work beautifully for the simple sales (small ticket items) and will work…but take longer for the larger ticket items. So some of those people who clicked on your ads in previous years may have come back 1 or 2 years later and said they heard about you on your website. So PPC is very targeted and specific. If done correctly, it should bring more qualified buyers.

Also an almost 5% return on investment is not bad. My guess is that you are still profitable at that number. I say that because my main audience (painters/remodelers) would be at that!

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Marcus Sheridan June 4, 2013 at 9:54 am

As someone who has so much experience in a blue-collar industry (painting) like you do David, this was great. And you’re point about the profits being much higher is absolutely true, as I don’t track phone calls from PPC or folks that come back much later.

Stay well brother!

Marcus

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John Harrington June 4, 2013 at 9:20 am

We have always used PPC and found them as a great way to get new clients. It is funny how opinion sways on them from business to business, it’s definitely not for everyone but a lot of businesses dive into it without proper knowledge of how to get the best out of it, ie not having specific landing pages which is a huge crime!

However the biggest problem we have found with PPC is tendency to over rely on this method because sooner or later the price is always going to go up.

In one of our markets the Cost per Click has risen by 400% since 2009. This got us a lot more focused on conversion optimization as opposed to Cost per Click which is not as controllable.

But as you said it all comes down to ROI and the great thing about PPC (Google adwords in particular) is that it is extremely measurable.

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Marcus Sheridan June 4, 2013 at 9:52 am

John, great points my friend. Yes, PPC is going up with each industry, which is why, like you, I think it should “ideally” be a supplement and not the core means of lead generation.

I’m really curious to see where it will be in 5 or 10 years…

Thanks agian,

Marcus

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Gareth Burton June 4, 2013 at 9:33 am

Hi Marcus, yet another great post,

So I understand completely that you’re using hubspot to track the effectiveness of your marketing and I do appreciate that you wrote a piece a while back about the relative merits of hubspot against other alternative solutions but with you mentioning the fact that you track the effectiveness of your marketing through to point of sale, do you do this using hubspot or do you feed your sales pipeline managed bu hubspot into another CRM product once they become paying customers??

Thanks for your continued advice, it’s great stuff so keep it coming!

Gareth

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Marcus Sheridan June 4, 2013 at 9:51 am

Gareth, GREAT question, I do appreciate it. In the case of River Pools, we don’t use a CRM, just HubSpot. But this could be done with other tools as well, not just HS. The key comes down to two things though:

1. Captured the lead via a cookied form
2. Closing out that lead when it becomes a customer

As long as those things are done, you’ll have a solid ROI measurement to review.

Thanks again!

Marcus

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Gareth Burton June 4, 2013 at 10:15 am

Thank for the response Marcus’s very useful to hear, sorry if you’ve explained this before, maybe I missed the post but could you point me in the direction of how to understand point 1 of your reply, I’m not a marketeer by trade so apologies for my lack of technical understanding!

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Cathy Boudreau June 4, 2013 at 11:07 am

You’re one of the few blogs I read religiously when it hits my inbox! I work for a CRM consulting company (B2B) and we’ve tried PPC in the past. A little experimenting here and there, but it never amounted to any conversions. Since then, we have not given it another shot but I feel like I might want to try it again. I think my biggest challenge is the keywords and writing good copy for the ad. In my brain, I think my first action needs to be tightening up/refreshing our current website keywords and SEO before spending money on PPC.

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Tyler Townsend June 4, 2013 at 1:37 pm

For those 28 pools you sold it cost you roughly $2,200 for PPC adds per pool seems a little pricy

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Andrea T.H.W. June 5, 2013 at 12:26 am

If it works then use it: I guess this is a pretty right point of view. Together with the fact that what works for you could not work for me. One of the reasons why many courses fail to deliver real value, the results of the owner of a website are not guaranteed to work on another website.

As of now I’m not using PPC, actually I’m on the other side of the fence as I use AdSense to monetize my website. From there I would say that it works for advertisers but not really much for publishers, as a matter of fact Google last year or this year paid less money to website owners. This might be due to the crisis or to ad blindness but what G should think about is that if publishers quit using AdSense as they are forced to do with traffic and serch results then also advertisers will feel the hit.

Being fed up with updates I went for social ways to get traffic so searches position is every day less important.

It has to be a balanced relationship for everyone to be happy. :)

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Marcus Sheridan June 6, 2013 at 12:29 pm

You said it bud—BALANCE. That’s exactly it, and it’s the part so many forget.

Cheers,

Marcus

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Tom Reber June 5, 2013 at 6:22 pm

Hey Marcus…good stuff as usual. Today I’m teaching 2 classes on content marketing and I shared how I failed miserably at PPC years ago in my painting company…BUT, the reasons we failed (clear to me now that I’m a little wiser) were:
1. We were not clear on our ‘who’…ideal client
2. We had crappy ads that didn’t speak to their needs…
3. Our website at the time was lame and had nothing of value to keep them there.

I am not an expert in PPC, but I do know that without being clear on those 3 things above no marketing will work to its potential….

MOTORhard

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Marcus Sheridan June 6, 2013 at 12:26 pm

Dude, I’m literally sitting here right now wearing my MOTOR shirt. Love that thing :-)

But great points you’ve made bud, those 3 things make a HUGE difference.

Marcus

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Tom Reber June 6, 2013 at 6:13 pm

Sweet! It’ll make you smarter and better looking….

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Bryce Christiansen June 6, 2013 at 12:14 pm

Thanks Marcus,

Very helpful post. I’ve always wanted to try more ppc but haven’t found the right use for it yet. Like you said, it works if it makes you money.

Our industry, DISC Assessments/Career Coaching is very competitive on the ppc market. Will have to think of some creative ways to leverage it.

Thanks,

Bryce

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Marcus Sheridan June 6, 2013 at 12:20 pm

Sure thing buddy. Creativity is often the key, combined with great content, landing pages, etc.

Good luck bud,

Marcus

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Rex Richard June 6, 2013 at 3:32 pm

Great topic Marcus! It’s interesting particularly be ause of the close relationship PPC has with strategy and content, subjectss you speak on often.

The parts of the puzzle most miss with PPC are the “headline” in the ad, “landing page” and headline there, and the “content” on the landing page.

Most just direct the PPC to their home page which results in generally poor results. Pro PPC marketers always use a keyword matched landing page with a strong headline and clear and attractive call to action. These elements increase “actions” significantly and as a result improve ROI. We have seen the ability to improve nearly all campaigns by more than double and a few by as much as 500 % just by adding keyword matched topical landing pages with a clear call to action. This is the future of “content marketing” and it is the “content” part most PPC pros could use help with. Best wishes in all you are doing!

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Allen Scott June 8, 2013 at 3:57 am

This is truly a splendid perspective. PPc can produce great comes about on time, ought to select an ideal match of magic word which is generally applicable to the home page of your site to make an adequate feature. One more essential thing is to make grasp qualified leads of purchasers.

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Sebastian Aiden Daniels June 13, 2013 at 5:31 pm

I am wondering just as a very new blogger and as someone who will be publishing his first book soon, if PPC is worth it to build traffic to the website?

I just started a FAcebook campaign on Tuesday and it already has paid dividends for my new facebook page. A page that hasn’t been advertised at all. I am currently using a $100 credit for Google Adwords, but I don’t know how effective it will be in transitioning those people to regular blog readers or how long they even stay on the page.

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Marcus Sheridan June 15, 2013 at 11:50 pm

Good question Sebastian, and to tell you the truth, PPC visitors are harder to tun into blog readers, but if you set the site up in such a way that it’s catchy, memorable, and valuable–it may prove effective. But like I said, for a normal blog, it’s tough to make it work for the long term.

Marcus

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Preeti Anu July 8, 2013 at 10:42 am

It really a very helpful blog. This is a very good idea that you shared. This article help me very best.

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Laura July 12, 2013 at 5:27 pm

2 words:
“A/B Testing” :)

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Ranjan Jena August 29, 2013 at 4:12 pm

HI Marcus. Very True Said, “If PPC helps you make money, then PPC is the Best.”
I represent a travel industry. The results have been random with time. I learned, PPC is all about testing. So for sure, with your 100% budget allocated to PPC, you should consciously spend 80% on the effectiveness, and 20% to experiment with latest features. If something is not working, then better not to spend money on them, and try concentrating on expanding keywords that delivers revenue.

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Patrick February 18, 2014 at 5:45 pm

Hi Marcus,

Would you have any advice on how much of a PPC budget should be spent on each product that I am advertising on price comparison sites like Nextag or Pricegrabber? I’d like to figure out the ideal percentage for COS in regards to my margins.

Thank you

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Bob March 26, 2014 at 12:38 pm

I believe the PPC is a rip off, from what I am reading on the web, most people cant afford to pay the fees.

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Raina March 31, 2014 at 9:21 am

My wife and I have been maintaining a pay per click campaign for
more or less 1 yr. Even while my partner and I see gains, my
husband and I do think the offline strategies is without a doubt more extremely important.

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Jack Stone April 2, 2014 at 3:27 pm

You can pay for traffic using the PPC advertising programs provided by Google Adwords , Yahoo Search Marketing and others. They enable you to display ads in the sponsored results section of each search engine’s results page. Then, you pay a fee — based on how competitive your chosen keyword is — whenever a viewer clicks through from your ad to your website .

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