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Internet Marketing Blog - WordStream

What Is Cost Per Action Advertising?

March 17, 2010

There are several ways to conduct online advertising campaigns. You can pay search engines or other Internet publishers hosting your ads each time one of your ads is clicked, every 1,000 times the ad is seen, or every time the ad prompts a more sales-related action.

The third option entails a user clicking on your ad and signing up for a free trial of a product, registering for a free download, or buying your product. Signups and registrations generate company leads, while sales generate immediate cash in your pocket.
 
With this type of advertising you pay the host an agreed-upon fee for each specified type of action. For leads that can mean a set amount, while for sales that can mean a set percentage of the sale amount.
 
This method of online advertising is called “cost per action” (CPA). It can also be referred to as “pay per action” (PPA) or performance-based advertising.
 
How can cost per action advertising benefit advertisers?
 
Cost per action advertising generally involves less risk for advertisers than other advertising techniques. Since you only pay when you get a lead or a sale, you are protecting yourself from potential eyeballs that won’t convert, as well as click fraud. Those possibilities can put a dent in your pocketbook fast.
 
At the same time, you are ensuring that you only pay when you have money coming in, or when the prospect for money coming in is relatively great.
 
How can cost per action hurt advertisers?
 
You can actually lose money from a cost per action campaign if you have a low leads to sales ratio. This is because you may be paying publishers more for leads than you are generating from sales revenue.
 
That may be worth your while if you have a plan for converting more leads to sales or believe that the advertising exposure outweighs any current loss in revenue.
 
If you are losing money, you can try negotiating a lower cost per action fee from the publishers hosting your ads. Or you can switch over to a CPA campaign based on sales. Either way, know that your success at conversions can impact your ability to find a publisher willing to run your ad on a cost per action basis.
 
Why might publishers not want to run my ad on a cost per action basis?
 
If you don’t have a strong track record for the specified type of action, publishers may determine they’re better off hosting ads with more potential for bringing them revenue.
 
Google offers a cost per action advertising program where ads are placed on Google’s affiliate websites. But to qualify for the program, advertisers must prove they manage a site that attracts a desirable audience, has enough conversions, and makes enough money. The exact criteria may differ from advertiser to advertiser.
 
Other affiliate networks may also pass you by due to your track record or finances. Affiliate networks like LinkShare, PeerFly, and Affiliate.com ask about such topics as online revenues, monthly marketing budgets, and cost per action offers in their online advertising applications.
 
You may find that individual companies have more lenient criteria for doing business.
 
You can also build your own affiliate network by handpicking company websites you are interested in advertising on, and reaching out to the sites about potential cost per action opportunities.
 
How much should I pay per action?
 
While it is ultimately up to a publisher to accept or reject your offer, you should go into cost per action negotiations with a figure in mind. It's important to do some homework when determining how much you are willing to spend per action.
 
For example, if you are already involved with a cost per click or cost per impression campaign, you should figure out how much you are paying for each conversion, whether it is a lead or sale. You can determine this amount by using an online cost per action calculator, like the one offered by ClickZ.
 
To get your cost per action you must enter either your cost per 1,000 impressions or cost per click, your conversion rate, and, if it’s a cost per impression campaign, your click through rate. You can get this information from within your pay per click account or a web analytics tool.
 
Once you have your current cost per action, you should try using a lower cost per action for a cost per action campaign.
 
Then what should I do?
 
Over time, evaluate how return on investment (ROI) from your CPA campaign compares with the ROI on your cost per impression or cost per click campaigns. If you have a much better return on investment for the cost per action campaign, you should consider scrapping the cost per impression or CPC campaign.
 
But if you have a much better return on investment for the cost per impression or cost per click campaign, you should probably negotiate a different cost per action amount or reconsider the CPA campaign.
 
If some of your products or services do better with one campaign type and others with another type, you can diversify your advertising methods.

Photo credit: http://www.flickr.com/photos/sepblog/3570992970/

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Posted in: by Christine Laube... at 08:06 am Comments (2)


Five Experts on SEO Link Building

March 16, 2010

A while back we interviewed a handful of link-building experts (Garrett French and Ben Wills, Wiep Knol, Debra Mastaler, and Julie Joyce) on everything from what features they'd want in their ultimate link-building tool to how to brainstorm linkbait. Here, you can find all of their answers to eight key SEO link-building questions in one place.

 

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Posted in: by Elisa Gabbert at 08:02 am Comments (7)


Rotating Ads vs. Optimizing Ads: Which Is Better?

March 15, 2010

This is a guest post by Alan Mitchell. Alan Mitchell is a Brisbane PPC consultant specializing in highly granular long-tail PPC management. Follow him on Twitter: @alanmitchell.

One question which is regularly asked when managing Google AdWords PPC campaigns is whether ads should be set to rotate or optimize.

Google's default setting is "optimize," so if you have multiple ads in one ad group, your better performing ads (generally those with a higher CTR) will be shown more often. This might seem great -- you will automatically receive the maximum number of clicks for your ads. But the more experienced PPC advertisers out there will know that clicks are not generally considered a good measure of success. Instead, conversions -- sales, leads, sign-ups, downloads and other desired outcomes -- are generally considered better measures of PPC performance.

So to aid acute PPC advertisers like Shaun Livengood from PPC Without Pity, who like to optimize ads based on conversions, Google have provided another option in AdWords called "rotate." Rotating ads allows PPC advertisers to override Google's default "optimize" setting and force all ads in an ad group to be shown equally.

Since each ad in an ad group is given the same number of impressions, data-hungry PPC advertisers are provided with a plethora of unbiased comparative ad performance data they can work with. Ad performance analysis becomes considerably easier if all ads in an ad group have the same number of impressions.

I too am extremely data-hungry and a big fan of post-click PPC analysis, so I have always tended to set ads to "rotate" to satisfy my craving of juicy PPC data.

But now I'm not too sure. Rotating ads could be detrimental to profitability.

Why?

Because by rotating ads, you are accepting a lower Quality Score and a higher average CPC in exchange for better analysis data.

Let me explain with an example.

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Posted in: by Anonymous at 12:40 pm Comments (6)


There Are No Stupid Questions …

March 12, 2010

Not All Questions Can Be Answered By Google

In a post called "What's Up, Internet," writer Amelia Gray answers some of the questions that Googlers have found her blog by asking:

how long does it take to get a warrant

I think you can get one in an afternoon, if you are a police officer and you can find a judge to give you one. (It will take more time if you’re just some guy.)

what sort of rocks are there?

All kinds. Some rocks are very hard and others are so soft you can scratch them with your fingernail. Sometimes rocks float. Once I had a dream I was explaining a quartz rock to my child.

Amelia may be doing this for laughs, but she still got a good post out of it, right? I've said it before, and I'll say it again: Your keywords are content idea generators.

If you're already ranking for questions like "What's the worst high five ever," think how much better you'll rank better for those same questions if you a) include the question in the text, or better yet the title, and b) actually answer it.

Here's how to use those search queries to generate content ideas:

  1. Find the keyword referrers in your Web analytics application. In Google Analytics, go to Traffic Sources → Keywords.
  2. You can search specifically for questions by filtering for question words like "what," "why," "how" and so on.
  3. Make a list of any queries that you don't already cover extensively and might make interesting content, ranked in order of popularity.
  4. Group related queries together (for example, in Amelia's case, questions about Rob Lowe).

Now you can consult your list of search query questions whenever you need ideas for Web or blog content.

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Posted in: by Elisa Gabbert at 08:11 am Comments (1)


Review of Link Assistant's Rank Tracker

March 11, 2010

Rank Tracker by Link Assistant

A few months ago, I published an article about the Best SEO Rank Checkers. In it, I wrote a quick review of a keyword rank checking tool called Rank Tracker, by Link-Assistant.com. Of all the paid rank checkers I featured in that article, Rank Tracker was one that intrigued me the most. So recently, I decided to do some more extensive work with Rank Tracker to get a real taste for the tool's full capabilities. And I'll tell you, after using this keyword SERP tracker for the past few weeks, I'm hooked. So let's take a closer look at Rank Tracker, so I can explain my newfound enthusiasm for this tool.

Rank Tracker: Key Benefits

There are a lot of keyword SERP trackers on the market, but they have their share of issues. First, they can be agonizingly slow. Some can only run checks on groups of 10 keywords max per session and even then they time out. Second, they can be wildly innacurate. In fact, with most rank checkers I've used, after I run ranking reports in them, I've been forced to manually double check the indivual SERP listins because I didn't trust the results. But with Rank Tracker, none of those deficiencies exist. Using Rank Tracker to monitor your site placement in the SERPs, you get:

  • Speed: Rank Tracker is FAST! It's one of the fastest (if not THE fastest) rank checkers I've ever used. When I run a rank check for the 200 plus keywords I target, it spits out the ranking results for Google, Bing and Yahoo in under a minute.
  • Accuracy: Rank Tracker's results are always spot on. And since I'm suspicious of most rank checkers, I've done my due diligence and spot-checked many of Rank Tracker's search engine ranking results against different data centers and the results were extremely accurate.

Rank Tracker: Key Features

In addition to Rank Tracker's speed and accuracy benefits, the tool is armed with an array of very cool features:

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Posted in: by Ken Lyons at 08:54 am Comments (2)


Announcing The Expert's Guide to Keyword Research for SEO Copywriting

March 10, 2010

Last week we published the Expert's Guide to Keyword Research for Social Media. This week, we're offering a similar how-to guide for the SEO copywriter.

Many keyword research guides amount to a list of tools, but this guide is all about process. You'll learn exactly when, why and how to do keyword research for blog posts, articles and other content that appears online. If you write for the web (or want to), you don't want to miss it.

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Posted in: by Elisa Gabbert at 08:42 am Comments (0)


Link Popularity Case Study: The Domino Effect of Inbound Links

March 09, 2010

For the link-building search nerd, little matches the joy of scoring a really great link. About a month ago, a post on my personal blog got a link from The Daily Dish, Andrew Sullivan's blog, which is ranked #12 on Technorati's Top 100 Blogs and has a Toolbar PageRank of 8.

Now, I'm pretty sure Andrew Sullivan doesn't subscribe to my blog or follow me on Twitter (to be fair, I don't follow him either). So how did this come about? Via domino effect: Over the course of about 15 days, I accumulated a series of inbound links, including a few quality links early on, one of which was clearly the tip-off for the Daily Dish link.

Domino Effect Infographic

This very high-authority link (which, sadly, went up over a weekend) sent a big spike of traffic and led to a mini-long-tail of links from sites and blogs with mid-range to low authority, amounting to more than 4,700 page views in total for the post.

Here's a closer look at the data, not including links that sent five or fewer visitors.

Domino Effect Data

Most of the links that followed the Daily Dish link came from new referrers, many of the sites "outside my space" (I primarily write about poetry on my blog). So they were clearly a result of the domino effect, rather than unrelated links.

Here's the narrative I impose on this data:

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Posted in: by Elisa Gabbert at 08:47 am Comments (4)


Larry Kim Speaking at SearchFest 2010

March 08, 2010

SEM PDX search marketing logo.

Our illustrious founder and VP of product development, Larry Kim, is presenting tomorrow, March 9, at SearchFest 2010, an SEMpdx event, taking place at the Governor Hotel in Portland, Oregon. (Click here for the full agenda.)

Larry will be talking about competitive intelligence:

Your marketing efforts do not exist in a vacuum. Effective competitive analysis gives you the information you need to ‘remove the blinders’ in terms of viewing your company and brands as customers do, and to highly tune your Paid Search Marketing strategies for success. This session identifies which competitive intelligence efforts enable you to determine what your competitors are doing to drive their online businesses, so that you can either emulate their PPC successes, or exploit their PPC weaknesses.

If you're in the Portland area, we highly recommend this event. (Friend of WordStream Todd Mintz is a director and founding member of SEMpdx; check out Todd's recent interview with Larry.) There are separate tracks for SEO, PPC and social media, covering everything from landing page testing to Facebook best practices.

Here are the details again:

What: Competitive Intelligence Session at SearchFest 2010

Where: Governor Hotel, 614 SW 11th Ave., Portland, OR

When: March 9, 9:30 a.m.

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Posted in: by Elisa Gabbert at 12:14 pm Comments (0)


7 Ways to Segment Your Landing Page Visitors

March 08, 2010

This is a guest post by Megan Leap. Megan is the online marketing manager at Ion Interactive. Ion sells first-rate landing page management and optimization software, has an excellent blog on post-click marketing, and are friends of WordStream. Megan will be posting periodically here, and also look for contributions from the WordStream team to their blog.

There are many ways to segment your online visitors in the three phases of online marketing.

On the pre-click side, there is keyword-based segmentation, which maximizes the relevancy of your paid clicks. On the post-conversion side, there is email list segmentation, which as most marketers know, boosts email marketing performance. 

And then, on the post-click side, there is form-based landing page segmentation, which can sometimes provide valuable data, after you sort through all the associate-level astronauts in Arizona who have a company revenue of over 1 billion. And there’s also user-directed, or post-click segmentation.

User-Directed Segmentation  

User-directed segmentation is a form of segmentation in which landing experience visitors are presented with a few simple choices to make about who they are and what they’re looking for, and the subsequent pages that the user lands on are more relevant and tailored to the visitor’s audience segment. The choices that the visitor makes are always in their self-interest and the user directs how they are segmented.

In the example below, visitors to this conversion path can segment as “physicians,” “residents,” or “students” (and “other healthcare professionals” in the bail-out link).

Segmented Landing Page

The subsequent pages of this conversion speak directly to the strategically chosen targets, yielding high conversions when the message gets more personal on the offer pages. Visitors who self identified as “physicians,” “residents” and “students” get more specific messaging on their offer pages.

Physician Landing Page 

resident landing page 

Student Landing Page

Taking over where keyword segmentation leaves off, this kind of user-directed segmentation:

  • Reveals valuable insights about your visitors: By analyzing what visitors are clicking on, you can measure what segments of your audience are (or AREN’T!) engaging with your landing experience, what segments are (or AREN’T) converting, and what sources of traffic are delivering your most qualified visitors.
  • Improves the relevancy of your message and offer: The more specific your messaging gets, the more effective your overall search and PPC marketing.
  • Increases conversions: Of course, by improving the relevancy of your campaigns and analyzing the segmentation choices people make, you’ll ultimately boost conversions.
  • Improves lead quality: By segmenting your visitors and gaining insights into who is (and isn’t) clicking your ads, you can optimize your messages for your different sources of traffic and different audience segments, and ultimately improve your lead quality, as well.

There are many ways to segment your visitors with user-directed segmentation, including:

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Posted in: by Anonymous at 08:25 am Comments (1)


Relevance Is Relative: Internet Predictions Past & Present

March 05, 2010

I'm sure many of you saw this much-shared gem: a Newsweek article from 1995 called "The Internet? Bah!" (subtitled "Why cyberspace isn't, and will never be, nirvana"), in which author Clifford Stoll argues that the Internet is overrated and will never be as pervasive as the pundits claim (emphases mine):

I'm uneasy about this most trendy and oversold community. Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems. And the freedom of digital networks will make government more democratic.

Baloney. Do our computer pundits lack all common sense? The truth in no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works.

Telecommuting workers, multimedia classrooms, virtual communities, online newspapers – doesn't sound so much like flying cars and robot maids now, does it? The whole thing actually reads like a gag or a hoax (the typos don't help): "Nicholas Negroponte, director of the MIT Media Lab, predicts that we'll soon buy books and newspapers straight over the Intenet [sic]. Uh, sure." He complains about the mountains of "unfiltered data":

You don't know what to ignore and what's worth reading. Logged onto the World Wide Web, I hunt for the date of the Battle of Trafalgar. Hundreds of files show up, and it takes 15 minutes to unravel them—one's a biography written by an eighth grader, the second is a computer game that doesn't work and the third is an image of a London monument.

A-ha! Stoll didn't anticipate that search engines would get exponentially better at filtering data, determining relevance and answering questions. Today, it takes a second or two to find this date – you don't even have to type the full phrase thanks to auto-suggest.

He also pooh-poohs e-commerce:

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Posted in: by Elisa Gabbert at 08:46 am Comments (2)


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