What Kinds of Businesses Should Use PPC Advertising?

On Monday, we published a new infographic based on original research into the industries that spent the most money on Google advertising last year, contributing to Google’s 2011 revenues of $37.9 billion, 96% of which came from advertising. (Larry answered some follow-up questions about the research here.)

Following up on those results, we wanted to share some advice for new or hopeful Google Ads (AdWords) advertisers – namely, what kinds of businesses are finding great success with Google Ads and other pay-per-click (PPC) advertising platforms? What types of characteristics could make your business a good match for PPC?

Below are five traits of businesses that usually see great results and strong ROI from paid search marketing. If any of these apply to your company and you’re not yet engaging in PPC, this marketing channel is worth investigating.

High Customer Lifetime Values

Some industries can afford to spend quite a bit acquiring new leads and customers because the lifetime value of a new client is so high. For example:

• Dentists, doctors, etc. – When a dentist acquires a new client, they can potentially be worth thousands or even tens of thousands of dollars over the course of many years, especially if they go on to refer more clients. Dental marketing pays off.
• Colleges & online degree programs – University of Phoenix, ITT and DeVry spend a lot on PPC because a new student is worth a lot over the course of his/her education. The same applies for other types of training programs.
• Cable and Internet providers, utilities – People tend to stick with one provider of phone, cable, or Internet service and pay that monthly bill for a long time. Any recurring service (subscription-based software, for example) could fit the same model.

High Margins

Sometimes it’s not about “lifetime value” so much as the high margins on a single purchase. Think relatively big ticket items like:

• Lawsuits – A lawyer can make a lot of money off a single case, which is why keywords like “personal injury lawyer” are so expensive – even if that client only needs your services for the one lawsuit, the margins can be very high.
• Repair jobs – Some kinds of home repair can be very expensive (roof repair, new pipes, etc.), so catching someone who needs this kind of work done can be a big win.
• Computer equipment – Servers, copiers, etc.
• Home Appliances – These days people usually comparison-shop online before buying something like a washer and dryer. Same goes for purchases like mattresses and large furniture.
• Cars – We’ve seen used car franchises have a lot of success with geo-targeted PPC.

Hard-to-Find Products

If your e-commerce business carries products that aren’t easy to find just by walking into a Wal-Mart, you’re probably a good candidate for PPC advertising. People often use search engines to find weird items that aren’t carried in many brick and mortar stores, such as unusual hobby supplies or rare records. (One weird purchase I made recently was a bunch of empty perfume sample vials.)

Diverse Array of Products

Retailers like Amazon (which spent over $55 million on AdWords in 2011) and eBay ($42.8 million) that carry a wide array of products have found a lot of success with PPC. Often, retailers like this advertise on tens of thousands of keywords, paying a small amount per click by bidding on long-tail keywords or using dynamic keyword insertion. Long-tail keywords have lower competition and, accordingly, lower costs per click, so advertisers can turn a profit even on lower-cost items.

The above ad from Lee.com, which showed up on a search for “black skinny jeans,” is almost certainly using dynamic keyword insertion to feature the exact search phrase as the ad headline. (The generic ad text is the tipoff.)

Seasonal or Event-Based Value

Florists love PPC because most people don’t send flowers very often – they look for a florist at the last minute when they need to send a floral arrangement for a funeral or an anniversary. That’s why 1-800-Flowers spent more than $30 million on Google Ads last year. Some other businesses that can use PPC to attract seasonal or event-based traffic include:

• Gift baskets
• Costumes (concentrate your spend around Halloween!)
• Wedding registries

Doesn’t Sound Like You?

Keep in mind these aren’t the only types of businesses that can get value from PPC. Actually, almost any kind of business can make PPC work for them. It’s a matter of finding the targeted, relevant, high-intent keywords that drive affordable leads and sales.

But if any of the above characteristics apply to your company, and you haven’t explored search engine marketing yet, you should definitely consider making the investment.

And if you haven’t checked out the full infographic yet, here are all 10 industries and the top five Google Ads advertisers from each industry (click to enlarge):

Learn more about our pay per click company WordStream and how we can assist you with your PPC needs.