Roadmap to Pay-for-Placement
Posted on October 6, 2000
by Mike Banks Valentine
The "paid placement" search results model introduced by GoTo.com
has become an accepted method of advertising online and should
be considered a very viable and attractive option in your small
business marketing budget. Get out your roadmap and let's GoTo!
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Tune up your Search Terms
Goto.com offers a great tool to help determine valuable search
terms to bid on by showing the number of searches in the previous
month for any word or phrase you enter in the search box.
Try it yourself and see. Let's assume you are in auto insurance.
I went there and found that "auto insurance quote" was searched
9853 times in August 2000.
Check Occupancy Rates and Book your Trip
Now visit the goto.com front page and type in the same search term
"auto insurance quote" and the results page will show how much money
each click-through costs the top bidding advertiser. In this case
it was $1.78 by "Netquote.com" I went there to see and they seem
to be a company that sells to agents and brokers, and thus are not
even aimed at the consumer.
By the way, my just clicking on that link to visit NetQuote cost
them $1.78 and I had no interest in them myself. The first page
of results lists the top 40 advertisers and if you go to the last
of them you see #40 advertiser bid is .05 cents. That is quite
a range for the front page of results! You can appear on the front
page of the "auto insurance quote" results for just .06 cents!
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The way to determine what type of campaign to run with goto is
to determine how much you want to spend and find out who your
competition is by doing this type of research. If I were to do
this for the client, I'd charge by the hour, ($75 hourly) since
it is not cut and dry stuff, but requires analysis and careful
targeting of terms. Sometimes you can offer the client the tools
and let them spend the time researching. Some of my smaller
clients take me up on this.
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GoTo also offers a service at $99 where they will find and set
your bids on twenty search terms and credit you with $50 in
click-throughs, so they are charging you $49 for a not-very
precise "we'll-do-it-for-you" kind of campaign.
Generally though you'll get good reports from goto and can
substantiate where the money goes to determine your return on
Note that the second bid for "auto insurance quote" at $1.76 is
from "insweb.com" and they are one of the big dogs of online
consumer insurance quotes.
Budget your Trip
GoTo claims that a number one listing gets three times the
click-through rate of the number two listing and offers stats
for ranking purposes to help you decide where to bid and what
your budget can afford. You can beat them all for $1.79 per
click-through so if your conversion rate were ten percent of
click-throughs converting to paying customers, then customer
acquisition on this campaign would cost you $17.90 per new
paying customer. If your profit exceeds that amount and you
can justify it, then you have a winning campaign!
Statistics show that the average cost to business for new
customer acquisition is $30 per customer, so the example
given above of less than $20 per new customer would be quite
Hit the Road and Enjoy your Trip!
What it comes down to is, how well do you want to rank? What
can you afford? What is your conversion rate once a searcher
clicks through? How much is that new customer worth to you for
the life of the business she would bring your company? Finally,
what is your return on investment? This can't be determined
until you set up a campaign and test it with them.
The value of this type of advertising is the ability to track
exactly where the customer came from. If you set up a specific
page on your site to receive traffic from your paid search
listings, your traffic logs will verify that those new clients
came from that paid listing. It is possible to create pages to
accept traffic from each of the pay-for-performance resources
out there. Consider a few of them and test, test, test!
GoTo is not the only vehicle on the road. Road-test these!
Check your mileage and keep your web vehicle in tune!
by Mike Banks Valentine
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