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Roadmap to Pay-for-Placement

Posted on October 6, 2000

by Mike Banks Valentine

The "paid placement" search results model introduced by 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 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 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 "" 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!

Fill up your Tank and Load your Belongings

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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Go to

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 investment.

Note that the second bid for "auto insurance quote" at $1.76 is from "" 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 a bargain.

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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