Is pay-per-click for you?

Everybody is doing pay-per-click, or so it seems. For those who don't know, this is the sponsored links that appear on all the major search engines. It's what's made them profitable and it's what's fueling the growth in online advertising, account for half the total budget.

Certainly the big online spenders are putting a lot of money into PPC. Financial services, travel and automotive have pushed up the costs of generic terms, such as "mortgage" or "flights", as far as it will go. (Costs are now coming down on the major terms, as the nature of the offering, with the best advertising slots going to the highest bidder ensures that each term will find it's natural cost level.)

And now the big PPC Agencies are using sophisticated software to "develop the long tail". This involves using advanced technology to increase the number of terms used in the search for better value terms. Key accounts will have literally millions of key words covering every possible search terms that you could think of using to find one of their products. Interestingly, the larger PPC agencies are looking for clients with a minimum monthly spend of £10k or more.

In short, the PPC world has become very competitive indeed and if you want to compete with the big guns, you have to compete on price. And if you want to use the latest technology to compete on price you have to have a very significant budget to offset the cost of that technology at a sensible percentage of overall spend.

So what does that mean for a small business that is looking to do online advertising. Is PPC still a viable route, or is it the domain of the big player?

We need to consider what it is ...
- a good way to acquire visitors to you website
- a good way to test the water for online marketing for you company
- easy to track in terms of ROI and visitor activity (using Google analytics)

... and what it's not?
- a panacea and the solution to your problems

So if it can generate visitors, why isn't it the panacea that you've been looking for. The answer is in 2 parts: one, those visitors each come with a price and, two, unless they do what you want them to when they visit your site (normally buy something), then they do not deliver any value in exchange for that price.

Which brings us to the nub of the issue and shows us the key to making it work? As ever, the key is good old-fashioned marketing techniques, admittedly as applied to the technically led world. In simple terms ...
- develop the right product
- defining your audience (segmentation)
- targeting
- tracking
- analytics focusing on ROI
- test-learn-test

All of which makes me think back to my marketing diploma, which I took when the Internet was the next big thing and PPC hadn't been born.

A view of the Internet

I read lots of stuff about the Internet. Everyone is using the it and everyone is using it more than they did. The world and his dog has a website (quite literally), whether its their own site, or a blog, or YouTube, or myspace, or bebo. Half of the users are on broadband. Most of them are eShoppers, browsing and buying from a huge variety of site.

And on the financial side it's still the place to be. Company valuations are extraordinary - one minute Murdoch is insanely spending £450bn on the latest fad, Myspace, the next he's being paid £900bn by Google in a search / advertising deal. But where is the value? I've heard a rumour that myspace is passe already - so where will that leave News Corp / Google?

My view of the Internet is of its potential as a marketing channel. The statisticians tell us that online advertising is growing faster than any other medium. The press tell us about all the exciting activity the big brands are undertaking, from new multi-million pound e-commerce sites to the latest mobile campaign.

So there's lots going on. And it seems to effect everyone one way or another. But what does it mean for SMEs. They should be in on the act for sure, but what should they be doing? There was a time when it was held that the Internet allowed the small player to compete with the multinational, but not many people believe that any more.

There are opportunities. And there are threats. Nothing unusual there. But working out what those opportunities and threats are for a small business can be a hard task.

In this blog I will putting down my thoughts on what the Internet means for SMEs and how it can be used as an effective marketing tool. It's probably only for my personal use, a way for me to help to organise my thoughts and to leave a trail so that I can see how they develop and change over time. But if you do happen to read something interesting, please, please leave a comment behind.