“24 out of the 25 largest newspapers are experiencing record declines and newspaper advertising is down almost 20%.”
“Only 18% of traditional TV campaigns generate a positive ROI.”
“Yellow Page advertising continues to decline and the Wall Street Journal predicts an additional 39% drop over the next few years.”
Given the quickly shifting landscape, many propane companies are struggling to figure out where their future customers will come from. To make matters worse, usage is declining (thanks to advances in efficiency), competition is growing, and the economy remains stubbornly weak. We know we have to advertise our business, but how, and to whom?
When I talk to propane business owners about search marketing, I frequently hear, “I tried pay-per-click. It doesn’t work.”
Well, the truth is, it does work. But you have to do it the right way.
Before I get too far into this, let’s go over a few terms you’ll need to know:
|PPC||Pay per click. (In pay per click advertising, you only pay when somebody actually clicks through from your ad to your website.)|
|Impressions||The number of times your ad is displayed on the search engine results pages.|
|Click thru rate||Impressions ÷ Clicks on your ad.|
|Click to call rate||Clicks on your ad ÷ phone calls received or web submissions (leads.)|
|Cost per click||The rate you pay for a click to your website|
Let’s look at some of the reasons PPC campaigns fail.
PPC efforts fail for those who stick a toe in the water. Throwing a few hundred dollars a month at a Google Adwords account is basically throwing your money down the drain. There is a real science to determining how much money a campaign needs to work effectively, and it depends entirely on how much search there is on your products and services in your particular market, and how competitive the landscape is. Let’s do the math. Let’s say there are 20,000 searches per month on your keywords. That means that your ad could potentially show up 20,000 times.
20,000 impressions X 1% click thru rate = 200 clicks. If the average cost per click is $5.00, you have spent $1,000.
Our websites generate about a 12%-15% click to call ratio, so your $1,000 would net you 25-30 calls at an average of $33 per call. If you convert just 20% of those into sales, you got five or six new customers at a cost of $1,000. That’s a customer acquisition cost of $166. If you assume a one-year gross margin of $800 per customer, that’s a pretty good number. And if there are 30,000 searches, or your website generates a higher number of calls, or your team does a better job of converting leads into sales; your numbers are even better.
But if you set your budget at $500, on average that gives you $16 per day. A few clicks early in the morning and you’re done for the day! 12% – 15% of three is basically nothing so chances are you’ve acquired no new customers and you’ve wasted your money.
Bottom Line: Done correctly, pay per click is science and math. Throwing spaghetti against the wall to see if it sticks is not the right approach.
In search marketing, a conversion is the term used to describe a user taking action on your website: calling the phone number, filling out a form, or submitting an email. Conversion is the ultimate goal. It’s what turns traffic into actual leads. And in the world of search, some keywords convert better than others, sometimes, in some situations. Sound complicated?
Let’s look at an example. At 1.5 million searches per month, the word propane is a pretty popular keyword. Propane delivery, on the other hand, is only searched about 8,000 times per month but it’s much more specific and relates more directly to your business. Chances are, users who come to your site from propane delivery will convert more frequently that those who come from searching propane.
Bottom Line: Bidding on keywords without knowing which words convert at the highest rate is a sure way to throw your money away.
There are a lot of similarities between selling on a website and selling in person. The most important, is that you have to ask for the sale.
If you want your visitor to do something on your site—call you, email you, or submit a form—you have to ask them to do it! Doing something as simple as having a graphic box that says, Call now to find out about our new customer special! is more likely to convert than a website that just lists your products and services.
Bottom Line: Spending money on buying keywords and then not having a call to action once the user lands on your site is not a winning strategy.
Now that we have talked about why PPC campaigns fail, let’s review how to help them succeed.
Select the right keywords to purchase. You can use the Google keyword tool to help you. Or even better, use a service that will do the legwork for you—the data will be more accurate that way as well. (If you’re interested in learning more about these services, drop me a line. I’d be happy to walk you through the pros and cons of the various services available.)
Compose advertising copy for each one of your pay-perclick ads that will make your message stand out. A quick review of the ads shown here (which were served up for the search propane delivery service in the Northern New Jersey area) clearly demonstrates that ads are written to deliver a specific marketing message—some obviously better than others. It is critical to determine your competitive advantage and craft the language that will make the phone ring.
Engage your potential customers with a reason to do business with you. The landing page—defined as any page on your website on which a user “lands” after clicking through from a search page, ad, or link—must have a strong call to action. You managed to get a potential customer’s interest, now get them to ACT NOW!!
The most important driver for success in a PPC campaign is to measure your results. How many phone calls and emails are you getting for how much you’re spending? Which keywords are driving the highest numbers of phone calls? If you don’t have a handle on this data, how do you know where to spend your money for the greatest return?
As an example, if propane delivery service costs $5.00 and results in two phone calls in a one-week period, and propane supplier costs $9.00 and delivers three calls in the same period, which word has the better ROI? In this example, you spent $10 on two phone calls and $27 on three phone calls. While the latter is higher, it is certainly worth the extra money!
And if overall, you spend $2,000 in one month, how many new customers do you need to acquire in order for the campaign to have been worth the investment? Five? Ten? If you know the answer to that question, you can easily tell on a month-to-month basis if your program is working.
The following table shows actual results from a propane company in the Mid-Atlantic region for one week at the end of August. Their cost per call works out to $19.65. If they convert 25% of those calls into sales, their customer acquisition cost is less than $80. Now that is a successful program.
Keeping your customer acquisition costs low is the way to win the marketing battle. Across the marketing mix, from direct mail, to newspaper advertising, to Yellow Pages, radio, billboards and cable TV, it is clear that pay per click wins. But before you charge ahead, do your homework. Analyze your current website and your market. Determine the right keywords and budget. And above all, measure and analyze again. The victor is the one who acquires the most customers for the least amount of money