Are you planning to do pay per click advertising on Google ? Or thinking of hiring a PPC consultant to help you with it ? If so, you need to find out more about what it entails before taking the plunge. In this article, you learn about what are the pros and cons of doing PPC yourself vs hiring an SEM agency in Singapore to do it.
WHAT IS PPC
Pay per click (PPC) advertising is essentially buying clicks from online advertising platforms such as Google to a website to convert into leads or sales, as depicted in the diagram below.
PPC AND ITS BRIEF HISTORY
Strictly speaking, the term PPC(Pay per click) advertising encompasses both Google and Facebook advertising. Both platforms adopt a similar costing system whereby advertisers are charged per click and only when users click, hence the term pay per click. However, Google being the more established and early PPC ads platform in the market, always comes to mind when with the mention of PPC. PPC is also known as SEM(search engine marketing).
In those days, Google created the PPC advertising platform (known as Adwords) mainly as a way to differentiate itself from traditional platforms where businesses pay regardless of actions taken. With online forms, generating leads & sales from Google wasn’t as hard. It became very successful and advertisers were seen shifting their budget from offline to online in hordes. Businesses definitely prefer the less risky approach where they only pay when there are clicks.
With Facebook launching its ads platform in 2012 in Singapore, advertisers today are spoilt for choice when it comes to inexpensive ROI-driven advertising. Not to mention platforms such as Youtube and Linkedin being viable channels for driving sales as well. Fast forward 5 years, Newspaper readership has declined to all-time low and it is no longer optional for businesses to do online marketing in Singapore.
Declining newspaper readership according to Newnation
According to Reachlocal, local businesses are shifting more budget online
PPC VS SEO
Within Google itself , you know that there are paid and organic search results. Search engine optimization(SEO) is a method that supposedly puts your website in the organic section of 1st page of Google results. Most people’s natural instincts is to opt for SEO because it is ‘sustainable’ and you don’t want to keep paying Google forever. However, Google is not dumb as well. If everyone does SEO instead of PPC, Google would have gone bust. SEO takes at least 3-6 months and is fraught with uncertainties. Contrary to popular beliefs, it is not as sustainable as one would think. Google changes their algorithm every few months or even weeks to prevent anyone from trying to ‘game’ the system. We are talking about a company with the smartest engineers and programmers in their team. PPC, on the other hand is a predictable process of leads generation. If you ‘cooperate’ with Google, they make sure you earn money(so you continue advertising).
HOW MUCH DOES IT COST TO ADVERTISE ON GOOGLE ?
I know this is the next question you will ask. Since we have to pay Google to appear on the search engine, how much exactly do they charge ? Google adwords works like an auction and you pay based on demand and supply, as well as how much your competitors are bidding. In Singapore, cost per click will be higher than countries such Malaysia but probably lower than in US , due to businesses being willing to pay more. With this system, you won’t be getting dirt cheap leads , but if you do PPC correctly, you can get affordable quality leads that are ready to buy from you. One of the things we do here in ICM is to conduct extensive keywords research to uncover low hanging fruits to save costs for our clients.
DOES IT MEAN PPC IS FOR ANYONE ?
If PPC is basically buying advertisement space on Google, it means I can do it myself ?
Yes. For example, buying ads on Straits times or Zaobao is as simple as giving a call to the sales rep. Just like any media giant, if you have money, Google is more than happy to take it. Anyone can set up an account and began advertising with Google. In fact, they want to make it as easy for you as possible.
However, buying ads and making money are 2 separate stories. If you have played mahjong, i’m sure you paid some ‘tuition fees’ in the beginning. Likewise, Google advertising is a competitive space and you are playing against other seasoned advertisers. If you are not careful, you pay a bomb in tuition.
When I first started on PPC for my first business in the tuition industry, you bet I was burning money real fast. To make it worse, all the recommended default settings in Google adwords are geared to make me run out of budget in a blink. For example, keywords are set to broad match by default, which means that anyone typing in any keyword in Google that is even remotely similar to my target keyword will trigger my ads, making me pay for alot of irrelevant clicks.
Case in point. I have a client selling ERP software (Enterprise resource planning software) to SMEs and he was buying keywords like “ERP gantry”, “ERP Orchard”, “ERP rates” , all without his knowledge! He was doing this for an entire year on his own until I did an audit on his account. One click on Google for ERP related keywords cost slightly over $2. Imagine how much money he has flushed into the drain over the timeframe.
Another client was putting his ads on Google.com.in even though he is running a Singapore-based business. He did so unknowingly for a couple of months and the estimated loss was at a few grand. (It is no wonder Google is one of the richest company in the world. )
If you are planning to advertise on Google on your own, be sure to do lots of reading on it. Google has an adwords course that teaches you the basics of using their platform.
WHY GOOGLE ADWORDS IS FOR SMES ?
Adwords is a double edged sword. Before you start cursing and swearing at Google for making your life so tough, do look at the other side of the coin.
The advertising world used to be the case of, richest man takes all. If you can afford a 5-figure one page ad on Straits Times, SPH will put up your ad no matter how ugly it is. SMEs with a limited budget never ever had a chance against big corporate giants in getting more exposure.
In the case of Google, the game is played differently. The top-ranking ad you see on Google is NOT from the advertiser that pays the most. Consider the following official formula released by Google in determining ad position:
Ad position = Quality score X Bid price X Ad extension
Google places a strong emphasis on the quality score of your advertisement. Why ?
It is widely known that Google has become a part of everyone’s lives today. They even crushed Yahoo, the pioneering search engine. Come to think of it, why did you use Google instead of Yahoo ? Simple, because they serve search results that better meet our needs. One day, if search results becomes populated by useless spammy advertisements, you would stop using Google, wouldn’t you ?
SEARCH ENGINE MARKET SHARE IN SINGAPORE
Google will never repeat Yahoo’s footsteps and ruin themselves with a short term focus on profits. Hence, the quality of your ads, landing page and campaign structure all plays a part in Google deciding whether or not to show your ads.
Good news, SMEs!
Case in point, one of my clients in the finance industry continually outranks big banks such as DBS, OCBC, Standard Chartered in the search results because of a strong focus on quality of advertisement. With rise of online marketing , everything is shifted in the favor of SMEs.
WHO SHOULD DO PPC ?
There are certain businesses that would have a tough time with Google per per click advertising.
The keyword ‘aircon servicing singapore’ comes with a cost per click of $4.50.
Yet people are charging only $18 – $20 for an aircon service , which is the price of about 4clicks. It is technically impossible to get a lead with just 4 clicks. Just like any marketing efforts, its a numbers game. (Think of it this way, can u get an appointment with every 4 cold calls or 4 flyers? ). In that case, does it even make business sense for them to advertise on Google ?
The only way to advertise profitably for these businesses is to maximize the lifetime value of a customer. For example, Starbucks sells coffee at just around $5 but their customer lifetime value is at $5400(source: Kissmetrics). How is that possible ? Well, a new customer that comes in their door do not just buy once, they keep buying over and again through their lifetime. Based on the average spending, purchase frequency and duration of a customer, you can estimate the lifetime value. Hence, if your upfront fee is not high, you need to figure out a way to increase the lifetime value of the customer by having a strong follow up system in place.
In Ice Cube Marketing, we use a systematic, numbers-driven process(albeit much simpler than what Starbucks uses) to determine if a keyword will be profitable for your business. If not, we will recommend other keywords, or even other platforms from which to leverage for your business. We do not suggest going in straight without doing some estimation of profits. Remember, advertising is science and an art.
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