See how acquiring more clicks can increase the cost per click and how diversification can help reduce the effects of price elasticity.
- [Instructor] Price elasticity in pay-per-click is counterintuitive when compared to conventional media buying and volume-based discounting. Let me explain. If you buy traditional media such as newspaper ads, or sponsored guest posts, the more articles you buy, the bigger the discount. The same would apply if you were a supermarket buying stock. But in pay-per-click, the more clicks you buy for a keyword, the higher the cost-per-click as you compete for volume. To prove this, I'm sharing with you a price elasticity graph from Bing Ads, which is something you will find handy if you're in campaign planning.
I don't hope this discouraged you from PPC. Yes, it's a challenge, but it can be managed. So, how do we manage price elasticity? The biggest mistake a business can make is to try and buy all their clicks from one provider because it seems easier. Let's imagine you need to buy 10,000 clicks to maintain market share. If price elasticity indicates that cost-per-click for 5,000 clicks will be $5, but it will then be $11 for 10,000 clicks, then you'd be spending $110,000 to acquire that volume of traffic from one provider.
If you've split your media buying between two providers, you could spend $50,000 on the same traffic, incurring the substantial saving. I would encourage you to learn how to use both Bing Ads and Google AdWords for PPC. This will enable you to lower your cost-per-click as you acquire traffic from the entire market. You can also measure the conversion rates that you achieve from each network and let that influence your budget allocation as part of conversion rate optimization.
- Understanding the difference between search and display advertising
- Mapping PPC marketing to the sales funnel
- Using marketing agencies and campaign specialists
- Creating a Bing Ads account
- Creating a Google AdWords account
- Granting access to third-party users
- Setting up a campaign in Bing Ads and Google AdWords
- Setting keyword match types
- Copywriting for PPC ads
- Improving the quality score of your ads across different networks
- Using goals and conversion tracking
- Handling typical problems in PPC advertising