The Perils and Pitfalls of Pay-per-click Advertising

by Cari Haus

Published on this site: April 27th, 2005 - See more articles from this month...

In this age of speed dialing, T1 lines and other forms of high-tech instant gratification, many webmasters find themselves tempted to engage in pay-per-click advertising. After all, if you’ve just designed a state-of-the-art website, there’s nothing quite as gratifying as a steady stream of traffic right from the start. Webmasters with open wallets have found that pay-per-click can provide traffic within hours or even minutes of a website’s launch.

Pay-per-click Pros

Before considering the perils and pitfalls of pay-per-click, it’s worthwhile to remember that in some instances, pay-per-click is a good market strategy. A number of reputable SEO firms combine pay-per-click management with search engine optimization as a method of getting their clients the clicks they need. Pay-per-click can be an especially effective strategy for:

• companies trying to beat a competitor to market with a new product who want to garner substantial traffic while waiting for their SEO efforts to kick in
  
  
• webmasters with deep pockets who are more concerned about establishing a quick presence than long-term return on investment
  
  
• webmasters who are reaping a return on investment high enough to justify expenditures on pay-per-click

Significant Drawbacks

Although there are valid reasons to engage in pay-per-click advertising campaigns, there are also enough drawbacks to give any webmaster pause.

Companies considering pay-per-click need to determine the primary purpose of their marketing campaign—whether it be immediate sales, building website value, or a combination of the two. If immediate sales is the goal and a worthwhile return on investment is being achieved, pay-per-click may be the strategy of choice—at least until good search engine positioning can be obtained.

Webmasters seeking to build a valuable web-based business should remember that whenever the money “spigot” for pay-per-click stops, so do the clicks. In contrast, clicks resulting from an investment in search engine optimization will continue for months and possibly years to come.

Monitoring ROI

Return on investment (ROI) is another key factor to monitor during the implementation of any pay-per-click marketing strategy. ROI can drop dramatically as market forces change. An increase in competition, when combined with rising costs-per-click and plummeting product prices, can quickly spell doom for a previously profitable ad campaign.

Computing ROI for pay-per-click can be a bit tricky. Since most sites receive “free” traffic resulting from SEO efforts, it’s important to try and ferret out what percentage of sales are resulting from pay-per-click and what percentage are resulting from your other SEO efforts.

Choosing which sites and search terms to allocate advertising dollars to can also be somewhat daunting. Rapid changes in per-click charges can also be challenging to manage well. If your bid is #1 and our competitors lower their bids, you may be left paying a higher price than necessary to maintain top positioning. This is the webmaster’s equivalent of throwing money down the drain. Unless you plan to sit by your computer watching per-click charges on an hourly basis, some type of pay-per-click management is, in my opinion, an absolute necessity.

In running a successful pay-per-click campaign, there are also questions to be answered about whether to try for top positioning or settle for some lesser spot, and which pay-per-click ads pull the best.

While I have learned “never to say never”, I am not presently using pay-per-click for any of my websites. Though I have used it in the past and may resort to it again, my website is doing better than ever without it. Pay-per-click is just one more thing to manage, and, if not managed well, can become a financial drain in a hurry. I’m a pretty busy person, and probably a tightwad as well. As a result, pay-per-click isn’t part of my current marketing arsenal.

That doesn’t mean, however, that it might not be right for your site. Do some testing, study it out, and consider the “cons” described in this article. In the words of an old adage, “if something is worth doing at all, it is worth doing well.” This is especially true for things that cost money. My advice is to keep that thought firmly in mind whenever you open your webmaster wallet.

Cari Haus has been successfully selling rustic log furniture and beds on the Internet since the late 1990’s. Copyright 2005 by Cari Haus, website http://www.logcabinrustics.com/. Permission is granted to reprint this article, either online or in written publications, as long as the copyright information, this paragraph, and a link address or a link to the Log Cabin Rustics website is attached at the end of the article.