Who should use PPC advertising?

Almost every week I receive enquiry from clients if they should go for online advertising with Google Adwords or Facebook PPC campaign. Well, instantaneously answering this question is very difficult. It all depends on many factors, few of them are…

  1. What is the objective of online ad campaign? Few objectives can be awareness creation for new product, online sales, lead generation, branding etc. You have to be very clear about your objective. Based on what your objective is, your digital marketing agency will be able to chalk out the further plan.
  2. Which product you wish to advertise? Your product profile decides the publisher of your online ad.  Industrial products are generally advertised on Google than Facebook. On the other hand, a company producing cosmetic products or apparels is suggested to go for Facebook ads. There are few product categories like mobile phones, furniture etc which can be advertised on Google as well as Facebook.
  3. What is the product cost per unit? This is very important factor, especially when your objective is online selling and not branding or product awareness. Consider you own an online T-Shirt store and are promoting your product on Google or Facebook. Your average product cost is $10 and your net profit margins are 20%. If you are spending 40 cents per click and getting 100 clicks a day, your daily expense is $40. If the ‘click to conversion’ ratio for your campaign happens to be 4%, your net sell is 4 units (or 4 T-shirts), net revenue is $40 and net profit is $8. So, you got the profit of $8 by spending $40 on advertising. Is it worth? Certainly not. On the other hand, consider that you are an IT training institute and want to advertise a course that costs $200 to the students. If your CPC is 40 cents and you get 100 clicks, you are spending $40. If the click to conversion rate of your campaign is 3%, you end up in generating revenue of $600 and profit of $120 by spending $40. This looks viable. Thus, it is very important what is the product cost per unit. But…. If your objective is to achieve brand visibility or new product launch, your may still go for PPC campaigns without bothering much about return on investment (ROI).

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