Be Careful: A Big Spender Could Be a Big Loser

The key to beating out competition within the ad space of Bing/Google search results, is not to spend the most money. Instead, you want to use your funds wisely. Those who spend the most, won’t win the most. Instead, the focus should be on figuring out just how much money you can afford to spend for CPC, in order to break-even or hopefully make a profit.

The Sweet Spot of CDC

The goal of any company paying for advertisement space within search results, is to not only get clicks, but to get conversion. The CPC will differ depending on the product, profit margin, and category. As John Gagnon stated as an example, Jimmy Choo shoes and auto insurance will have different rates per click. However, both companies are paying an amount that correlated directly with their margin of profit. While auto insurance companies usually have to pay about $50 per click, their product has a higher profit margin and ROI than Jimmy Choo shoes, which have a rate of about $1-$2 per click. So, if you are an auto insurance company, of course you can pay $100 per click in order to be the #1 ad search result. Just don’t expect to make a profit.

Know Your Purpose

Remember, becoming the #1 ad search result has one purpose: to make money through sales. If you spend so much money to become #1 that you don’t have any profit margin, the entire purpose is thrown away. Instead, take the time to ensure you are investing wisely in the ad search results. Becoming #1 has a price, can you afford it?

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