Investing in Pay-Per-Click (PPC) even with a constrained budget

With today’s economy, business are always looking for ways to “save” on expenses.  That makes perfect sense when there is limited GDP growth, competition is fierce and margins are constantly under attack.  Many times, this method is over-applied to areas of your income statement that are revenue generators.  It is important not to confuse accounting and business operations.  From an accounting stand-point, Marketing is an expense.  From a business operations stand-point, Marketing should be viewed as a revenue-generating, return-producing INVESTMENT.  Any Marketing that is not achieving those goals, should be closely scrutinized because when Marketing solutions are done properly, they will produce revenue and they will generate a positive Return on Investment (ROI).

Pay-Per-Click (PPC) advertising is one of the most direct forms of Marketing that, when implemented properly, will produce an ROI.  Even when your budget is limited or even anemic, there are ways to implement PPC so that it will achieve your financial objectives.

The first step in beginning any PPC campaign is figuring out what budget you have to work with.  Once you have figured out that number, there are some key decisions that will need to be made to ensure your PPC campaign produces the results you are seeking.

The first thing you should evaluate is the profitability of your products and services.  This involves a combination of two things…. The gross margin each product/service produces and the volume of that product/service you are operationally setup to handle.  So for example, you may make a very large gross margin on selling Tankless Hot Water Heaters, but you may only be setup to install one of those every 2 days due to the qualifications and availability of your installation crew.  Look at both and isolate the highest profit producing products/services that you can also support in volume and you are off to a great start.

The second thing you should look at is the geographic parameters of where you obtain your most profitable customers.  You may serve the entire Metropolitan area, but you may also make the lions-share of your profit from 3 zip codes.  In looking at this time and time again, the 80/20 rule seems to almost always prove out here…. 80% of the profit comes from 20% of the servable market.  Identify your most profitable geography and focus on generating more business from them.

Now that you have these elements in place, you can make some decisions.  With a constrained budget, you also want to constrain the scope of your PPC campaign.  You do that by focusing on the most profitable products/services and also the most profitable geography.  The goal here is to keep the scope of the campaign consistent with the size of the budget.  To borrow a fishing analogy, we are using our best bait to fish in the smallest pond that is stocked with the maximum amount of the most desirable fish.

In closing, remember that most businesses start out their PPC investments with a small budget and then grow them over time.  PPC works when implemented methodically and strategically and the results are measured and monitored.