Marketing Matrix: Why Your PPC Campaigns are Like the Stock Market and Careful Management of Your 'Portfolio' Matters

by Stoney deGeyter

I've always been an SEO guy. I like getting into websites, optimizing for keywords, fixing problems and then watching the rankings climb.

Because SEO is relatively so inexpensive compared to other marketing efforts, I am often surprised by the amount of dollars companies are willing to invest into PPC (pay-per-click) advertising, while at the same time balking about a similar investment in SEO.

In my experience, SEO often translates into better ROI than PPC! But the primary difference is that PPC is far more trackable than SEO. PPC analytics can give you amazing flexibility into your campaigns and insight into your conversions that just isn't available with SEO.

Another benefit of PPC over SEO is the immediacy of it. SEO takes time to get results and drive traffic. PPC is easy to set up and can start delivering traffic near instantaneously.

But that's also the biggest problem with PPC. Because they are so quick and easy, most PPC campaigns are simply not managed properly. I often talk with people who believe "PPC doesn't work" for them. It's not that PPC doesn't work, it's that the campaign was built to generate traffic rather than managed to generate a profit.

If you don't know the difference between the two, then it's likely you're not going to be as profitable as you should be.

PPC Marketing is Like Investing in Stocks

Investment in the stock market and PPC marketing has a host of similarities. By drawing these comparisons, I hope to shed some light on the expectations of a well-managed PPC campaign and provide some solutions to effectively managing your PPC "portfolio."

Like stocks, PPC is an investment

Before you buy a stock, you should research the company you're investing in. You're looking for growth potential, price-to-earnings ratios and a whole lot of other stuff. Using this research data, you can analyze and set realistic expectations for what your year-over-year return should be.

Researching the PPC market should include research of your keywords, your competition, your available budget and the estimated search volume and click-through rates for your keywords. But you also need to know your conversion rates, profit margins and a whole lot more. With this information you can then set realistic expectations for what your month-over-month return should be.

Both can easily be self-managed

It's as easy to set up an account with Google AdWords as it is to set up an account with TD Ameritrade and Options Express. All three make measuring performance easy, but don't mistake the ease of use as a barometer for success.

Google and Bing have made managing your ad campaigns as easy as possible. You get reports, historical data and real-time performance results. But again, easy to use does not translate into profits.

Most business owners don't know enough about PPC to manage their campaigns profitably. Effective management of your PPC campaign requires a great deal of knowledge about each system. There are a lot of cool tricks you can do but only if you know about them. Even those who do nothing more than PPC all day still have a hard time keeping up!

Both have their ups and downs

Anybody who has watched a stock for more than 30 seconds knows that the value of the stock goes up and down constantly. With each investment we hope to see our stocks rise in value, and most long-term stock investments do see gains in their investments. But even if you look at a one-year history of consistent stock growth, you're never going to see 100% upward movement.

Any PPC campaign will see similar results when looking at overall cost per conversion. Some days you'll have a really high CPC and other days it'll be much lower. There will even be spans of time when your cost per conversion is unprofitable. This, again, is normal.

The difference here between stocks and PPC is that with stocks, you rely on the market to decide the value. With PPC, you rely on your own management skills to keep your cost per conversions where they need to be to make a profit. But, just as with stocks, there are also outside factors that weigh in on profitability.

Both can bring long-term gains

A well-managed, knowledge-based stock investment can lead to solid long-term financial growth. Unless you are extraordinarily lucky, you won't get rich overnight, but you can develop a stock portfolio that provides a respectable retirement income.

The goal of stock investment is for long-term financial security. PPC can help deliver that, too, when smart management principles are applied. Looking for short-term gains with PPC often goes against your long-term business growth strategy.

Building a smart PPC "portfolio" can be a key component to your business growth. Many people look at PPC as a supplement to SEO until you get natural rankings. Instead, look at PPC as just one of your investment options. Think diversification. But smart diversification is what you need, and smart management of your PPC campaigns can ensure that this avenue of investment not only brings sales, but profits as well.

Follow me at @StoneyD, and @PolePositionMkg.

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