SEO

The ROI of PPC Beats Most Advertising Opportunities

At Fuel Interactive, we’re always trying to find more profitable advertising and marketing channels for our clients. That means we test beyond those channels already known to have the best ROI (which are email marketing and PPC). Some of our clients have virtually unlimited budgets, so we’ve been able to try a variety of different channels.

I want to show you comparative results on some of the advertising opportunities we’ve tested.

NOTE: this case study is in the hotel industry. Some of these channels are only applicable to travel and hospitality, or to our client’s locale. For other clients, look at advertising opportunities specific to their verticals and geography.

Here’s what we saw in February 2009, which was a strong hotel booking month, for one of our clients. The numbers here are similar proportionally to what we’ve seen in other months.

roascompare The ROI of PPC Beats Most Advertising Opportunities

*ROAS is an ROI metric = revenue / ad spend


Where Was The Best ROI?

To protect client identity and competitive advantages, I can’t share the spends or sales volumes, but I can tell you that the lion’s share of revenue came from Pay Per Click.

The best ROI results came from:

  • Pay Per Click advertising
  • Text ad placements on locally-focused websites

The advantage of some of these local placements is that the cost per click can be much lower than what you pay in AdWords- at times, 50% less or more. For example, we can get clicks from MyrtleBeach.com for less than $0.50, which the average AdWords CPC for many of our hotels is $1.30. Naturally, your cost per sale is lower, and this increases your ROI.

TripAdvisor achieved a great ROI, but we couldn’t spend a lot there. The overall revenue was a drop in the bucket compared to PPC.

Details on PPC Efforts

Pay Per Click included Google AdWords, Yahoo, and MSN. As usual, Google provided the bulk of clicks and sales. Yahoo produced the best overall ROI in PPC, but a significantly lower volume of sales than AdWords. MSN produced its typically low click volume.

AdWords campaigns were focused on customers both new to Myrtle Beach and customers familiar with specific hotel brands. We used a mix of Search and Content networks. Google’s newer approach to Content Network keywords yielded ROAS above 300%.

Six Budget Allocation Recommendations for Online Advertisers

For those who are allocating ad spends online, this case study and our other client experiences lead me to recommend the following:

  1. Test new ad channels ONLY if you can track ROI via your analytics. Also, use call tracking to find out how many sales come via each channel.
  2. Spend where you get the best ROI. Do not pay for clicks blindly. Don’t pay for impressions only unless you want to be accused being stuck in the 20th century.
  3. Spend the bulk of your ad spend on pay per click, mainly AdWords, but also as much as you can in Yahoo.
  4. For new customers, PPC is your strongest option. But don’t neglect appropriately stimulating return sales with emails to your house list.
  5. Find media placement opportunities on locally-focused sites, especially those that use text ads and charge lower than the going AdWords CPC for your niche.
  6. Consider directly approaching sites with good ROAS from the AdWords content network. If they have their own advertising opportunities, you may be able to lower your CPC and improve your ROI from these sites.
 The ROI of PPC Beats Most Advertising Opportunities
Brian is author of The Like Economy: How Businesses Make Money With Facebook and Facebook Marketing: Leveraging Facebook's Features For Your Marketing Campaigns, How to Get More Fans on Facebook, and LinkedIn For Business: How Advertisers, Marketers and Salespeople get Leads, Sales and Profits from LinkedInBrian has 12 years experience as a freelance consultant and digital marketing agency director. His hands-on business experience, cutting edge insights, background in improv and stand up comedy culminate in a keynote speaker, and social media trainer who leaves every audience not only entertained, but armed with powerful strategies and tactics.
 The ROI of PPC Beats Most Advertising Opportunities

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5 thoughts on “The ROI of PPC Beats Most Advertising Opportunities

  1. Great post and some really key points you listed.

    I’m curious to know how branded terms did compared to general terms and if you used and site-targeted image campaigns.

  2. Dan, Branded always does better than General on ROAS basis for us, but that’s also part of the sales cycle… I have plenty to say on that in a future article.

    Haven’t tested image campaigns extensively- my limited experience suggested it would be similar to lack of performance from banner ads- have you seen something else?

    1. As an employee of a company that uses PPC among other SEO techniques for its clients I would like to divide SEO into two categories -on page optimization and off page optimization. PPC would fall into the second category. Our company has found that the best approach is to continuously change the client’s website based on the types of users that our going to that website. How do we know who those users are? Because we can check which of our off-page links brough them to the site and what sites they were looking at before hand. Keeping the site up-to-date with who is looking at it, in turn affects the channels we focus more on to attract those types of users.

  3. Thanks for the interesting article on PPC ROI. You’ve said, ‘Spend the bulk of your ad spend on pay per click, mainly AdWords, but also as much as you can in Yahoo.”, which I’m not agreeing with, as AdCenter is a better platform than to Yahoo, while being specific to ad results.