Two Effective Ways To Overcome Rising Pay-Per-Click Advertising Costs

As more and more people start online businesses, your pay-per-click advertising (PPC ad) costs will increase. It’s inevitable as new internet entrepreneurs start pouring money into Google AdWords and Yahoo Search Marketing.

And the increase in PPC ad costs will definitely affect your bottomline. For instance, if you’re currently paying 20 cents a click and getting a 1% conversion rate for a $50 ebook, you’re making a profit of $30 for every sale.

Now, what happens if the cost per click is driven up to 50 cents?

With a 1% conversion rate, you’re just breaking even on your $50 ebook.

And what happens if the cost per click goes up to $1?

Now, you’re losing $50 for every sale!

So, how do you overcome this inevitable challenge?

Well, here are two proven strategies to overcome rising PPC ad costs:

1. Extend your customer lifetime value

Customer lifetime value (CLV) refers to the total amount of profits you’ll generate from your customer’s expenditure on your products and services in her lifetime. Using the earlier example, if you’re making a profit of $30 from a $50 ebook, your CLV is $30.

So, to overcome rising PPC ad costs, you’ll have to extend your CLV. In other words, you’ll need to generate repeat business by selling additional products and services to your customers.

Here are two ways to extend your CLV:

Tactic #1: Create and sell high ticket information products.

I highly recommend that you create a $97 to $497 information product and promote it via email to your customer list. The fastest way to create a high ticket information product is to conduct a live or teleseminar and record it on video or audio. And when you charge a fee for the seminar, you’re actually getting paid to create your product.

Tactic #2: Sell services.

For example, if you’re selling an ebook on job hunting, you should also sell resume writing or interview coaching services. You don’t necessarily have to be the service provider. You can always set up a joint venture with a service professional and collect a commission for every sale you generate.

2. Share advertising costs with complementary businesses

This is an old strategy used by franchises like McDonald’s. You see, every McDonald’s franchisee has to contribute to an advertising fund. A portion of their sales is automatically deducted for advertising expenses.

The reason is because each franchisee by itself wouldn’t be able to afford to produce television and print advertisements and buy airtime on national television or ad space in national newspapers.

But when they combine their financial resources together, they can afford to create a multi-million dollar advertising campaign. In other words, their leveraging on each other’s resources.

Now, here’s how you can adapt this strategy for your own business:

1. Find and approach one to three complementary businesses to share PPC ad costs.

2. Create a landing page that will promote your business as well as your joint venture partners’ businesses. If the landing page collects visitors’ contact information, each partner has access to the information. The landing page will have to be hosted on a neutral domain to be fair to all parties.

3. Set up PPC ads to send traffic to this landing page. One of the partners will have to be appointed to set up and manage the ad campaign. And that partner should be compensated for her effort. Alternately, you and your partners can outsource the task to a virtual assistant or a professional search marketing firm.

So, with these two strategies, the rising PPC ad costs will not be much of a problem for your business.