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Cost Per Lead

With the economy in tough shape, many business owners and entrepreneurs are trying to decrease their cost per lead. This is a noble goal, because those who are able to decrease their cost per lead will usually be able to decrease their cost per customer and thus increase their return on investment for their advertising dollars. For this discussion, we are going to focus on those marketers who are using the pay per click services of Google to drive traffic to a landing page where the goal is to have prospects “opt-in” to an online information form and thus identify themselves as honest to goodness leads. So, we have two things to focus on – the cost per click and the conversion rate. Lowering the former and increasing the latter will help decrease the cost per lead. Lowering the cost per click for a particular keyword takes some work. In order to learn how to lower your cost per click, you must first consider what the goal of Google is. Google wants their searchers to find unique, relevant content when they search for a particular keyword. This applies to both the paid and organic results on a particular query. How does Google know if your ad is relevant? Well, among other things, they look at the click through rate or CTR. The click through rate (or click thru rate) is simply the amount of people who click on your ad divided by the amount of people who had the opportunity to click on your ad- in other words, when your ad was visible on a results page, how often did people click on it? You see the logic here, right? Google figures that if a high percentage of people are clicking on your ad, then your ad must be relevant to what they are looking for. So Google likes you because you are helping them to provide relevant search results, which is their mission. Not only does Google like you, but they reward you, by lowering your cost per click. Now in the world of click thru rates, 5% might be viewed as a very high CTR. This is because most people don’t click on paid ads or even anything on the results page – but that’s okay! Remember, you are not paying for those searchers who don’t click so we don’t care about them. So how do you lower your click thru rate? The answer is “by testing”. Google will allow you to test two different ads by displaying them alternatively each time a person searches for a particular keyword of yours. They will then report to you which ad has the highest click thru rate. They will even display the ad with the highest click thru rate more often if you’d like. This allows you to constantly be testing ads and dropping the ones that are not performing. Constantly testing ads will raise your click thru rates and thus lower your cost per lead.

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