Basic Knowledge of Advertising:CRO + PPC=$

Google’s Pay-Per-Click (PPC) system, AdWords, is a great way to drive traffic and sales for a website, but it takes careful research and preparation to get the most from it. A website owner should understand the basics of Conversion Rate Optimization (CRO), including how optimization can help, how to identify conversions and how to use their figures to determine their advertising budget. They must also take the time to understand how their website design can help–or hurt–their CRO.

What CRO Does

When done correctly, Conversion Rate Optimization will allow a website owner to target advertising campaigns efficiently, increasing profitable conversions and reducing the average cost per conversion. In general, conversions and sales grow proportionately. Being able to identify desired, profitable conversions not only allows a website owner to identify PPC keywords to focus on, it also helps identify areas of their site they should concentrate on to make it easier for their users to navigate through a purchase.

CRO Equation

The most basic CRO equation required to evaluate PPC campaigns and site design is as follows:

X * Y = Z

X = Cost per keyword click

Y = Percentage of conversions for X’s keyword

Z = Advertising cost per conversion

If the profit on the item being sold through the campaign is greater than Z, the advertising campaign is profitable and within budget; if not, the advertiser should evaluate their web design or focus on other keywords that are profitable. This equation should be used for each keyword individually, to find the profitability of each portion of an advertising campaign. Some keywords will prove to be more profitable than others, which can help advertisers identify areas that might benefit from longtail keywords.

CRO and Advertising Budgets

By using the CRO equation, identifying the most profitable keywords and finding longtail keywords to target, a website owner can take greater control of their budget, putting their money where it will perform the best. Words like “shop”, “purchase” or “buy” are great additions to keyword phrases that are used to target people who have an intent to purchase. If an advertiser’s goal is to gain subscriptions, adding words like “sign up”, “subscribe” or “receive updates” will aid in targeting their most desired conversions.

Site Optimization

Targeting keywords and setting a budget will offer few benefits if most users bounce from the landing page. In order for a website owner to make the most of their traffic, they must align their web design with their conversion goals.  By simplifying landing pages and making a user’s options clear, the owner can help their prospective clients find what they want quickly and easily, which will not only reduce user confusion, but also result in more desirable actions such as sales conversions. Using active verb phrases such as “Sign up”, “Click here” or “Buy now” on buttons or links make a user’s choices actionable and obvious and direct them to their goals.

Special types of optimization may need to be rolled out to streamline user-experience and to make sure that all types of functionality fit with a mobile app platform. Mobile CRO is increasingly important as traffic from mobile sources continues to explode more or less across the board.

By focusing on Pay-Per-Click Conversion Rate Optimization and site optimization, a website owner can build an effective advertising campaign that will result in a substantial increase in desired, profitable conversions. Knowing the basic CRO equation and how to determine the necessary budget for a campaign will enable the owner to target specific clients and organize their site in a way that will result in more sales, signups or general traffic.

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