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Video 49: How Click Through Rates Will Make or Break Insurance PPC Campaign

April 7th, 2011Posted by akassover in Insurance Agent Websites, PPC, Videos


Hi, it’s Aaron from AgentMethods talking about insurance agent websites.  Check out the new sweatshirt.  I was thinking about my conversation about brand this week and realized that, “Hey, I could get a sweatshirt with my logo on it.”  So here we are from AgentMethods and I am talking more about pay-per-click advertising.  I talked yesterday about sort of the pay-per-click funnel and if you remember, I talked about the clickthrough rate which is the percent of searchers typing in a phrase who will click on your ad for a given keyword.  I want to talk more about how the clickthrough rate affects your campaign and also how it can make or break your campaign in terms of the return on investment and how it’s just really kind of a critical factor in search marketing.

So I’ve got sort of two theoretical sites, Site A and Site B, and just for this example, we’ll pretend they are both bidding on the phrase “Life Insurance Ohio.”  This is a phrase they want to get traffic for.  So I want to walk through these two sites to show you how clickthrough rate can really impact your advertising campaign for the same phrase.  Let’s just say that Site A has an ad they’re running for the phrase “Life Insurance Ohio” that’s getting a 1% clickthrough rate.  That means for every time, a hundred times somebody searches for this phrase, one person will click on their ad.  It’s not bad, 1% is okay.  And then they’re making a bid, they’re telling the search engine that they’re going to pay a certain dollar amount per click.  Let’s just say they have a bid of $5, which is probably fairly respectable.

*Now let’s look at Site B.  Let’s just say that Site B has written a better ad, it’s more targeted to the phrase “Life Insurance Ohio”.  They’ve really kind of narrowed their campaign around that and optimized their ads to get the most clickthroughs they can.  Let’s say they are getting 5% which would be hitting it out of the park.  They are getting 5% clickthroughs on this ad.  They have made a bid per click of $3.  So they’ll pay $3 every time somebody clicks on their ad on the phrase “Life Insurance Ohio”. *

So then we have the question of whose ad is going to show first.  Whose ad is going to show higher on the advertising column in the search engine?  When you think that Site A is bidding more, $5, so they are going to show up first because they are willing to pay more per click, but if you look at the clickthrough rates, and we think about search engine search inventory, there is a little more to the story then that.  So if you think about in 100 clicks, 100 searches, in 100 searches, if they show Site A’s ad first every time, the search engine’s going to make $5 because one person clicks.  On Site B, if they show their ad 100 times, the search engine is going to make $15 because of the higher clickthrough rate.  Even though it’s a lower bid per click, they’re going to get 5 clicks, so 5 times 3; 15, so in 100 searches, $15 versus $5.

So what this means is that search engines are going to make more money off of Site B and because of that, they’re going to show Site B’s ad before they show Site A’s ad.  They are going to go ahead and just focus on Site B until they hit Site B’s maximum per-day budget and then they’ll look at Site A.  For Site A to compete with Site B, if Site B wants to get their ads to show up first, they’re going to actually have to increase their bid so that the search engines make the same amount of money because at 1% clickthrough rate, they are going to have to increase their bid to $15 per click.  If Site A wants to compete with Site B, they are going to have to pay $15 per click because of their clickthrough rate.  That’s $15 versus $3 simply because they have a lower clickthrough rate.

You can see here how if you aren’t optimizing your clickthrough rate on your search campaigns, if you have a low clickthrough rate, what that means is it’s going to drive the cost of your ads to show up through the roof; $15 versus $3 is a lot.  It’s going to have a huge impact on the return of investment of the campaign and probably make advertising for Site A not economically viable.  They are not going to make money.  They are going to lose money.

You can see here, just kind of theoretically, if Site A wanted to increase their effectiveness, they could turn up their budget, but probably where they should focus on first is improving their clickthrough rate.  Tremendously important.

*Now, there is a flip side to this.  Let’s say that Site B, their ad for the phrase “Life Insurance Ohio” says “Get free life insurance, find out how” and that’s why they’re getting such a high clickthrough rate because they’re promising free life insurance, but when you get there you discover that, in fact, there is no such thing as free life insurance.  Or maybe even worse, maybe they are saying “free beer,” and so they’re getting a huge clickthrough rate, but what then happens is they have a high bounce rate on their site.  So while they are getting more traffic per 100 visitors, they might not necessarily be getting real leads that are converting to real sales.  And so on the flip side, you want to make sure that your clickthrough rate isn’t so high that you’re getting people coming to your site that aren’t your prospects. *

You want to look really closely at what’s happening on a given keyword.  Is there a high clickthrough, high bounce rate, is there a high clickthrough rate, but do they convert to leads, do they convert to sales?  You need to track this all the way through because clickthrough rate is going to help you getting your ad to show up, but it could also hurt you in actually converting those leads.  The strategy I like to take is first work on getting your clickthrough rate up, getting it to where you can get your ads showing very affordably, you can get good traffic, and do this for lots of different keywords and lots of different ads.  Then go in and really track how those keywords are performing.  Be ruthless in cutting keywords that don’t have good conversion rate to leads and have a high bounce rate.  If you do those two things, you’re going to use clickthrough rate to get your ads to show up and then to really zero in on the keywords that are producing the results you need for your pay-per-click campaign.

*So that’s clickthrough rates, there is a lot more to PPC campaigns.  I’m going to talk more about it in the next few days.  If you have any questions, please add them to the comments and I’d love to hear what you want to know about pay-per-click advertising if there is something you are working on or struggling on, so I can talk about it in a future video. *

Thank you very much for watching.  I will, of course, have more tomorrow.