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Aug
15
2016
Why PPC Needs a Large Budget

Here's a breakdown of what we can see from our organic SEO results in the finance industry:

Out of every 26 people that fill in their details for a certain finance product, three of those convert - giving a conversion ratio of 11.5%. Our small campaign showed that those 26 people came from 358 visitors, which is 7% of people add their details - this low figure could be down to the fact our iFrame is fairly slow to load up which we are dealing with the finance company to try and rectify.

Each sale is worth £250, so for every 8 or so people to our website, we get £250 in commission.

Let's turn those figures into a pay per click campaign:

We want one sale per day, at least, which would give us £250 per day.

We know that through organic we can make £1.66 per visitor so let's take that as the target cost per click (CPC), but in the finance world, it's going to be more like 10x that figure. Yes, really!

So, at £1.66 we need to spend £150 to make £250 giving us a £100 profit or £25k per year - this isn't good enough to have any staff, any real return as the UK national average wage is £26k. So let's try and get £250 per day, which equates to £96k per year. How do we get there?

Spend £450 on PPC per day, giving a profit of £300 per day from £750 (or 3) sales per day. Over a month that's £9k profit, or £96k per year. But you've had to outlay £13,500 to turnover £22,500 and make £9,000 profit. 

But, what if you don't convert. What if you don't get the same results as organic - which PPC never does. What if there are low converting months, seasonal? To spend £13.5k to make £9 per month is pretty weak ROI. You might as well go to the casino. 

Usually, PPC gets around 5% conversion rate, which brings that ROI and score down even more. And if the CPC is 10x what we quoted then you need to spend 10x more to make what is comparitively a very low figure. 

Organic traffic is always best, and it's always cheaper but it's not instant. If you get lucky and have an endless bag of cash, then go with PPC. If not, then work with organic SEO and see the rewards for far cheaper (as we can hit more and more keywords), you're only battling with companies' websites not their budget. It might take a few months, but the rewards and ROI keep on increasing.

This is why we don't like pay per click. It's pointless, it's expensive, there are no guarantees and the only company that profits is Google.