Paid Placement Costs: Kinds of Costs to Keep Your Eyes On - PPC Campaign

One of the best things about paid placement is that you can control the costs. You can buy as many or as few keywords as you want, and you decide how much you are willing to pay for each click. And you can adjust anything at a moment's notice, so you can control your budget.

As you embark on a paid placement program, here are the kinds of costs to keep your eye on:

Creative Costs – whether you do it in house or your hire a consultant or ad agency to do it for you, it costs money to create the titles and descriptions that display onscreen. Remember, the number of searchers who click through to your site depends completely on the killer title and description your write, so this is no place to skimp on the budget. Agencies can usually do three or four new ads an hour, charging anywhere from $50 to $200 an hour to do so.

Management Costs - Tracking and adjusting your bids can be a lot of work, but it is the key to maximizing the return on your paid placement investment – these campaigns do not run well on autopilot. You also need to keep track of your creative changes and deadlines, reconcile your bills, and verify your click-throughs. You can hire an ad agency or search consultant to manage your paid placement campaign for you. Conversely, if you manage it in house, budget at least one full time person to manage a large campaign consisting of more than a thousand keywords. In addition, you should invest in bid management software or services to automate a lot of manual work.

Per Impression Fee - Usually referred to as CPM (cost per thousand – M is the Roman numeral for 1,000), you pay each time your ad displays onscreen, whether a searcher clicks or not. Typically, CPM pricing is used only for fixed placement advertising, not bid based advertising, and it varies from $10 to $30 per thousand impressions (or about 1cent to 3 cent per single impression).
Per Click Fee - Often call CPC (cost per click), it just means that each time a searcher clicks your advertisement, the search engine charges you a fee. Typically, you open an account for a set amount and start bidding for placement. Whenever a searcher clicks your ad, the current bid (per click) free deducted from your account, with your ad disappearing if your account reaches zero. CPC prices range from about 10 cent (usually the lowest bid allowed) to $30 or sometimes more, with the average around $1.

Per Action Fee – also known as CPA (cost per action), you pay only when the searcher takes “action” – typically a purchase of your product. In practice, CPA pricing is used mainly for fixed placement or shopping searches, not bid based advertising, and runs anywhere from $5 to $50.

CPM, CPC, and CPA free are usually mutually exclusive – you pay only one of them on any particular deal. Some advertisers prefer one method over another, but there is no surefire way to pay less on a consistent basis – it all depends on how many searches, clickthrough, and purchases there are.

Paid Placement Formula