Unlimited budget?! That may sound crazy to some advertisers, but it is actually the norm among Capterra customers. That’s because, if done properly, Pay Per Click (PPC) advertising pays for itself. Every time an advertiser says that they don’t have a budget to give us a try, we know they’re either blowing us off (understandable, since most ad channels are probably worth blowing off) or they don’t fundamentally understand PPC advertising and how closely it’s connected to revenue generation.
The PPC advertising novice thinks of a new channel opportunity this way:
“Some of my competitors advertise there, so maybe I should try it, too.”
When they do decide to try, they only want to spend a few hundred dollars a month.
Now compare that to the savvy PPC advertiser:
“I’ll spend as much as I possibly can to maximize my sales!”
Why are they able to do that?
- They know their average revenue per customer so they’re willing to pay referral partners a commission if they close the deal.
- They have calculated their typical close rate so they can determine how much they’re willing to pay for a lead.
- Their website is optimized: strong call-to-action tied to a short form.
- They look at each channel separately because they know conversion rates can vary.
The savvy advertisers have connected the dots and realize that there is a direct line from web traffic to sales. More traffic (assuming the source has been verified) leads to more customers. No company wants to limit their customer growth but many will advertise for only the first half of the month when they could be generating leads all month long.
Savvy advertisers don’t limit themselves. Instead, they determine their target cost per lead and then spend as much as they possibly can with any channel that can achieve that goal.
That being said, there are three valid reasons for a temporary limit:
- Your sales team is at capacity. Once you hire more sales people, you lift the limit.
- You want to confirm the quality of a new channel – both the number of clicks and the value of the leads – before committing all the way.
- You’re short on cash and have a very long sales cycle. If it takes a year to convert a web lead into a sale then you may have to limit yourself so you don’t run out of cash in between.
Any other reason just doesn’t make sense – and is a sure sign that the advertiser isn’t connecting the “click-to-customer” dots.
Did I miss a reason? If you think I did, I’d love to hear from you!
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