Answer: Many advertisers mistakenly believe a cost-per-click (CPC) model automatically generates a greater return on investment, but CPC deals may not be the bargains they seem to be.
To determine the ROI of a campaign, you must weigh all factors together. What is your overall campaign cost? How many qualified prospects did you receive? What resources did you apply against follow up? How many sales did you make? What was the average cost per sale? And most important, did you make a profit?
Clicks are just the initial piece of the puzzle and are not an adequate measure upon which to base your assessment of campaign ROI. While you may pay a low cost-per-click in a CPC campaign, in many cases your back-end investment nullifies any perceived gains.
There are two important things to consider beyond the number of clicks:
- Conversion—It’s great to get a click, but how many people who clicked actually followed through to complete your call to action? A valuable benchmark to consider when executing your ad campaign is conversion—the percentage of people who clicked through who then go on to perform the requested action (for example, downloading your white paper or registering for your Webcast). The value of a click is lowered considerably if it does not lead to conversion.
- Quality—Few publishers will sell premium inventory on a cost-per-click basis. As a result, many publishers send CPC e-mails to poorly targeted (less valuable) lists, or place your e-newsletter CPC ads in less desirable positions. How valuable is this click when it’s either not directed to the proper audience or not positioned in the best way to reach your target audience? It’s imperative to be in front of the right audience at the right time to make the most of your investment.
In conclusion, while you may pay more upfront, the best way to maximize overall ROI (as well as the ROI of each click itself) is to advertise within targeted newsletters or to very targeted lists. The more you can engage the audience on the front end, the more valuable the click will turn out to be.
Garrett Mann is senior manager of TechTarget Client Consulting Services (www.techtarget.com).