Subscribe to Entrepreneur for $5

Using Pay-Per-Click Services to Drive Traffic to Your Site

Try these budget-friendly strategies for effectively advertising your site.

Opinions expressed by Entrepreneur contributors are their own.

Thanks to pay-per-click advertising services like Google'sAdWords and Yahoo's Overture, you can now create an advertisingbudget and know exactly what type of return to expect. That'sbecause by bidding on keywords that relate to your company, youonly pay when a search engine user clicks on your ad--and only theamount you've specified.

After completing the free sign-up process for accounts withAdWords and Overture, you start by creating ad campaigns that aremade up of four components: a text ad with a hyperlink, keywordsthat'll bring up your ad when searched for, a budget detailinghow much you're willing to spend per keyword and your total perday.

Assembling a catchy ad for these services is relatively simple.Deciding which keywords to bid on and how much to pay for eachclick is a little more complicated. There's a natural tendencyto go keyword-crazy at first, which can be extremely ineffectiveand expensive. For example, if your company sells golf balls andyou bid on such keywords as "PGA Tour," "TigerWoods" and "The Masters," your ad is going to beshown millions of times and may even get clicked on a lot--but notnecessarily by potential customers. More likely, your ad is beingshown to a Tiger Woods' fan who doesn't even play golf, andwhen they click on your ad, you've just wasted money onadvertising to somebody who isn't going to buy your golf balls.So keep your keywords few and targeted.

Once you've chosen your keywords, it's time to decidehow much you're willing to pay per click. If you're onlywilling to pay $0.05 per click, your ad may be placed under yourcompetitors' ads and may not be shown very often. On the otherhand, if you bid $2 per click, your ad might come up at the top ofthe results, taking a toll on your advertising budget.

Finding a happy medium is a process of trial and error. Bydefault, AdWords and Overture will calculate how much otheradvertisers are paying for the keywords you're interested inand suggest a price that beats them. This price can be extremelyhigh, but it's not necessary to have your ad placed at the verytop of the results page, so don't automatically accept thesuggested bid price. I recommend bidding low to begin--about $0.10per click--and monitoring the results. If your ad gets lost underyour competitor's ads and isn't being clicked on veryoften, you'll probably want to raise your bid.

As an example, my company sells stock footage, so the mainkeywords I focus on are "stock footage." Because thereare a few major players in the stock footage industry, it wouldcost me more than $3 per click if I wanted my ad to be featured atthe very top of the results page on Google or Yahoo. Since I'munwilling to spend that much, I found a happy medium at $0.30 perclick that places my ad right in the middle of the results andreturns a good number of clicks.

In addition to providing statistics on how many people havevisited your website as a result of your ad campaign, GoogleAdWords also provides conversion tracking. This means you can trackhow many sales have resulted as a direct result of your adcampaign, providing an excellent way to determine the return onyour advertising investment. To implement the conversion tracking,you simply place a small snippet of HTML code onto your site. To dothis, simply click on the Conversion Tracking page in the CampaignSummary section of your AdWords account, and follow thedirections.

If you create an effective ad, bid on targeted keywords, andbudget keyword clicks properly, using pay-per-click services can bea terrific way to drive instant traffic to your website.

So there are a few important things to remember:

1. Don't go keyword crazy! Choose only the keywordsthat'll draw the highest number of targeted visitors to yoursite. It's a much better strategy to have a few targetedkeywords at $0.30 per click than to have 100, loosely-relatedkeywords and pay $0.05 for each click.

2. Start by bidding low on keywords--between $0.10 to $0.20 aclick. See how many clicks result from this and raise the price ifyou feel your ad is being lost beneath those of yourcompetitors.

3. Set a daily budget for how much you're willing to spend,just in case the response to your ads is overwhelming. For example,three hundred clicks at $0.20 a click will cost you $6, and thatmay be too much for your budget to absorb.

4. Put the Google conversion tracking code onto your website tomonitor how many sales are resulting from your ad campaigns.

5. Analyze and administrate. Determine the increased revenue vs.your advertising expense. If nobody's buying, it may mean yourads aren't drawing the most targeted visitors and you need tochange keywords or your ad. It may also mean that clicks are bogus,coming from people such as competitors trying to break your bank.(Yes, this happens, and no, there is no way to stop them).

Entrepreneur Editors' Picks