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Is PPC Like Renting Traffic?

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I read somewhere on another blog (donโ€™t remember where now) that running a PPC campaign is like renting traffic. The analogy makes sense, but if you think that renting is a bad thing then think again. Renting traffic can actually pay off.

There is a difference between renting and owning, however. While PPC is like renting traffic, SEO is more like owning it. Hereโ€™s how they differ.

When you spend $100 on a PPC campaign and receive 100 visitors to your website then youโ€™ve paid $1 per visitor to read your offer. But letโ€™s say that you close 1 in 10 of your visitors or, to say it another way, you have a 10% conversion ratio. Each sale costs you $10. But you only pay for that sale whenever you have your PPC ads turned on. Stop the advertising and you stop the sales and the traffic.

Measuring ROI is a different thing altogether. Letโ€™s say you sell pink widgets for $20 each. For each sale you pay $10 to obtain you also earn $20 to close. But thatโ€™s not your profit. You also have material costs. Letโ€™s say it costs you $3 to make your widgets. Your profit is $7 for each widget you sell. Thereโ€™s your ROI.

SEO works a little differently. Letโ€™s say you pay an SEO professional $500 to optimize your website. Your conversion ratio is still 10% and letโ€™s say that you get 1,000 visitors from the search engines each month. That means you make 100 sales every month and at $20 each you earn $2,000 on your search engine traffic the first month. Thatโ€™s an ROI of $1,200 the first month andย $1,700 every month after that.

Obviously, the money you can earn from SEO has a lot greater potential than the money you can earn from PPC. But, realistically, you have to wait 2-6 months for that SEO traffic to become profitable. If that $500 investment doesnโ€™t start paying off for 6 months then you do not realize an ROI for 6 months on your investment whereas you can realize an ROI on your PPC the very same month. Itโ€™s a lot more immediate.

Question:ย Would you rather earn $70 additional income today or $1,700 additional income 6 months from now?

Consider that your $70 ROI will add up to $420 over a 6-month period. If you re-invest that money into other vehicles then $420 could turn into more. So donโ€™t knock the lower numbers today that you can earn from PPC. Iโ€™d recommend that you utilize both channels โ€“ PPC and SEO โ€“ for your online marketing efforts.

BTW, the numbers in these examples are not reflective of actual sales and ROI numbers. They could be higher or lower for both PPC and SEO. Some companies actually earn higher ROIs from PPC.

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United Kingdom (UK): London, Birmingham, Leeds, Glasgow, Sheffield, Bradford, Liverpool, Edinburgh, Manchester, Bristol, Kirklees, Fife, Wirral, North Lanarkshire, Wakefield, Cardiff, Dudley, Wigan, East Riding, South Lanarkshire, Coventry, Belfast, Leicester, Sunderland, Sandwell, Doncaster, Stockport, Sefton, Nottingham
Canada: Toronto, Montreal, Calgary, Ottawa, Edmonton, Mississauga, North York, Winnipeg, Vancouver, Scarborough, Quรฉbec, Hamilton, Brampton, Surrey, Laval, Halifax, Etobicoke, London, Okanagan, Victoria, Windsor, Markham, Oshawa, Gatineau, Vaughan, Kitchener, Longueuil, Burnaby, Ladner, Saskatoon
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