Pay per click advertising for the holidays

As we get into the holiday shopping season, the cost of paid search advertising will increase significantly. The reason for this is simple--more people bidding more aggressively for a limited number of search keywords. Many companies who do little or no paid search advertising throughout the year enter the market in November, and others will decide now is a good time to try it for the first time.

This creates what I call the "amateur effect", where people start pouring money into paid search campaigns without understanding much more than "I want lots of traffic" and "a #1 position is best". These advertisers drive prices up for everyone.

Established advertisers who know what works for them will gladly pay more to keep their top-converting keywords in the top 5 positions. The result is that prices start rising in November, will peak just before Christmas, and will drop down again in the first half of January. How much is a crapshoot, but it's likely to be 25% - 30%.

Shopping.com has gone a step further than most with this statement:

"Effective November 1, 2005 we will temporarily increase the cost per lead by 30% (thirty percent) in all categories."

So, you will spend more money to get prospects to your website during the holidays. If you want to maintain your momentum, you will likely need to increase your spending. This is a good time to look at how you set your ad budget. If you are managing your campaigns to a CPO or ROI target, you don't need to read any further; you already know that you need to adjust those targets for seasonal ad pricing, and make sure every step of your campaign is a well-oiled conversion machine.

If you've just been spending a fixed budgeted amount every month and you have no idea how you'd go about managing spending to a CPO or ROI target, then you are not getting the most for your online advertising investment. A good first step is to start tracking your conversion rates for your PPC campaigns. Most major search engines (Google, Yahoo Search Marketing) and shopping comparison sites (Shopzilla, Shopping.com, Pricegrabber) offer a tool for tracking your conversion rates. Until you understand, at a detailed level, what's working and what isn't, you'll be wasting money that could be working to drive new sales through your business.