Catalyst Search Matters Search Marketing Blog

Here Tim Breen, Catalyst’s Director of Paid Search, addresses some frequently asked questions about Cost Per Visitor.

Q: What is the difference between Cost Per Visitor and Cost Per Click?
A: Many advertisers aren’t aware that there is a difference between Cost Per Visitor (CPV) and Cost Per Click (CPC). CPC is what you get charged by the search engine – Google, Yahoo!, etc. – when someone clicks on your paid search ad. Cost Per Visitor (CPV) is what you pay for each prospect that clicks on a paid search ad and comes to your site. Someone may click on an ad but move on before they get to your site. You get charged but you don’t actually see a visitor. When you look through your analytics reports you may have more clicks than visitors. It can be a difference of up to 10%. This may have to do with the quality of your ad. A searcher may click but then see something else on the Search Engine Results Page (SERP) and decide to go there instead. CPC is what you get charged but CPV is what you need to know to determine the true ROI of the campaign.

Q: What are the key factors that influence a keyword’s cost?
A: There are two main factors – keyword competition and Quality Score. The level of competition for a keyword is a primary factor. If you have a lot of people bidding on the same term it can drive up the overall price. Search engines are continually adjusting the bidding process and criteria. You used to be able to see the top five bids of your competitors when you set your bids. You had a good idea of what you should bid and could buy a term by bidding only .01 more than the advertiser in the #2 position. These conditions are continually changing and require daily monitoring to ensure that the advertiser is bidding appropriately.

Q: What is Quality Score and how does it affect cost?
A: Many search engines, including Google, Yahoo! and MSN Live, assign a Quality Score to every ad. Three things determine your ad’s score: ad quality, click through rate, and landing page relevance.

Click through rate is the most important factor. If your ad has a high click through rate the Quality Score will be higher and your CPC will be lower.

The second most important factor is the ad’s landing page. Search engines are trying to reward companies that create a good experience for users, so the quality of the landing page you send someone to is very important. Search engines want someone to be brought to a page that is highly relevant and doesn’t ask for a lot of personal information. The big fear is that a searcher will be brought to a registration page that asks for email address and other information that will make people shy away.

Search engines also want to be sure that the information mentioned in the ad is clearly displayed on the landing page to avoid destination disappointment. An example of this is an the ad that says, “Learn about a new drug for multiple sclerosis” but when you click on the ad it takes you to a page that describes symptoms of multiple sclerosis. The user will say, “Wait a minute, I was looking for new drug info, not a list of symptoms or questions to ask my doctor.”

You must take the user to a page that specifically talks about what you talked about in the ad. For example, if your ad says, “Save 10% in the next 30 days” you need to have a link directly to that special offer.

Q: What is a classic mistake that can really hurt Quality Score?
A: The biggest mistake is leading searchers to your home page. Each unique ad has to go to a unique targeted landing page. A landing page that is very relevant to the search term and the ad copy, doesn’t contain pop-ups, and offers a nice clean user experience will give you the best Quality Score. With a campaign-specific landing page you’ll get better results, more conversions, a lower Cost Per Click and ultimately a better ROI.

Q: Does placing the highest bid guarantee a top listing for a sponsored ad?
A: Paid search has changed in the past year and advertisers are no longer guaranteed a number one spot for the top bid. Your position used to be determined by bid and click through rate. Now your ad’s Quality Score effects positioning. A higher score means you’re higher on the page. Search engines are more concerned with user experience and this benefits everyone. Search engines only get paid when a user clicks on an ad. They don’t want to show an ad that’s not relevant and that’s not going to get a good click through rate. Users benefit by having more relevant information returned to them. And advertisers benefit by getting more highly qualified traffic in response to their ads.

Q: How do you determine your initial bid?
A: Bidding properly is now more of a science than it was a year ago. Today since Quality Score plays such a large role in your positioning it’s harder to determine what you should bid in first place. If you’re measuring the ROI of your campaign, you need to estimate how much you’re willing to pay for each visitor before launching your campaign and not go above that. For example, if you are willing to pay .75 on a term, and after bidding that you aren’t getting the placements you want, the best strategy is not to increase your bid but to adjust your ad copy or your landing page to improve your Quality Score and improve your positioning. You need to know what your maximum bid can be for the best ROI. Do your homework before the campaign starts to figure out what you’re willing to pay.

About Timothy Breen, Director of Search Marketing
Tim directs the paid search engine marketing team at Catalyst. He has developed the business unit into an industry leader that produces extraordinary results for our clients. Tim brings more than 22 years of business development and marketing experience to Catalyst including ten years of Internet marketing experience.