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Negative Keywords in your Pay Per Click(PPC) SEM strategy

Pay per click (PPC) is a way to advertise your webpage through services like Google AdWords and YahooAds to reach consumer that are searching for products or services such as the ones you offer. It is also a great way to waste valuable marketing dollars if used improperly, even though search engine strive to prevent your doing so. For example, Google AdWords lets you set a daily budget, put a maximum cost per click, target your ads geographically. As if it were not enough, gives you lots of information about how the system works; however you can still manage to spend unnecessary money, most of the time without knowing so.
One of the tips for preventing this from happening is to use negative keywords when you don’t want you ad to appear or when it just doesn’t make sense. Here is an example:

– If the objective of your campaign is to sell video cards for PC then your keywords could be “video card for PC” (This is too generic by the way, but is just as an example). The problem here is that you may appear (depending on your bid for the keywords and competition) under the following search terms:
o video card for PC free
o video card for PC drivers
o sell video card for PC
o repair video card for PC
o compatibility of video card for PC
o etc..

As you may have noticed, probably none of those queries will end up as a sale of your PC cards just because the user is not looking to buy, moreover, their click on your ad will cost you some green.
To prevent this from happening, you can use negative keywords. If one of your negative keywords appears on the user’s query your ad will simply not appear. The way you set this up in your Google campaign is to use a dash “-“ before a keyword.

I recommend you to use the following keywords if the objective of your campaign is selling a product or service:
-free
-information
-“what is”
-“how to”
-definition

If the objective of your campaign is to generate leads or to get people to subscribe to a newsletter, even to drive traffic to your site, then those negative keywords should change, but I will let you guys think about it, I don’t want to ruin all the fun for you.

Latter on this blog I will write about wild cards and other search variations.

Have fun, and if you just like spending money, better buy me dinner! Google has enough already!

F.

The guys from Site Tuners forgot about Economics

While doing my daily research about new products and services related to search engine marketing (SEM) or search engine optimization (SEO), I stumbled with a white paper from Site Tuners that is outrageously incorrect.

The product is called PriceTuning and they claim to: Establishing the profit-optimal price for a product or service. They supposedly do this by testing various price-points and getting the highest price you can charge your product or service according to the revenue per visitor, and here is the fallacy.

First of all what they are measuring is the Maximum Willingness to Pay for the customer, not the optimal price point. Why? The maximum willingness to pay is the highest price a customer agrese to pay for a product or service whereas the optimal price-point would be defined as the price that maximizes your profits of the business.

But, if I sell always at the maximum price wouldn’t I be maximizing my total profit? Well, not necessarily, and here is where the Site Tuners guys trip.

There is something in economics called price elasticity of demand that measures the nature and percentage of the relationship between changes in quantity demanded of a good and changes in its price. Uh? In simple words it measures how many units more or less are sold when a price change occurs.

I think is better if I explain it with an example, and I will use Site Tuners exhibit to illustrate it:

Site Tuners Error
This image was taken from the Whitepaper ProfitTuner from SiteTuners.com

You are selling a product and the price may range from $20 to $50, then you go to Site Tuners and they tell you the optimal price is $47 (according to their graph, because is the maximum point of the curve) and this price will give you the maximum profit from each visitor. This would be the optimal price only if your demand is perfectly inelastic. However, the optimal price should be linked to the quantity of sales you make. That is, if you charge the $47 you may have only 50 clients while you could be selling at $33 and getting 300 customers.

This analysis is done assuming there are no incremental costs if you produce more or less pieces of the product, circumstances that change the profit curve (but don’t worry, site tunes didn’t take this into account)

So, if you are using PriceTunning, review your total profits, you may be leaving money on the table, and please be careful on who you trust your pricing strategies. In addition, Site Tuners, please don’t call optimal something that is only half true, that could come back to you in the future as half number of clients maybe.