The Pay Per Click Passive Income Experiment – What Not To do!

You may or may not have heard of Pay per Click advertising. But you have seen it in action hundreds of times, even if you don’t realise it!

Pay Per Click advertising is a form of advertising that places ads in the search results of Google. These ads are seen at the very top and upper right parts of the Google search results.

To place an ad is not free, we know this because Google is not poor. All of the free services that Google provides like Google maps, Gmail and Google Earth are paid for by PPC advertising.

So, Google is making billions from it, is anyone else? Well not my little passive income business that’s for sure. Why? Because I suck at it.

Before I reveal my mistakes, let’s look at how PPC should work?

Let’s say you want to sell a product on your website and that product sells for $20.

If your product is good and directly related to your niche market, you hope that out of the one in 100 visitors, one will buy. One of the quickest ways to get 100 visitors to your site is to pay to advertise on Google.

So, when you run an ad, you only pay Google when someone actually clicks on your ad, hence pay per click. How much you pay is where things start getting tricky.

Ideally in this example I’d want to pay only $0.20 per click. This means if we get one sale of $20 from 100 customers, we break even because we only paid $20 to get those customers. Hey if 2 people buy we’ve made money.

An ad is displayed based on search results. If you search on “quit smoking” you’ll see a bunch of relevant ads displayed. Ideally I want to display an ad everytime someone searches on “quit smoking”.

The only problem here is that I’m not the only one advertising in this market, so Google has to find a fair way to allocate the ad spots in its much prized real-estate.

Google solves this problem by auctioning the cost of the ad.

Remember I want to pay $0.20cents every time my ad is clicked. To set the price per click you have bid against other advertisers. Damn.

Here’s where the problems for me started.

The first problem I ran into was overpaying. Being desperate to give this PPC thing a shot I offered a way too higher price and my ads ran at $0.90. At that price I’d have to sell 5 products out of 100 customers and that’s way to ambitious for any new business.

Fail.

The next problem is the phrases I bid on. Remembering that if no one clicks on your add it costs you nothing. I experienced the direct reverse, my ad was so compelling that heaps of people click on it blowing my budget in days.

Fail.

So here’s the dilemma, clearly PPC works, but it works too well for a newbie like me because I can’t control the power of it all.

All in all I think it’s a brilliant way to get traffic to your website however a lot of research and slower pace is probably required. More research and more control is needed.

All I’ve done so far is help Google make Gmail better without getting anything in return.