When monitoring a pay per click advertising campaign there are several sets of numbers that are important. Click through rates (CTR) are one area that many advertisers concentrate on with the theory being the more visitors you receive to a site, the more opportunities their are for sales. However, your click through rate needs to be seen as a comparison to several other sets of data, in particular conversion rates and costs per click. Your campaign may be receiving a thousand clicks per day, and the cost may be as low as a dollar a click, however, if you are only converting at 1% with a profit per sale of $10, you’re actually losing $900 per day.
On their own, click through rates are a false statistic at the end of the day. You are much better off with lower click through rates if they are targeting better keywords and achieving higher conversion rates. Away from the statistics, one problem that many advertisers fail to deal with is the relationship between their advertisement and the landing page.
If your PPC ad unit promotes widgets, yet your landing page is dedicated to red widgets, then you are going to lose a lot of customers. Your ad unit has failed to deliver. If advertise widgets, then you need a landing page dedicated to widgets, not just red widgets. If you only sell red widgets, then your ad should specify red widgets.
By being more precise with your ad unit, you will see a big drop in the number of click throughs. However, people who do click through will do because, in the example given, they are interested in red widgets. If your landing page is well designed, you should see a considerable change in your conversion rates for that ad unit as well. The end result, less traffic, possible at a higher cost per click, but with a much improved conversion rate. If you marketing plan is costed effectively, you should be in the black and making a reasonable profit as well. PPC for small business is not about generating as much traffic as possible, it is all about generating quality targeted traffic that converts/