Pay-for-performance or
pay-per-click Internet advertising is making big waves lately, and the two
biggest players are Google and Yahoo (which recently acquired Overture to
become a major player in the search arena once again). Microsoft recently
jumped in with MSN Search, while numerous other fish (albeit tadpoles) are
active in the pond.

With pay-per-click advertising via
Google and Overture, the cost of an ad is based on performance. In other words,
you pay for an ad only when someone reacts to it, by clicking on it. However,
the effectiveness of the ad is gauged by its conversion ratio. For example, if
one out of every 100 people who click buys your service or product for $100 and
your ad costs $1 every time someone clicks on the ad, then your conversion-to-cost
ratio is 1:1—you’re breaking even. If the conversion ratio goes up,
you’re making money. If it goes down, you’re losing money.

Thanks to tools provided by both
Google and Overture, these conversion ratios can be calculated automatically if
you add a little Javascript code to your Web site.

The cost of an ad in traditional
print media, on the other hand, is based on circulation and “readership.”
Although rates are expressed in terms of CPM (cost per thousand), you have no
way of knowing how many readers actually see an ad you place. And even if they
see it, how many respond positively to it?

In these terms, it’s easy to
recognize the advantages of pay-per-click advertising, especially for a
relatively small-ticket item such as a book. But before you jump headfirst into
the pay-per-click arena, review the following tips:

Be aware of the
differences between Google and Overture.

Google is the leading search
engine at the moment, but its reach never exceeds its own grasp. Overture
technology, on the other hand, currently extends to Yahoo, AltaVista, CNN,
Infospace, and others.

With the help of Overture
technology, Yahoo provides more intuitive and complete reporting functionality
to help you analyze the effectiveness of keywords, but it also requires you to
deposit money into an account in advance. It draws money from that account to
pay for your activities until the account is fully depleted. The draw can vary
substantially from one day to the next. Also, Overture requires you to keep
three days of “extra cash” on hand. Do you earn interest on the money you’re
loaning to Overture? Forget about it. Google simply bills your credit card for
your expenditures and allows you to set a maximum expenditure-per-day, giving
you more control over your monthly spending.

Be aware of the
similarities.

Both Google and Overture
differentiate their paid clicks from their free listings, usually by featuring
the “sponsored” searches on a different part of the page and by highlighting
them in a color box. Recently, Overture launched a new search mechanism that
lets an advertiser choose to be included in the free listings too. Perhaps this
is because over 80 percent of user-clicks still occur within the “free”
listings. Overture’s ploy is designed to attract some of those users while
still providing sponsored links.

Both services experience
unexplained, and fortunately infrequent, spikes that rapidly decimate your
daily or monthly budget. It’s a little unnerving knowing that you could blow
through $500 or $1,000 in a matter of hours—or minutes—with
absolutely no recourse.

That’s right, no recourse, since
both services feature barely adequate customer service with representatives who
often reply to questions about such technical idiosyncrasies with hostile
ambivalence. Sounds like an oxymoron, but it’s not.

Start conservatively.

Since pay-per-click campaigns are
not an exact science and can be ridiculously expensive if you’re not careful,
start a campaign on either Google or Overture, but not both. Then get some
experience with the mechanics before launching full-scale advertising campaigns
with a second company.

Understand the mechanics.

The way pay-for-performance works is
simple. You bid on search terms, either words or phrases or a combination of
both. Your Web page link then appears in search engine results in a position
that’s related to your bid. In Overture’s case, if you’re the highest bidder on
a particular keyword, your Web page appears at the absolute top of many search
engines. Remember the frustration of typing in a search for your Web page and
never finding your link? No longer! In Google’s case, your placement is
determined by your bid in relation to other competitors’. But, unlike Overture,
Google doesn’t reveal the competing bids, so a bit of trial-and-error becomes
necessary. The lower your bid, the lower your spending, but the lower your ad
placement, until you stop appearing on the sponsored links at all (which
defeats the purpose, doesn’t it?).

Select the appropriate
keywords.

Let’s look at an example. Say you
have published a mystery novel about the death of a land baron in Louisiana.
Not exactly a new plot, and yet millions of whodunit readers may be interested.
Your solution? Open a pay-for-performance account and bid, for example, on <span
class=95StoneSerifIt>Louisiana mystery novel
and mystery book
plantation and similar search terms. Counterintuitively, the more
specific the term, the better your campaign will perform, because very specific
searches deliver very motivated buyers to your page. You’re paying for each
click, so you want those browsers to buy! That’s where “conversion” comes into
play.

Understand the
disadvantages.

You have to manage your bids and
select your keywords carefully, or pay-for-performance advertising can become
ineffective. Do not bid on ridiculously vague and popular words like <span
class=95StoneSerifIt>book or <span
class=95StoneSerifIt>fiction
because you will never recoup your money. Focus your search terms as
specifically as possible.

Understand the advantages.

Perhaps the best part of
pay-for-performance advertising is the “pay-for-performance” part: you pay only
if people click on your link. In essence, they are presold.

Pay-per-click advertising is
introducing a paradigm shift for traditional print media, and many magazines
are already feeling the financial sting. It’s only a matter of time before
print media find a way to offer cost-per-conversion and pay-for-performance
advertising to their customers, replacing the archaic CPM system. Those that
don’t will die trying.

Viva la digital revolution!

Brent Sampson is the
president and CEO of Outskirts Press, simplifying self-publishing at
www.outskirtspress.com. He is the author of <span
style=’font-size:11.0pt’>Publishing Gems: Insider Information for the
Self-Publishing Writer. Information is available at
outskirtspress.com/publishinggems.