February 20, 2009, 12:00 AM

Search firm offers tips on combating the rising cost of pay-per-click ads

The number of paid search advertisers increased 15% over the past year and the average price per click has gone up more than 12%, NetElixir says in a new report. The search marketing company says online retailers can cut costs with careful management.

Stiffer competition for paid search ad positions is driving up pay-per-click costs, says search management company NetElixir in a new report that includes three tips for improving paid search results.

Across retail categories, the number of paid search advertisers per keyword has increased by 15% over the past year, and the average cost per click increased by 12%. That puts pressure on e-retailers to become more efficient search advertisers, and NetElixir has three suggestions:

  • Use negative keywords that prevent your ad from appearing when a specific term is searched for. Google offers the example of a retailer that sells clothes but not shorts-excluding shorts would prevent the retailer from paying for clicks that would not lead to sales. Cost per lead for NetElixir clients who used this approach went down from $27.00 to $17.57 while click-through rates improved to 3.37% from 2.77% within a week after adding negative keywords, NetElixir says.

  • Examine your cost per conversion across the major search engines. In the case of one NetElixir campaign, the cost per conversion on MSN was about 30% less than on Google and Yahoo. Adjusting the spend by search engine might yield better return on ad spend.

  • Prevent competitors and affiliates from profiting from your trademarked brand. File complaints with the major search engines, which can prevent competitors from advertising against your trademarked terms. Create a list of affiliates you have permitted to use your trademarks in their ads, and send letters to all other affiliates using trademarked terms telling them to stop.

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