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.

Katie Evans

Managing Editor, International Research

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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