Success Management
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- Why has the cost of my AdWords gone up/down?
- Why am I receiving a lower volume of leads?
- What affects the cost on my advertising campaigns?
The Economics of PPC
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You’ve set your budget. You have your targeted areas. Now it’s time for leads to roll in, but what you didn’t count on is the lead fluctuation (from price to volume). There are a myriad forces impacting and affecting your paid advertising campaigns; so make yourself aware of what to lookout for. We cover everything from seasonality to the economy in today’s paid advertising video.
If you’re a BoomTown user with a question about this video, please contact Support.Let’s pretend we are heading into winter and paid traffic seems to be down. The reason behind it? Supply and Demand. Contrary to what some may think, paid advertising isn’t immune to economic forces. Things like the the size of your audience, the competition for that audience and seasonal trends in search traffic — all play a role in determining the cost of clicks.
So, let’s say spring comes early. Suddenly there is a huge increase in the number of buyers searching for homes but the number of advertisers has stayed the same. What is going to happen? The cost of that traffic is going to fall since the supply of searches rose relative to the number of advertisers.
Flip-flopped, if winter hit early and people stop searching for homes online but the demand for that traffic has stayed the same, then the cost for that traffic is going to increase.
It’s the same with the housing market. If the number of buyers is high and the availability of listings is low then you have a seller’s market. If it was reversed, you would have a buyer’s market. And you know how that impacts the selling price of homes. A similar set of rules apply to search advertising and the cost of traffic.
While there are a ton of variables that can impact the cost of traffic, at a high level, it really just comes down to the supply of or size of the audience versus the demand of advertisers for traffic from that audience. Remember that especially traffic, is ALWAYS changing. The larger your addressable audience, the more insulated you can be against these changes.
So next time your traffic is changing, it is not always your competitors beating you out. There could be some other forces at play. Ask yourself: are people moving in or out of your area what season is it have there been large changes in inventory or other market shifts. Every market is different. Happy Advertising and good luck guys!
