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Ilana DeBare, Chronicle Staff Writer
Sunday, May 20, 2007

Are you thinking about pay-per-click advertising for your business? Here are some tips that could make the difference between success and failure:

-- Consider your target customers and whether they go online to make buying decisions. For instance, pay per click often works better for consumer sales than for business-to-business sales.

"If someone is an office manager looking to put a new phone system into their high-rise building, they're not going to be looking on Google," said Lael Sturm, an online marketing consultant with LPS Solutions in San Francisco. "They're more likely to have a network they draw upon or someone who has come in and given them a business card."

-- Design your Web site to include specific actions that customers can take. This might be online shopping, signing up for a company newsletter, downloading a coupon or filling out an electronic form asking for more information. But unless you give visitors the opportunity to take specific actions, you won't have any way to find out if you are getting a decent return on your investment.

"If you don't have a Web site with a 'call to action,' pay per click is not for you," said Jennifer Laycock, editor in chief of the Search Engine Guide Web site.

-- Send visitors to the right page. If an ad appears in response to a search for "silver charm bracelet," the link should take viewers to a charm bracelet page, not a page about jewelry in general. You may need different landing pages for different ads.

-- Understand how many sales you must generate to make pay-per-click advertising profitable, and how much you can afford to pay for each click.

Suppose you're paying $1 per click, and 1 click out of every 50 turns into a sale. That means you're spending $50 for each sale. That could be worthwhile if you're selling laptop computers for $1,000. But it's a recipe for disaster if you're selling handcrafted note cards at $30 a box.

-- Start small. Begin with a handful of keywords so you can track which phrases and ad wordings are more successful. "Start with 25 keywords, because until you figure out what you're doing, you're going to be overwhelmed by more than that," Laycock said.

-- Choose narrow rather than broad keyword phrases -- "German chocolate cake" rather than "cake." This will help you in two ways. There will probably be fewer bidders for narrower phrases, so the cost-per-click may be less. And narrower phrases will attract customers who are more likely to buy.

"It comes down not to how many clicks you get, but how did those clicks convert to sales?" said Stephen HERZ of Moonstone Interactive, an online marketing firm in San Ramon. "The person who types in 'restaurant' is probably looking around and not very hungry. But the person who types 'classic Mexican restaurant in Alameda, California' is probably on their way out the door. They know what they want to eat and, by God, they're hungry. They will probably convert (to a sale) better and cost a lot less."

-- If your business has a local focus, avoid clicks from people elsewhere. For instance, a San Francisco plumber who buys the keywords "licensed plumber" could end up paying for useless clicks from homeowners with busted pipes in Texas.

Some search engines allow you to specify the geographic area from which you want to receive clicks. Another approach is to use geographical terms in the text of your ad, such as "Expert plumbing service for Bay Area homeowners." That would presumably stop some of those Texas homeowners from clicking on your ad and eating up your ad budget.

-- Limit your ads to search-result pages, rather than content pages, at least when you're starting out. Suppose you own a Thai restaurant. You'll get better results from advertising on a search page where people are actively looking for "Thai food Oakland," than from advertising on a page about the history and culture of Thailand.

-- Aim for the top -- but not the very top. You'll get more clicks if your ad is one of the top three listed on the page. But you don't need to be No. 1.

Sturm tells his clients that the best place to be is the No. 3 slot, which often costs a lot less than the top two but still has high visibility.

-- Analyze your results -- and keep analyzing them. Google offers a free program called Google Analytics that allows you to track which keywords and ads bring the most visitors to your site, along with how many of your visitors convert to customers. (There are paid programs to do that also.)

Use this information to refine your choice of keywords, headlines and ad text. Keep tinkering and monitoring the results.

"One keyword might be losing money, one breaking even, and one might be where all your profit comes in," said Laycock.