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Is Pay-Per-Click Advertising Worth It?

Editor’s Note: This guest post was written and sponsored by Sequoia Legal Marketing.

Nearly 80% of the top 100 most expensive keywords using Google AdWords are legal related; all of which are over $43 PER CLICK. Using industry averages for bounce rate (they visit your homepage, but go no further before leaving) and conversion rates, we can calculate an average cost per lead (phone call or email submission).

Using one example from a divorce attorney, we can extract the following:

Mr. Divorce paid just over $80k to AdWords directly in 2008. The cost to manage this campaign through a larger legal marketing firm was $80k. Total investment: $160,000.

Using Google Analytics, we can see that this campaign provided 550 legitimate individuals [1] to his website, for an average cost, including managing the campaign, of $290 per click. Also by using Google Analytics, we can determine “bounce rate.” This particular attorney had a bounce rate of over 70% (a low bounce rate is 20%; average is 50 – 60%). That means 70% of those 550 clicks actually clicked through, but immediately left. This reduces our potential leads to 165 (or $969 per lead).

Now we can take a look at the tracking devices we have in place; our call tracking phone number and our contact form. This particular client received only 10 contact form submissions in 2008 from his PPC campaign (also trackable through Google Analytics). We cannot track ALL leads through his phone because while he did have a toll free tracking number in place, the total calls in were unreliable since he also had his local phone number on his website. We can however, apply a standard rate of 5 calls to every one contact form submission (industry average), to get a general idea of how many calls our attorney may have anticipated. With ten contact form submissions, I expect he received approximately fifty calls, or sixty total contacts from his $160,000 investment (approx $2,666 per actual lead).

With a high ball estimate of 50% conversion rate (one of every two calls from a PPC campaign becomes a client), that client just cost you over $5,000 to obtain.

This particular client was unable to track his actual conversion rate of calls to clients retained; however, it’s fair to say this may NOT be the most efficient campaign for Mr. Divorce.

On a last note, Mr. Divorce also ran an SEO (search engine optimization) campaign on his website. Using Google Analytics, we are also able to track these leads. On average, his SEO leads cost only $49/ea (actual contacts through phone or email), and he received 2.5 times as many leads from SEO than he did with AdWords.

In two weeks, we will follow up with this conversation by showing you how to track your own leads, even if someone else is managing your campaign.

[1] What happens when someone clicks on my site twice, or even repeatedly? Answer: You are changed for these clicks. If you have Google Analytics installed, Google can track how many of these click-throughs are from a single IP address, and only counts it once. So, if our PPC account shows 1,000 clicks which we are charged for in a given period of time, and Google Analytics shows only 550, we know 450 are fraudulent. You can contact Google for a refund for the fraudulent clicks; however, I’m willing to bet your current marketing firm probably isn’t doing this for you.

Editor’s Note: This guest post was written and sponsored by Sequoia Legal Marketing.

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9 Responses to “Is Pay-Per-Click Advertising Worth It?”

  1. Chuck Newton
    February 12th, 2009

    One of the best post I’ve read in a while. It is very informative.

  2. [...] Is Pay-Per-Click Advertising Worth It? « Legal Andrew [...]

  3. Andrew Flusche
    February 13th, 2009

    @Chuck – I’m glad you found it useful! Thanks for the comment.

  4. Christopher McKinney
    February 19th, 2009

    This is an excellent article that I am forwarding on to several friends and will link to on Twitter. I dropped my yellowpages advertising and my pay-per-click adds last year b/c they just are not cost effective. A good blog and relationship building via social media and in-person contacts is hands-down more cost effective.

  5. Network Management Florida
    February 23rd, 2009

    yes now a days and specially in this situation need to think that PPC worth or not, b’coz no one wanted to waste Singe Dollar nice article.

  6. Scott
    March 20th, 2009

    I dropped my yellowpages advertising and my pay-per-click adds last year b/c they just are not cost effective.

    That’s not fair to the PPC model, honestly. The main reasons why online campaigns fail are:

    • Call-to-Action / Message Is Weak
    • Landing page / site for product/service is ugly, slow, confusing, etc.
    • Product / Service isn’t a good deal (or idea) to begin with. Savvy computer users aren’t idiots. You might trick ‘em to click, but that doesn’t mean they’ll buy.
    • Campaign isn’t targeted at the right audience (wrong keywords, site, etc.)

    It sounds like this lawyer just dumped a bunch of money into a campaign and didn’t think it through.

  7. Andrew Flusche
    March 20th, 2009

    @Scott – You make valid points that PPC has to be done carefully and correctly to be effective. But I think many attorneys are finding that it still isn’t cost effective, especially compared to other marketing methods. I know there are lots of PPC companies and advisors that disagree, but they definitely have an incentive to push PPC.

  8. Chris
    March 20th, 2009

    @Scott – No Scott, I did not just dump a bunch of money into a campaign without thinking it through.

    I am not saying that pay-per-click doesn’t work any situation. Perhaps it works for the people you are selling it to. But it was not cost effective form me.

    Cost-per-click is subject to bidding wars for important keywords to lawyers. It is also rife with click fraud.

    I actually have a pretty robust stats package and spend quite a lot of time analyzing what types of marketing results in clients and not just clicks.

  9. Frank Pournelle
    August 31st, 2009

    There are several options for obtaining legal leads on a pay-for-performance basis. As you can tell cost per click is not very profitable in contested categories. If you’re targeting personal injury, mass tort, toxic tort or medical malpractice you can now obtain high conversion leads through TV, radio, newsprint, yellow pages and email/web publishing. These leads are available on a per inquiry, cost per lead (CPL) or cost per call (CPC) basis through media brokerage shops like our own. Frank, Lawyer Profit LLC

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