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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.