How Many Clicks To Get To a Purchase?
One question that comes up frequently from Trada’s small business customers is how much is enough data to make decisions about their paid-search campaign. This is an understandable question as small businesses want to know that every penny they spend is being spent in the most efficient manner possible. After spending $500, do they have enough data? After 1,000 clicks? After 1 month? After a few conversions? The challenge of answering this question (like most questions in paid search) is that there is no right – or sometimes even simple – answer. The right answer for the specific customer depends on a number of factors:
What kind of product or service are you selling, and how long does it take for a purchaser to realistically research and decide on your offering?
This is a critical dynamic to understand before you start a search campaign. Companies that are selling expensive products where the buyer is likely to research their options thoroughly first, will likely have a longer conversion period than customers who are simply collecting email registrations or selling impulse buys. If a company is selling a $1,000 swing set, it’s unlikely that someone clicking through to their website is going to buy on the first visit. Or maybe even second. Or maybe even within a couple of weeks. All the money you’re investing in clicks up front, won’t bear fruit for a few weeks until prospects actually turn into buyers.
What is your target market and how does that affect your click volume?
Many local businesses have a very defined geographic radius that they are targeting their campaigns to. The number of people on any given day that might be searching for their product or service in that region might be limited. Thus the click volume of their campaign is somewhat limited sheerly by the market size they are targeting. As a basic rule of thumb (if you have no other data), between 1 and 2 out of a 100 visitors to your website will likely buy something. This translates through to a 1-2% conversion rate. At this rate, you’ll have to see at least 50-100 clicks before you can expect someone to buy something. Realistically though this is an average over a long period of time. Its not uncommon for conversions to be bursty. Your campaign will get no conversions for 300 clicks (in this example), and then you’ll get 4 conversions in the next 100 clicks. The average in this example is 1% (4 conversions in 400 clicks). So you can’t look at the first 100 clicks and make a quick decision. A very simple analogy here is sitting down to play Blackjack in a casino. While the odds are against you in the long term, we all know that what happens in the first 5 hands of play (you may win them all, you may lose them all, or something in between) are rarely a predictor of how you’ll do over 100 hands.
How broad is your product offering and how wide are you casting your net?
If you have a small business that is selling a lot of products online in a catalog (say for example that you’re selling cameras and all the parts and accessories that go along with it), how broadly have you chosen to advertise your wares. Are you focusing your campaign merely on cameras? Or are you advertising every product you have? If you focus on cameras, you may require a longer waiting time until a customer converts (my first question above.? If you’re focusing on all your products, that means you’re likely spreading the clicks between different types of customers and products. The broader your approach, the more slowly you get enough data in any category (cameras versus lenses) to make an informed decision. You may get 200 clicks on your campaign but 100 have gone to camera related ads and 100 have gone to lens related ads. That’s barely getting to the average expected conversion rate of 1%. Per my last point, you may not get a 1% conversion rate right away – this is an expected conversion rate over time. Now take this concept and extend it. What if you are advertising cameras, lenses, camera straps, film, processing, flashes, tripods and carrying cases? You will be spreading the clicks around all of these items, and it will take a longer time to get enough clicks on any category to see a conversion. In this example, you’d likely need something like 800 clicks before you got a conversion. While in reality you’ll likely see a better than 1/800 conversion rate, there is a chance this can happen.
Are you focused on broad search terms of specific long-tail terms?
One of the great parts about paid search is that there is a never ending list of keywords that might find you a conversion. There are obvious ones “camera store” and less obvious ones “what tripods fit a canon rebel XS.” The more obvious ones will get higher volume but are less specific about what the buyer wants and will usually convert less frequently. The more specific ones target a more specific buyer (and usually cost less) but are limited that the number of searchers typing in that whole phrase is less. If you’re playing in the long tail with specific keywords, you may have to wait a lot longer to get those first 100 clicks.
So to go back to the start, set the right expectations up front for your campaign. Be honest about the buyer you are looking for, how many of them there are, how likely are your keywords to attract them and how many strategies you have running at once. This should let you decide what the right combination of clicks, conversions, and time is that you’ll have to invest into paid search.
At Trada, we ask customers to commit 3 months to the marketplace. If nothing else, we find this sets the right expectation for most companies new to paid search. The good news is that it’s very likely we’ll have amazing results well before that time!
(Cross-posted @ Trada Blog)
