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Ultimate Guide to Digital Marketing — Part 6

Build a “Customer Machine” with Pay Per Click Advertising

Build a “Customer Machine” with Pay Per Click Advertising
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You wouldn’t believe how many people I know who run companies doing hundreds of thousands or even millions of dollars in revenue with pay per click advertising.

And they brag about getting customers at $0.25 a click. They say to me, “It’s so good, Ramit. I have a scalable engine.”

What they’re talking about is going to Facebook or Google, spending $1, and making $2. That’s the dream. That’s when paid advertising really works.

“Pay per click advertising” is also called paid acquisition, PPC, or pay-per-click. It all means the same thing — the ads you see people running on Facebook and Google. There are other channels for pay per click, but the big ones are Facebook Ads and Google AdWords.

With pay per click advertising, timing is everything

Paid acquisition strategies (like PPC) can work. But the key for you as a business owner is knowing which of these strategies to apply, and when.

For example, if you start off from day one spending $5,000 a month on PPC, you’re dead. You don’t know your numbers yet. You’re just throwing away money and burning it.

We spent years and years doing guest posts before we even thought about PPC. Follow our lead and remember:

Timing is everything. Don’t be in a rush.

Now, some businesses have cracked the code and done it beautifully.

But it’s difficult. It takes a lot of sophistication to know if it’s actually working.

I have friends who spend $5,000 to $25,000 a month on paid ads. And many of them don’t even know if they are making a profit.

How’s that possible? Because they spend $25,000 and then they make $40,000 — but they’re not sure if it’s from people who came through paid ads or from something else. They don’t have the tracking in place.

For successful pay per click advertising, you need to know your numbers. It comes down to one key number, your CPA.

Acronym To Know

Cost Per Acquisition

CPA: Cost Per Acquisition

The cost per acquisition is simply, how much money does it cost to get one paying customer? It’s easy to get distracted by other data points (likes, shares, clicks, conversions), but the ONLY way to calculate your return on investment is to know how much money you are spending for each customer. So for example, if you sell a $10 ebook using advertising, your CPA needs to be less than $10. That means if you spend $100 on ads, you need at least 10 paying customers (not just email subscribers) from the promotion for it to break even.

Let’s break down how we figure out our CPA and use that information to find out if we’re getting a return on investment for a sample Facebook ad.

GrowthLab: The Simple Formula to Make Money on Every Ad You Run

Now that we understand the numbers, let’s dig into how to get started with pay per click advertising.

Start with simple Facebook Ads (NOT Google AdWords). Here’s why.

Facebook allows you to advertise to a very specific type of person — the kind most likely to buy from you. You can filter who sees your ad by criteria like:

  • Location
  • Age
  • Gender
  • Interests (what pages they like or follow)
  • Education level (including fields of study, schools they’ve attended, or graduation year)
  • Behaviors like recent websites they’ve visited or if they use mobile
  • And connections like “friends of people who follow me”

When you’re ready to advertise on Facebook, you can use the information you gathered in the Immersion Phase (Find the Immersion Strategy in Part 2) to get very specific about who you target.

If you wanted, you could target females in your town under 35 who follow Ramit Sethi’s IWT to build an email list of potential brides.

The point is, when you get super-specific with who you reach, you avoid spending money showing your ad to people that will never buy from you.

(See how doing the work to understand your customer makes advanced marketing strategies — like paid media — easier to execute, and more profitable for your business? That’s why we encourage taking the steps in order.)

Derek Halpern - Doing PPC Advertising Right

Derek Halpern

Doing PPC Advertising Right

My friend Derek Halpern uses Facebook ads to promote his remarkable content. In this ad, he collects email addresses in return for a free mini-series on how to build profitable online courses. People that want a free mini-series on this topic are the perfect market of potential buyers for his premium material.

Example of Derek Halpern PPC Facebook advertising

Do you need a fancy website before you drive traffic to your site?

Absolutely not.

It’s a huge mistake to delay driving traffic to your website for reasons like design, colors, or font choices.

You can convert traffic to buyers with only the remarkable content you created in Part 4 and a simple website.

I recorded a 9-minute video that shows you the 5 components you need for a website that sells.

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The 5 (yes, just 5) components of a website that sells

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Build a “Customer Machine” with Pay Per Click Advertising