Too Much Traffic Causes Accidents

While reviewing my pay per click listing expenditures at
Overture this past week, I was absolutely shocked to see
that the cost of one account had more than quadrupled a few
days earlier.

I didn't recall that my product sales were unusually high
that day, however. On review, I saw that my sales
were almost double the average number, but nothing
extraordinary - and certainly not four times greater.

It took me a little while, but I finally figured out what
happened to cause this huge spike in traffic and my
advertising costs that day.

On one hugely popular keyword that receives several million
searches at Overture in any given month, I usually try to
maintain the third position, as opposed to the first. Past
experience has taught me that the third position has a much
better conversion to sales rate than the top spot.

In order to get and maintain a third place position, I bid
36 cents, which was just a penny lower than the second
highest bidder.

Bidding in this manner flies in the face of conventional pay
per click strategy, which suggests that I should bid one
cent higher than the next LOWER bidder, or 24 cents in this
case. However, the conventional strategy allows the
competitor in the 4th spot to raise their bid by just 2
cents to regain his or her third place standing. Using my
method, he'd have to bid thirteen cents more to gain
placement above my listing.

Also, by using Overture's Auto bid feature, my cost per
click will only be one cent above the maximum bid of the
next highest competitor. So, even with a maximum bid of 36
cents, I will only pay 24 cents per click as long as the guy
in the fourth spot stays at 23 cents.

That's where my problem began. The other bidders didn't keep
with my game plan.

Bidder Number Two dropped out of the game entirely,
and Bidder Number One reduced his bid to 35 cents. This put me
in first place, paying a hefty 36 cents per click.

That might have been OK if the number of clicks I received
that day had remained the same. Assuming an average of 100
clicks per day, my cost to advertise would have gone from
$24.00 to $36.00 for the day. A month as "Top Dog" would
have cost me an additional $180.00. A good lesson - not to
be repeated.

Unfortunately, in this case, all that talk you hear about
the top position receiving considerably more traffic than
those positioned lower down is true. Actually, the
percentages bandied about in the pay per click promotional
material is perhaps a little low.

I didn't receive just FORTY percent more traffic for the day,
I got FOUR HUNDRED percent more traffic for the day.

Whether your advertising budget is tens, hundreds, thousands
or even tens of thousands of dollars per month, errors like
that can have a significant impact on your business if not
caught in a timely manner.

I'm just lucky that the original top bidder missed his high
traffic volume and took back his top spot, sending me back
to my rightful, less expensive placement the very next day.

So, stay alert! While using pay per click engines is a great
way to get traffic to your site, inattention could result in
a costly 'traffic accident'.