When Is It Time To Stop Doing PPC?
August 20, 2013
Every business has to decide at one time or another if PPC is still a viable channel for them. It may be that new channels have proven to be more profitable or that PPC profits have shrunk as demand has shifted or eroded.
The worst-case scenario is when conversion rates and search queries are decreasing while CPCs are increasing and you do not have the resources to fight it. Take a look at this trend for the term “PPC”.
If this was a keyword I was interesting in marketing on, which I am not, I would be seeing an increase in average CPC and unless my site was getting better and better at converting searches into leads and clients, I would likely be priced right out of the market.
Trends like these are exactly why 85% of responders to Hanapin Marketing’s State of Paid Search survey say they intend to focus more heavily on conversion rate optimization in 2014. The above is an extreme example of what most people are seeing; shrinking demand in a marketing channel that is predicated on harvesting demand.
Therefore, the #1 way you know it is time to get out of PPC is if your industry is seeing year-over-year CPC’s increase by greater than 25% and you do not have the resources, the know how and/or the grit to dedicate to conversion rate optimization.
If your CPC’s are rising at the rate the chances are you are on the downslope and in order to protect the ROAS that PPC has generated for you so far you should be constructing your exit plan.
Bonus! Another way you know it is time to get out of PPC is when your business stops evolving.
Some products or services die. They become obsolete through substitute products or a change in consumer/business preference. A business that does not evolve with the market is sure to die a quick death (especially online).
Let’s take a look at an example.
The below graph is for the search term “Nose Ring”
Now look at this graph is for the search term “Eyebrow Ring”
A very simple example would be if a business specialized in eyebrow rings. They would have had a great business model in 2004-2006 but would have had seriously declining revenues after that. Conversely, a business trying to sell nose rings may have struggled until 2007 or 2008 but saw revenue increase drastically. Of course, this is a simple example, and a business would likely sell both of those items, but it displays what happens to people preferences over time and demonstrates how quickly this happens in an online marketplace.
So if your business sells or offers only one product or services and does not evolve those offerings based on what the market is doing, you may want to start thinking about your exit plan (or new marketing channels where the demand still does exist).
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