A Pay Per Click (PPC) advertising campaign’s success is greatly directed to the website’s conversion rate. This means that the more paid search bid prices increase, the more crucial a site’s conversion rate is to have a high return of investment (ROI).

So as to comprehend how conversion rate is related to the success of PPC advertising, you must realize the challenges that come with low conversion rates. These challenges are: (1) if you have a PPC search advertising campaign and the keyword price increases, your site’s current conversion rate may not support the higher bids needed to stay on top, (2) if you don’t have a PPC campaign but when you decided to join in the game, keyword bid prices have already continued to rise, and (3) if you’re caught in any of these situations, you would need the knowledge and expertise to increase your conversion rates effectively.

Let’s take a look at a typical online retailer’s conversion rate and its relation to the PPC advertising bids. Brand Y sells ladies’ bags at $300 each and has a 10% profit margin wherein he earns $30 per bag. For every 1,000 visitors, Brand Y sells 20 bags for $6,000 and earns $600 in profit from those sales. By dividing $600 profit by the 1,000 visitors, the break even bid is $0.60, making Brand Y’s average cost per click (CPC) on Yahoo or AdWords at $0.60 or lower.

Ideally, Brand Y’s overall PPC advertising campaign must be played under the $0.60 bid ceiling. The higher the bid gets the less audience the retailer can reach. However, the reality is many targeted keywords have bid prices that are more than a dollar. Hence, in the above circumstance, Brand Y is now out of the game before he even got the chance to start his campaign.

This example is just centered on a 2% conversion rate. If he boosts his conversion rate to 4% or higher, he could increase his bids, and at 4% conversion rate, he can compete with a $1.20 bid for the top spots. At 8 to 10 percent conversion rate, Brand Y’s PPC search advertising campaign could be very profitable. As you can see, increasing the site’s conversion rate is the key to success in the competitive world of PPC advertising.

Because bid prices are escalating quickly, you could be in serious risk if you haven’t launched your PPC advertising campaign. By the time you would have started to get to know more about paid search advertising, it will be too expensive to learn through trial and error. What’s worse is if your competitors have already started their campaigns and are at the moment of enhancing their sites’ conversion rates whereas you’re still just about to start yours.

A crucial aspect of your Pay Per Click campaign is raising your site’s conversion rate. Don’t wait until bid prices are very expensive to focus on increasing your conversion rates. If you want to increase your conversion rates effectively, turning to a qualified PPC management company would be the best decision you’ll make in your campaign. As bid prices continue to rise, it’s more and more important that you let the pros do the PPC search advertising for you.