How Much Is PPC Really Costing You?

Every lead has a cost, but it’s not always easy to calculate. Leads have different price tags when they are acquired, and then that price can increase as they continue to be nurtured along through life with follow up calls, time with sales reps, and the like. And somewhere within that mix you should be able to render some fairly reasonable cost-per-lead numbers.

But what are those costs, exactly? The most common leads for Microsoft Dynamics ISVs that we talk to still come from one of two places – in-person conferences or pay-per-click (PPC) ads on Google and the like. Both of these sources, while not exactly cutting edge these days, should make it easy to know your cost per lead. But we still see that quite often even the most basic cost calculations don’t emerge in a meaningful way.

PPC should be eminently measurable, even without many technical investments. It is natural to assume that companies always break down PPC campaigns by measuring some type of conversion – fill out a form, download a document, etc. But that’s not the case. We frequently speak with marketing people at companies that spend huge chunks of their budgets on paid search ads but can’t break down the cost per lead at even the start of the lead qualification process.

They have a general sense that a sizable investment in ads is working out because they still have an acceptable number of leads and sales making their way through the sales channel. No specific data, mind you, but a general sense. That means they usually can’t track sales back to PPC campaigns specifically, they don’t know the true cost of those leads in terms of either specific work on that one lead or in terms of how many leads came out of the spend on a particular campaign.

Ok, so PPC is one just one channel, right? Surely with all the other marketing that vendor are doing, it’s not that big a deal. Wrong – PPC is often the primary lead-generation mechanism for Dynamics ISVs, along with in-person events, which by their nature require large upfront expenses. (Of course, there are other benefits to being at an in-person conference that factor in.)

Why would software companies limit themselves to these lead-generation sources? If we put our psychologist hat on for a minute, we might say that one reason is resistance to change. PPC appears to be getting the job done one way or another, right? Leads are coming in and the sales team is making sales. And there’s a system in place to handle it and that doesn’t require change. Also, there’s the unpleasant notion that if you’re spending too much today, maybe you’d almost rather not know it. After all, if you’re spending $15 or $20 or more on a single ad click, it might not feel good to face the possibility that you could be paying the same amount for actual marketing leads with lots of relevant data and work already put into understanding the person behind the “lead”.

So if your marketing department can’t put the numbers on the cost of your PPC leads, add this noble cause to your to-do list. Maybe you’ll be happy with what you find. Maybe not. But until you can face the music and make an informed judgement about the money you’re shelling out on clicks, you’re at the mercy of both the ad market at large and likely your competitors who may know better than you where the smart marketing dollars should go.

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