Given the goal of the current internet marketing efforts, it is a difficult task to determine the appropriate cost per click. Generally cost per click is determined within a sales context. This is done by setting the value of a conversion. A conversion can mean virtually anything, but it defines an action. A conversion could be that someone buys a product, submits an RFP, or downloads a White Paper.
Conversion defines what the outcome is. Since one has not been specifically defined in this campaign, it would be difficult to ascertain the value of a click.
Cost per click is often determined by the following formula:
v = Value of Conversion – how much is each person who takes an action worth to you?
r = Conversion Rate – how many clicks do you need to convert?
c = Cost per Click = the price you’d pay per click to break even
v / r = c
If a conversion is worth $100 (v)
It takes 10 clicks to convert (r)
$100/10 = $10
You can pay up to $10 per click. Anything less is profit, anything more is a loss.
There is no industry standard for cost per click as every organization has different goals, different budgets, different name recognition, different margins, and different competitive landscapes. Each of these variables can affect the appropriate budget to allocate for web advertising.
The goal of this campaign was to increase site traffic, which has happened since the start of the banner advertising campaign. In general banner advertisements are great for generating impressions, however they are much less effective in generating clickthroughs.
In a sales context a better option might be Search Marketing, Google Adwords or highly targeted Social Media advertisements.
The benefit of search marketing is that the audience is self-segmenting. Potential buyers are setting themselves aside as strong leads by their search terms.
For instance, someone searching: digital cameras might be looking for reviews, pictures, or online stores.
However someone searching for: cheap digital cameras or digital camera free shipping, is looking for something different.
This is how search marketing works. Careful keyword selection can help isolate your buyers who have self selected themselves as buyers, resulting in a higher conversion rate.