What? I’m being charged $6.65 per click! I don’t understand what happened (I really didn’t) with my search marketing program. I only knew that my credit card showed I’d been charged $665 for a marketing program that I thought would cost me $150. Yikes!

So what happened here? First some background…

When advertising on search engines (yes, there are more choices than Google) you’ll be buying advertising space on a “pay-for-performance” basis. This means you only pay if someone clicks on your ad when it shows up in search results you care about. Pay per click. Sounds pretty good right?

Totally is… but buyers beware! You need to know what you’re doing AND keep a close eye on your advertising campaign as things can move really fast. Why? Because you’re competing against many other advertisers that also want their ads to show up in those same search results.

So what you pay for those clicks can be pretty volatile (translation: get expensive fast!) And the best way to manage your ad campaign pricing is to first decide on the key elements of your bidding strategy:

• Maximum bid price: What’s the most you’re willing to pay (or bid) to have your ad show up when someone types in your target keyword phrase? The higher your maximum bid the more often your ad will show up in relevant search results. But the more you’ll pay per click!

• Average bid range: What are others (your competitors) bidding? Most search engines will show you the average range that other advertisers are willing to pay. This gives you a sense of how expensive those clicks are going to be.

• Daily cap: This is the most you want (or are able) to spend on a daily basis for advertising. If you set your daily cap at, say, $50, then your ad will keep showing until you’ve generated $50 of clicks for that day. No more.

Now back to our story…

I’d set my maximum bid price at $6.65 even though the average bid range was $0.73 to $1.54. I figured this assured me the top positions for my target keywords (resulting in lots of clicks) and would only be hit if pricing was really bid up. But I wasn’t too worried about that since the average bid range was much lower.

To protect my pocketbook, I set my daily cap at $25 so there was no way I could accidentally pay for more than $25 worth of clicks on any given day.

And then I got really busy… with clients, life, cool and fun stuff. You name it and I was busy doing it. Plus I was happy seeing lots of quality clicks coming from my search marketing campaign. Two weeks later I decided to check my credit card and… well you already know the rest of the story. = (

What mistakes did I make with my search engine marketing program?

• Setting the maximum bid (way) too high. You should set your maximum bid at the most you’d truly be okay paying. In this case, I should have set my max bid at $1.50 given the number and quality of clicks I was looking for.

• Assuming the average click range reflected the highest bids. Remember that the average bid range is just that… average! There will be lots of advertisers that are willing to pay (much) more than the average to get their ads seen the most.

• Not keeping a close eye on the search campaign. You need to check back often (daily or multiple times a day for new campaigns) to see how your ad campaign is doing and make adjustments accordingly. You can always increase your maximum bid if you need more clicks or if the quality of the clicks is better than expected.

• Having a daily cap that was too high. You should set a low daily cap to begin with and then increase it over time as you get a sense of the trade-off between the number of clicks and the price per click (PPC). But always use a daily (or weekly) cap as things can change quickly… and trust me, my surprise would have been much worse if I didn’t have a $25 daily cap in place!

• Not first testing and learning what works best. Sometimes it’s best to start with a low maximum bid and then move up as you better understand the quality and volume of clicks you’re getting. In other cases, it may make sense to start with a high maximum bid to get in front of lots of prospects to see if your ad performs well. You can then lower your max bid over time. The important lesson? Test, test, and test!

Hopefully, you can learn from my mistakes… so that my “out of pocket” investment ends up being your marketing gain.

Stay tuned as I’m sure I’ll be making plenty more mistakes that you can learn from… = )