• by Joe Mandese  @mp_joemandese, November 10, 2003

The unparalleled efficiency of pay-per-click advertising programs has created a dilemma for media agencies, which increasingly are finding themselves in the awkward position of not being able to answer the most basic media planning question from their clients: "How much will this campaign cost me?"

Because of their dynamic nature, it has been nearly impossible for media shops to accurately project the costs of pay-per-click ad buys, which ultimately are determined by the number of clicks generated by keyword placement. As a result, some shops have been reluctant to push pay-per-click as part of a broader media plan, or have done so with considerable constraints, such as pulling campaigns when they exhaust a prescribed budget, even if they are continuing to generate strong results.

In an effort to solve this problem, pay-per-click ad network Searchfeed.com today will unveil a new service that enables advertisers and media agencies to project the actual monthly costs of keyword campaigns. Cost estimates are based on an advertiser's specific keyword list and the placement position in search results. The system incorporates real-time bid values for keywords and positions, as well as their clickthrough rates, to create realistic projections for upcoming campaigns.

"We did this because media agencies kept coming to us asking us how much their campaigns would cost. We were doing it manually and we figured there was a better way of doing it. So we automated the process," says Rachel Lyubovitzky, manager of national accounts and business development at Searchfeed.com, who helped develop the new campaign costs estimator.

Searchfeed.com executives say they checked around and could not find another pay-per-click network offering an automated campaign cost estimator, though many provide such estimates manually for big clients.

"This is not rocket science. It was relatively simple to write," says Lyubovitzky, noting that she expects others to follow suit shortly with their own campaign cost estimators.

And that would be a good thing for the field at large, she says, because it would give media shops much more latitude when planning pay-per-click campaigns. If they want to fine-tune a search budget, for example, they can simply opt to limit the number of keywords used, or shift their results position preferences to bring them in line with their expectations.

"We believe this will help make people feel more comfortable using search," says Lyubovitzky, because the notion of paying upfront for something whose ultimate costs were not known did not sit well with many advertisers and media buyers. As a result, she believes the new campaign cost estimator will enable media agencies to plan search campaigns with more rigor and as part of an integral mix with banners and other online advertising options.