• by Laurie Sullivan  @lauriesullivan, October 30, 2009

Holiday sales might have been slow for Halloween Express if not for pay-per-click advertising. Brad Butler, the company's chief operating officer, has his hand in several businesses -- from awards to wine -- and he plans to spend about $1 million this year and get more than every penny back on the investment.

Halloween Express is online, and also has 250 seasonal retail stores. September and October are the peak period -- he spends more than 90% of his Google AdWords budget during these two months.

Butler taught himself how to use AdWords. He dedicates about 35% of the overall marketing budget to AdWords, and attributes about 20% of site traffic to the campaigns. Managing about 5,000 keywords helps him to differentiate the business from larger advertisers and capture every relevant costume query possible including sexy, adult and even plus size and religious -- words that big-box retailers might avoid.

"We also use negative keywords to filter out the pornography, so we don't get all the perverts coming to our site wasting our money," Butler says.

Butler merely bids on popular terms that consumers search on -- no slang or offensive language. He takes the search terms directly from the various search engine databases and cross-links them against the items they have in their database. The objective with any of these PPC campaigns is to bring people who are looking for items that Halloween Express sells to the site.

Without paid search, small businesses are hard-pressed to compete against the likes of Wal-Mart and Target, according to Butler. AdWords, along with search engine optimization techniques, puts small businesses in the game. They can't afford to buy television, radio and print, but they can afford an AdWords campaign because the company sets the parameters, limits and modifies on the fly. "If you don't see performance, you turn it off," he says. "It's as close to a sure thing in the advertising world as you're going to find."

During a typical Halloween season, about 40% of sales come from PPC campaigns, with more than 100% return. Butler never loses money on the campaigns. This year, he will have spent nearly $1 million on paid-search campaigns. Granted, Butler has been at it since 2004.

There are challenges. Butler warns people who want to use paid search to be sure to understand how it works. Test the campaign. "In the beginning, I put a high cap on the campaign, and before I knew it, I was losing money," he says. "I monitor it day and night because -- bam, you need to make sure you don't spend $10,000 on a campaign you don't need."

If people don't know what they are doing they can lose their shirts, "big time," he says. AdWords doesn't necessarily outperform in paid-search conversion rates. Butler also runs paid-search campaigns on Yahoo and Microsoft; they just don't get the traffic that Google does. Butler's budget for Yahoo in October was $50,000, but he spent about $25,000. Both Yahoo and Microsoft lack in support for pay-per-click campaigns -- one reason that he puts more of the ad budget toward Google.

The PPC campaigns run year-round, but they are refined and adjusted.