The Internet offers a lot of opportunities which may use to earn money. The big companies like Yahoo, Google or others try to attract more customers by developing new tools for better use of Internet. This paper try to show through a simulation, how can we use the instruments offered free by the Yahoo company for earn money starting from a simple click.the internet, search marketing tools, returns of investment

Costel IONASCU

Daniela DANCIULESCU

Luminita POPESCU

English

Research Papers in Economics

Informatica Economică, nr. 2 (42)/2007  34 
The simulation of a PPC company using instruments 
offered by Yahoo! Search marketing 
 
Daniela DĂNCIULESCU, Luminiţa POPESCU, Costel IONAŞCU 
University of Craiova 
 
The Internet offers a lot of opportunities which may use to earn money. The big com-
panies like Yahoo, Google or others try to attract more customers by developing new tools for 
better use of Internet. This paper try to show through a simulation, how can we use the in-
struments offered free by the Yahoo company for earn money starting from a simple click. 
Keywords: the internet, search marketing tools, returns of investment. 
 
here are often heard sweet/bitter stories 
about the spending of some important 
amounts of money in the system Pay-per-
click/AdWords, about impressive traffic, 
which later it is materialized in loss of money 
– sometimes big amounts. 
To maker a visitor click on a commercial 
(ad) is only a part of the equation. If these 
clicks do not convert in sales, it is only a loss 
of money and time. No matter what the cho-
sen PPC system is (AdWords or Yahoo, 
MSN, etc.), the idea is to make an investment 
in business, to generate the profit through 
“buying” and the converting of the traffic in 
this way being accumulated. If the use of the 
PPC system within a business it is not final-
ized with a positive profit of the investment 
(ROI / Return of Investment)
1, then we could 
say that this company hasn’t reach by far its 
purpose, succeeding, worse, to lose money, 
too. The only way to know when the profit it 
is generated is the use of a pursuit system 
that cold measure the results of this invest-
ment in publicity. This system is also used to 
simulate the conversion power in profit of 
this kind of company, taking in account the 
subsequent data taken from the same com-
pany or from companies that operate in simi-
lar domains and implement the same meth-
ods in the online sale.   
Yahoo! Search marketing TOOLS 
Yahoo! Search marketing (ex Overture, ex 
GoTo.com, but yet known under the name of 
                                                 
                                                
1 The calculation of the profit obtained from the in-
vestment / on the CPC basis (cost per click) from 
sponsored researches of s Yahoo!, Google type, etc. 
Overture), offers free 3 efficient instruments
2 
(and that at the same time are considered of 
measuring as well as of simulation) and that 
could be used for the anticipation of the re-
sults in a company of the PPC type – these 
instruments are: 
- Keyword Selector Tool – Visualization 
instrument of the executed searches number 
on various terms of search. Although it is 
easier to access, form experience recom-
mending the use of the system from 
http://www.wordtracker.com (the use of the 
free variant being nevertheless complicated 
by the necessity of the daily re-registration, a 
trial account being available only 2 hours). 
Besides a few small differences regarding the 
way of calculating if the effectuated re-
searches on certain terms and of the used ba-
sis, this instrument presents the advantage 
that it offers an estimation of the searches 
on the respective term based on the previous 
evolution.  
- ROI computer -  Computer for the de-
termination  of the investment profit based 
upon cost per click (used in the PPC system) 
- CMP computer - Computer for the de-
termination  of the investment profit based 
upon cost per thousand of impres-
sions/visionaries for the publicity type ban-
 
2 It is to be mentioned that 2 months ago there were  4 
instruments of this type, the one which at the present 
doesn’t exist anymore in the list, “Bidding Tool” used 
as an information instrument regarding the paid/click 
amount of various companies for the obtained posi-
tions in the research sponsored from Yahoo!. Alter-
nately, we will use data offered by the Google Ad-
Word system, but which are not very exact.  
 
T Informatica Economică, nr. 2 (42)/2007  35
ner.  
All the instruments presented above can be 
used from the address:  
http://searchmarketing.yahoo.com/rc/src/  
Yahoo! Search marketing – ROI computer 
Each company of the PPC type should begin 
with the estimation of the profit that will be 
generated by the respective company. In an 
ideal way, this profit has to be maximized.  
This estimation consists largely in the identi-
fication of the elements that have the possi-
bility to not be realized as it was expected. It 
is essential to be known what terms of search 
and what formulations in the text of the 
commercial have the tendency to lower the 
profit. Through a continuous pursuit of these 
elements there could be eliminated the finan-
cial losses. But until then, till the company is 
started and there can be made some opinions 
regarding it, there have to be simulated vari-
ous variants and to renounce from the begin-
ning at the companies that will not be profit-
able from the start. ROI it is calculated by the 
formula: 
100
cos
cos
×
−
=
ts
ts sales
ROI
. 
For example, let’s say that it is taken into 
calculation a company of a PPC type which 
will generate 1400 USD in sales from an in-
vestment of 500 USD in commercials of Ya-
hoo! Sponsored Search type.  
% 180 100
500
500 1400
= ×
−
= ROI
 
In this case, the company will develop in fa-
vorable conditions and will return a profit of 
the investment of 180%.  
Before considering a satisfactory result as be-
ing extraordinary there has to be remarked 
the fact that the returned profit can be satisfy-
ing, this doesn’t mean it cannot be improved. 
To take an example of a AdWords company 
which wants to create direct sales for the 
products of the Lamaze (Lamaze – is the 
known method of formation, very used in USA. 
Lamaze class – it refers to preparatory courses 
for the application of this method. Besides these 
courses, on the market appear other products un-
der this brand: Lamaze toys for newborns, video 
tapes/CD with Lamaze courses, books for the 
preschooler children) company: Lamaze 
courses, toys 
 
Research terms 
(Keywords) 
Clicks Cost  Sales  ROI 
Lamaze   120 75  USD  1200  USD  1500% 
Lamaze class  45 20  USD  950  USD  4650% 
 
Lamaze: 
% 1500 100
75
75 1200
= ×
−
 
ROI – net profit: 1125 USD 
Lamaze class: 
% 4650 100
20
20 950
= ×
−
 
 ROI – net profit: 930 USD 
From the point of view of the net profit it 
seems that the term Lamaze is the most ade-
quate, producing with 195 USD more profit 
then the term Lamaze class. After a detailed 
inspection, we could see that ROI for Lamaze 
class is more then triple then the one result-
ing for the term Lamaze. 
This doesn’t mean the company developed 
on the term Lamaze should be renounced at, 
but there only have to be tested improvement 
alternatives of the ad (especially in the text 
part), as well as the targeting of some alterna-
tive key-words, which could be acquired at a 
lower price, regarding the attraction of as 
much visitors as possible but only from the 
ones with high potential for being converted 
into clients.  
The calculation/estimation of the returned 
profit by a company of the PPC type is rela-
tively easy. Nevertheless, for estimating 
more precisely what ad has chances to be a 
good investment, besides an opinion (which, 
often, in the case of the non-experimented 
ones, is not very good) connected to the qual-
ity of the text – the message inspired by ad, 
there are also other variables that must be 
taken into account.  
The conversion  
The conversion is the process by which a 
visitor entered in the site by clicking on a Informatica Economică, nr. 2 (42)/2007  36 
commercial of the PPC type is transformed 
into a client of that respective site.  
Independent of the objective that is pursued 
through the term of client (in general case, 
the realization of a sale, but there can also be 
pursued actions of the type of the subscrip-
tion at groups/magazines, download, etc.) all 
follow in the end the profile. 
It is important to mention that this conversion 
is not always measured in terms of direct 
sales. Sometimes the sale is an aggregate 
process of more stages in which a visitor en-
tered in the site by clicking on a commercial 
of the PPC type offers information in the 
change of some stimulants (free samples, im-
portant reductions, different facilities at the 
services), and later this will be converted into 
a client in the proper sense.  
The simulation of a PPC company using 
the instruments offered by Yahoo! Search 
marketing 
The obtainment of relevant data about how a 
company of the PPC type will act could be 
difficult enough for the ones less familiarized 
with this system. Therefore, there must be 
taken into account the essential elements 
used in this simulation: 
1. The visitors that enter the site through 
the company (“Total monthly clicks”) (in 
this case, the estimation instrument makes 
reference to Yahoo!) – this number is esti-
mated taking into account the frequency of 
the search on the chosen term as well as of 
the number of estimated clicks which are ob-
tained by the chosen PPC system – the Ad-
Words System from Google offers an exact 
estimation  
2.  The average cost estimated per click 
(“Estimated average CPC (USD)”) - al-
though Yahoo! Marketing Research has just 
eliminated the estimation instrument from the 
instruments offered for free (Bidding tool), 
for the clients of the PPC companies, once in 
the proper profile, there is the possibility to 
see the value that has to be paid for the ob-
tainment of a certain position.  
3. The conversion rate (“Conversion rate 
:%)”): the percentage that is calculated from 
the number of clients obtained from the visi-
tors entered on the site by clicking on a 
commercial of the PPC type. 
4. Average profit per conversion (“Aver-
age profit per conversion”): the average 
profit generated by a sale. 
 
The ROI calculation: 
The first two values can be estimated by us-
ing dedicated instruments depending on the 
chosen PPC company operator (the attached 
image represents the estimation made with 
Google AdWords – Traffic Estimator) 
 
Trafic Estimator -  Google AdWords 
 
The conversion rate and the average profile 
per conversion must be known from the pre-
vious activity of the company or, best, from 
the previous activity in similar PPC compa-
nies. Therefore, for 30 days, taking into ac-
count the estimations obtained through the 
instruments from AdWords, and taking into 
calculation the averages between the returned 
values by it,  Informatica Economică, nr. 2 (42)/2007  37
Search terms 
 
Average numbers of Clicks 
per day  Clicks per 30 days Average cost 
per day/click  Total cost 30 days
baby toys  84.5 2535  0.30  747.83 
childbirth  95.5 2865  0.18  515.70 
educational toys 
 
32 
 
960 
 
0.30 
 
283.20 
 
lamaze  18.5 555  0.22  119.33 
lamaze toys  2  60  0.28  16.50 
 
Search terms  Conversion 
rate 
Profit / 
conversion
baby toys  5  4 
childbirth  1.8  29 
educational toys  4.5  5.3 
lamaze  2  30 
lamaze toys  7  3.9 
The ROI simulation for the chosen data 
looks like this: 
Search terms  ROI 
 
Net profit 
($) 
baby toys  -33.33%  -253.50 
childbirth  190.00%  979.83 
educational 
toys 
-20.5% 
 
-59.04 
lamaze  172.73%  $210.9 
lamaze toys  -2.5%  -0.42 
 
It is observed that only the terms childbirth 
and Lamaze are profitable for this kind of 
company. To make sure that the publicity 
of the PPC type will also become profit-
able for the other tested terms, there are 
more variants: 
- Trying to improve the conversion rate by 
writing much more attractive ads 
- The increasing of the profit obtained by 
selling a product from that category, which 
invariable leads to the increasing of the 
sale price and, therefore it is also spread a 
decreasing of the conversion rate, the of-
fered price not being anymore competitive 
on the market – therefore, this variant is 
not viable.  
- The search for alternative terms on 
which the publicity will be made, term 
which, although individuals will generate a 
lower traffic, through their accumulation 
and through the increased conversion 
power could lead to the ROI improvement 
(for example, instead of the following of 
education toys there should be used the 
imperative terms, which lead to action or 
higher conversion power of the type buy 
educational toys, best educational toys, 
recommended educational toys, educa-
tional toys for babies, educational toys for 
newborns etc.) 
 
ROI simulation for the search term baby toys 
 
Bibliography and used sources 
-  Yahoo! Search Marketing: 
http://searchmarketing.yahoo.com/rc/srch/  
-  WordTracker tutorial: 
http://www.wordtracker.com 
-  Google AdWords: http://adwords.google.com. 
-  Webmaster World News and Discussion for the 
Web Professional 
http://www.webmasterworld.com/ 
-  Mat Cutt’s Blog: http://www.mattcutts.com/blog/ 
-  Search Engine Marketing professional Organiza-
tion: http://www.sempo.org  

The simulation of a PPC company using instruments

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