There are many firms who will assist you with a pay-per-click marketing campaign. They can try to analyze ROI ( return on investment ) for the various terms you are bidding on. Imagine, that you track all browsers who looked you up under the term, "Red Widgets", and you found that the average browser who queried you for that term bought a case of widgets from you one in every 57 clicks. Lets say your profit on a case of widgets is $20. Now, you can compute what you should pay for pay-per-click advertising. PPC can be expensive, so don't overspend. Sometimes its better to be lower on particular overpriced keywords, while capitalizing on less sought after keywords, that have smaller revenues attached to them.

If ABC Widget company makes $20 profit on one case of widgets for every 57 clicks, they need to think outside the box (or think outside the case) in this case. They are making MORE than $20. They are gaining a relationship with a new client who could become a repeat client, and who could refer them to their widget loving friends and relatives. The value of such a customer might be worth thousands. If you are basing your advertising strategy on immediate profits, then don't spend more than 35 cents per click to make a profit. But, companies with a long range attitude, will use other analytics, such as how many first time buyers become long range customers, and what does an average first time buyer spend over the years. This is how some companies are willing to spend up to $10 for a single click. Its worth it to them. Only you and your gut feelings can really decide for yourself what to pay.

Analytics for PPC change over time. In one of our directory companies, our average new sales were $600 per day when business was fast, and then it slowed down to $200 per day when the economy changed. Our rate of upgrades for free positions was 15% in one year and then shot up to 35% later after we implemented some new customer relationship programs. Things change, and analytics can not predict the future. Analytics, when properly interpreted (whatever that means), can give you some idea of what to expect and are valuable, but they are not gospel, and nothing is written in stone.

How on earth can you pick your 1000 best search terms? Use google analytics to see which terms are getting you incoming traffic. Also, use your common sense and brainstorm daily. Meditate on search terms. More will come as time rolls on. After a few months of really putting your thought into it, you will have 99% of the terms you will ever need. Search phrases are also important. You can use an FAQ page to optimize all types of search phrase variations.

And how do you figure out which terms are more important on your PPC campaign? This is a tricky task. If you get google analytics, you can see which pages are getting traffic, and which search terms people are finding you under. You might get only 5 clicks on an organic search for Imperial county widgets and think that its not a very important term while Indio Widgets gets you 100 clicks per day. However, don't overlook that your placement under Imperial county widgets, or your landing page for that term might be terrible which would influence your total amount of incoming traffic. When you analyze terms, base their importance on a combination of number of clicks and placmement. My rule of thumb is that a term on the 1st page will get "X" amount of clicks. The same term on the second page will get about 30% of that, and on the third page, perhaps only 10% of those clicks. Placement is life or death in this industry. The top of the first page on google is worth more than double the clicks as the bottom of the first page. If you get 5 clicks a month on "Orange Widgets", yet you are on the 10th page for that term, it could become 200 clicks per month if you were on the first page. If Orange Widgets is getting you clicks all the way down the list, then put it on your pay-per-click list and see how it performs.

PPC helps your organic search results.
Google rewards you for spending money on their adwords program. You can try and track how much your organic searches on particular keywords do better after putting them in your pay-per-click program.

Testing keyword frequencies. Once you have established which keywords you want to put on the pay-per-click campaign, make a record of how many clicks they get now, and then write down your results again after they have been on pay-per-click advertising for a month or so.