Not all industries are appropriate for paid search. Rather than just provide a list of optimum industries, I wanted to focus on the concept on why some industries provide a better ROI than others.
 
As a general rule, service industries typically provide the best opportunity for ROI. There are however some exceptions where eCommerce websites perform extremely well. Let’s take 2 examples:

Example of a Good choice:
One of our clients sell gourmet mushroom products. This performs extremely well. Why? Two reasons:

• The average customer orders are enough to more than compensate for the total costs per click. That  typically means that either the margins are high enough to absorb the clicks that don’t result in a purchase, or the sales volume or conversion rate makes up for the cliks that don’t result in a sale.
• Because this is a unique product where the consumer only has so many choices, there is a lifetime values to a new customer. That is; once someone finds this store the first time, there is a lifetime of repeat business that will never cost anything again once the customer has been introduced to the website.

Example of a Poor choice:
One of our clients wanted to run a PPC (Pay-Per-Click) campaign to sell laser print cartridges. A few simple questions and a quick analysis determined that would be a losing proposition. Why?

The average profit on a sale was about $12.00 - $14.00. Suppose the average cost per click (CPC) was $2.00 and the conversion rate was 10% (one out of every 10 visitors made a purchase). That means that the vendor would spend about $20.00 to make about $14.00 ( a net loss of about $6.00).

Does that mean that all eCommerce sites are not good candidates for paid search? No… suppose that the majority of those print cartridges were sold in bulk. Then a single click could result in hundreds of dollars in sales.

Conversely, suppose the margin on a single item was extremely high. For example, auto dealerships routinely use PPC to sell cars off their lots. You don’t buy cars online, but you do research on line. A single purchase more than makes up for the investment.

Summary:
When deciding if paid search is a good strategy for an eCommerce site, ask yourself these questions:

• Are the margins high enough?
• Is the potential volume high enough?
• Is there a lifetime value to a new customer