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Pay Per Click: For the newbie

So many marketing acronyms to learn, not enough time in the fast pace of digital marketing. From SEO to SERP, CPC to DRM, keeping track of the growing list of terminology marketers need to know is difficult when you’re a pro, let alone green to the industry.

As a newbie, you will need to educate yourself on key marketing acronyms, in this piece we’ll concentrate on one of the most important in online marketing: PPC aka Pay Per Click.

Pay Per Click

Pay Per Click is one of the fastest growing online business models, but in its barest form it is the adverts you see in the pink boxes at the top and right hand side of Google search results (the grey box in Bing etc etc). It is called Pay Per Click or PPC because the advertiser only pays the search engine when someone clicks on their ad. With me so far? Good because this is where it starts to get a bit technical.

PPC providers

Firstly, how is PPC provided to advertisers? Google are undoubtedly the largest provider of PPC services, through Adwords which is the company’s main source of income. The way it works is that an advertiser (you) bids for keywords that internet searchers might type in. As it is bid-based, ie an auction, you pay more if a particular keyword is popular and others are competing for the term.

Google’s not the only company to offer PPC. They may be the biggest providers of the service, but they do not have a monopoly on the market.

Examples of PPC providers include:

  • Yahoo Search Marketing
  • Microsoft adCenter
  • Ask: Sponsored Listings

It’s easy to see why this online business model is on the increase. It’s mutually beneficial: if the advertiser’s ad is clicked, the company enjoys increased exposure (statistically, at least). The advertiser then pays the publisher for hosting the ad that made the click happen.

Bidding on Adwords

To get your advert seen using PPC, you have to bid on words that your advert will appear alongside in the search results. For example, if someone is searching for ‘holiday cottages in Wales’ and you have one that you rent out, you might bid on the terms ‘Welsh holidays’ or even better ‘holiday lets in Snowdonia’.

Each advertiser sets a maximum amount they’re willing to bid in their chosen keyword auction (.025pence), so the ad’s potential can then be tested out by Google on the search engine to see how its total impressions fair against clicks.

What makes an ad campaign a success on Adwords?

It’s not all about the money you put into the campaign. Ultimately your overall quality score will influence the success of your campaign and the amount of money you pay. You see, Google are all about the user experience. Yahoo might run their PPC like eBay with the highest bidder gaining the most exposure, but Google focus on the relevancy of your ad versus the amount of your bid. If you place a high bid but your quality score is low, your campaign will have a lesser impact than a lower bid with a great quality score.

A number of other factors also influence your campaign’s success: the searcher’s geographical location, when you want the ad to go up (you pay less in the middle of the night when fewer people surf the web, and pay more at peak times), and the quality of wording, to name a few.

When writing the ad that will appear in the PPC box, there is a character limit for both the headline and body text. Make every letter – not just every word – count. (Top tip here: don’t forget your call-to-action.)

Success doesn’t happen overnight with PPC. The bidding process is a matter of trial and error to begin with, because Google wants you to prove yourself as a successful advertiser. Focus on developing a quality ad over time, improve the click-through rate and the cost you pay will start to reduce.

The problem with PPC

PPC advertising can cost a fortune, especially if you get caught up in a bidding war for a key word, because you can end up paying more than you’ll get in return. Bid inflation is a problem too, raising the per-click cost for phrases that are highly searched. Inflation can also occur because of ‘ego bidding’, where a marketer intends to get this search term, no matter the cost. If ego and pride are involved, you could be on to a loser. Also search engines will often impose restrictions on key words that raise the price.

You are paying per click rather than conversion (actually acquiring a customer who buys something). So, you can sometimes find lots of people click through to your site, but only a small percentage of those actually come through and buy anything. As you can imagine, this can be expensive. The key for a good PPC campaign is to get people to click AND convert. The skill here is finding the right keywords to bid for and writing an ad which will actually sell.

What’s great about PPC

PPC advertising can generate traffic straight away. It depends on whether or not people are searching for the phrases you bid on, and if your ad is well-written. You will get clicks the moment the ad is activated if these factors ring true.

Most Pay Per Click campaigns are adjustable within hours or days too, so if the market changes, you can adjust to match it. Sometimes you can find a bargain, if you hit on a niche key word with a low starting bid which will allow you to generate results at a lower cost.

As an advertiser getting started with PPC

  • Join a search engine’s PPC program and ‘load’ the account with a starter amount of money. It depends on your budget.
  • Create a small text ad.
  • Specify which keywords the ad should be associated with.
  • Detail the amount you are willing to pay for each ad click.
  • If a searcher clicks your ad, the advertiser pays for the click.

To summarise

When you Pay Per Click, you don’t create an ad, pay a website up front and hope people see it. You’re paying for results. The beauty of it is, if no one sees your ad, you don’t pay a penny. If searchers see your ad, but don’t click on it, you still don’t pay for it. Only when a person clicks and transfers to your site, do you pay for the privilege. Just try to make sure they then convert.

The reason PPC remains popular? Despite the technicalities, this business model provides excellent data on your customers. And how you use that data, is the key to success.