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What is Pay-Per-Click?
by F. Terrence Markle
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Pay-Per-Click
Copyright (C) 2004 F. Terrence Markle
Pay-per-click
(PPC) advertising is when an advertiser pays for each qualified click
that sends a search engine user (i.e., visitor) to the advertiser’s web
page. PPC requires the advertiser to bid on key words or key word
phrases chosen by the advertiser. There are many PPC advertising
services available to choose from. Google AdWords and Overture are
probably the two most popular in use today.
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The PPC search
engine allows you to buy a top position in the search engine results
for the particular keyword or phrase you choose. The PPC search engines
can deliver targeted and qualified visitors to your web page at an
economical advertising cost if you manage the program carefully with a
clear objective. PPC provides the advertiser with assurance that their
ad is being delivered to the targeted audience.
PPC advertising
uses a bidding process where the highest bidder or highest activity
value, depending on the search engine, for a particular keyword or
phrase will receive the top placement on the search engine results
page. The PPC search engine will place your ad text in a special
location on the results page when a user searches on your PPC keyword
or phrase search term.
As an example, Google AdWords appear on
the right side of the search results page while the organic (i.e.,
natural) search results appear on the left side of the page. In the
case of Yahoo! Search, the sponsored ads appear on both the left and
right side of the search results page. The top 2-3 sponsored ads appear
in the top positions on the left side above the natural search results
and the next 3 sponsored ads appear at the bottom of the left side and
on the right side of the search results page along with other sponsored
ads.
PPC advertising is a good way to obtain web page visitors
when you don’t have a top ranking web page to get you the necessary
natural search engine placement. Statistics show that over 80% of
search engine users prefer the natural search results as opposed to
sponsored ads. Nevertheless, the search engines deliver a huge amount
of visitor traffic to the sponsored advertisers especially in the
competitive keyword markets.
The typical PPC advertising
campaign is based on the bid per click. For example, you bid $0.10 for
a particular keyword or phrase that is accepted by the search engine.
Whenever a search engine user clicks on your sponsored ad then you are
charged $0.10 by the search engine. This amount is deducted from your
account funds. Your placement in the search engine results page depends
on the search engine. For Google, the placement is determined by your
bid price and the ad’s click-through activity. For Yahoo, the placement
is determined by your bid relative to other bids.
PPC can be
an excellent method for getting visitor traffic to your web site but it
can also cost you a lot of money. You need to be extremely careful and
monitor your cost of using PPC versus the revenue generated. As the old
saying goes, do the math. Calculate your return on investment (ROI) on
a continuous basis to determine if you are making a profit on your PPC
campaign.
As an example, assume your bid for a particular
keyword is $0.10 and the product you sell has a profit margin of $15
after product costs (excluding PPC costs). If your conversion rate (the
number of visitors that buy your product) is 1.0%, only 1 of your
visitors will buy your product out of 100 visitors. Your net profit for
every 100 visitors from your PPC campaign will be $5 ($15 profit margin
less $10 for PPC).
It is a good idea to experiment with the
different PPC search engines to find the one that works best for you.
In addition, you need to spend the necessary time and effort to select
the keyword or keyword phrase that has a profitable conversion rate for
your specific web page. A higher conversion rate implies more profits
to you.
Try to avoid the senseless bidding war with your
competitors. Seriously evaluate whether having the number one placement
position is worth the PPC price you pay. What about position numbers
two, three and so on. Will you get enough clicks in one of those
positions to make your PPC campaign a success? Do not automatically
assume that you have to be in position number one to make a lot of
money using PPC. It all comes down to experimenting and testing.
There
is no such thing as the perfect PPC campaign. Evaluate the performance
of your PPC campaigns on a continuous basis. Are you leaving money on
the table by not adjusting your PPC bid to a lower level? Should you
increase the bid price to get more traffic? Is your conversion rate
changing? What are your competitors doing? Should you be considering
different keywords in your campaign? PPC advertising is a great way to
get traffic but at a definite price. PPC requires a thorough knowledge
of the PPC search engines that you use and constant monitoring and
evaluation of your campaigns.
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Copyright (C) 2004 F. Terrence Markle – All Rights Reserved
Get my F.R.E.E multi-part series on generating targeted
and quality traffic to your web site.
http://www.QuikSystems.com/WST/TrafficSeries.htm
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mailing list:
http://www.QuikSystems.com/EzineSub.htm
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About the Author
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Copyright (C) 2004 – F. Terrence Markle has worked for over 20 years
with public and private companies. He has an MBA in marketing and finance.
He has been involved with Internet-related businesses for over 3
years. His primary focus is the marketing of affiliate programs.
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