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Understanding Pay Per Click Advertising

What is Pay Per Click Search Engine Advertising / Marketing

Pay-Per-Click (PPC) or Search Engine Marketing is a form of online marketing involving search engines, where advertisers pay for prime real estate on a search engine ranking page. When web-searchers click on an advertisement he/she is redirected to the advertiser’s website and the advertiser is charged a fee.  PPC ads do not actually cost money until the ad is actually clicked.  When Pay Per Click advertisements are clicked on the advertiser pays a fee based on the amount the advertiser bid.  PPC advertisers are not paying for the right to be listed on the top of a search engine ranking page for targeted keywords, but instead they are paying for when a searchers chose to click on your ad and subsequently are taken to the advertiser's website.  When searchers type in a keyword or keyword phrase that a PPC advertiser has placed a bid on, the advertisement they have placed may be viewed. The frequency and placement of the advertisement depends on the amount the advertiser bid for that particular keyword or keyword phrase. These “Sponsored Links”, as Google refers to them, can be found to the right or above any organic search results.     

Search Engine Marketing revolves around keywords or keyword phrases that advertisers bid on and feel will entice visitors to vist their website.  These words or phrases that are bid on appear order of highest bidding price to lowest bidding price. Individual Pay-Per-Click bids are determined by what other advertisers are paying and what the market for that keyword is.  The actual bid price to be listed on top for some keyword phrases can exceed $10.00 PER CLICK! The order or position of these PPC listings depends not only on the bids but the “quality score” of ads shown for that given search.  The quality score of PPC ads is generally calculated by click-through rates and the relevance of the ads text and keywords.  The typical Pay-Per-Click advertising engine requires advertisers to specify which words/phrases will trigger their ads and are then required to specify what the maximum amount they are willing to pay per click for a certain rank.   

Why To Use PPC Search Engine Marketing / Advantages

Pay-Per-Click advertising has its advantages and downfalls as with any other online marketing technique.  In many cases the cons of Pay Per Click advertising outweigh the pros and are therefore rendering your pay per click campaign not profitable or in many cases a LOSS! 

PPC advertisements can be highly effective for branding purposes.  Ads on the web not only act as a traffic generator but also allow marketers to put a brand name out in more places to be viewed by more potential clients or customers. 

One of the biggest advantages of Search Engine Marketing is that it offers a quick and direct response.  With most online marketing tactics you don’t see results in a short period of time, generally months, but PPC is unique in that you get listed fairly instantaneously in search engines.  Jumping up quickly in search engines is key when a website initially goes up (until other tactics start taking over) and can be vital during certain times of the year. 

Another benefit of Pay-Per-Click advertising is that you can control a websites ranking fairly quickly and simply just by increasing or decreasing the amount of your bids.  Your position/rank in PPC search engines is usually determined by the amount of your bid.  The higher your bid, the higher your position in search results with that keyword.  The number one positioned listing i.e. the highest bid doesn’t necessarily mean more sales, although it is more likely to bring in more traffic.  Many people don’t purchase from the first site they visit, so in some cases being number one is not always the best position.     

 Search Engine Marketing allows for very targeted traffic.  Since ads are only paid for when clicked on advertisers are only paying to reach their targeted audience whom is potentially more likely to purchase your product than others.  The traffic that is generated by search engines is from those who are searching with specific keywords, so by placing a Pay-Per-Click ad you are showing up on top of a search with your paid keywords.  Not only do you receive targeted traffic but guaranteed traffic is the only thing that you are paying for in Search Engine Marketing.  Advertisers only pay for the traffic that is sent to their site with Pay-Per-Click search engines.   

Why NOT To Use PPC Search Engine Marketing / Disadvantages

Search Engine Marketing can be expensive, prone to click fraud, attract the wrong type of clientele and have mass amounts of competition. 

The number one disadvantage to Pay-Per-Click in many instances is its cost.  Advertisers could be spending a huge amount of money to gain just one or in some cases no customers.  Since keyword bids are determined by competitors it can be expensive to just keep up with or to overcome your competitor’s price per click.  Keeping up with other advertisers Pay-Per-Click bids for businesses that engage in a small amount of sales could not only be expensive, but could mean little or no profit margin, and sometimes could cost more than you make.  That being said, for smaller businesses PPC is typically not the right advertising method.   

Click fraud is becoming more prominent in Search Engine Marketing.  Click fraud in Pay-Per-Click campaigns occurs when a person or sometimes computer program acts as a searcher and clicks on an advertisement for the purpose of charging that advertiser for a click with no interest in the ad in which they clicked on.  This fraudulent behavior is usually performed by Pay-Per-Click competitors, trying to use up competitors budget in an effort to steal their business.  Google is the first PPC search engine to implement a system to guard against this click fraud, although it is not 100% effective.   

It can be easy to attract the wrong clientele with Search Engine Marketing.  Possible customers are in so called “internet mode” where they feel overwhelmed with information and options.  Due to this overwhelming feeling searchers may think fast and may go in and out of your website quickly, while at the same time costing money to click on your advertisement.  Many people access the internet looking for give-aways or freebies.  Those searchers often click on paid advertisements looking for those no cost items, which could bring in no profit and end up costing you.       

Competition is something everyone is used to on the web, but with Search Engine Marketing the competition can be extensive and even overwhelming.  Pay-Per-Click often brings out a cut throat attitude in advertisers.  Competitors can be found bidding outrageously to knock one another out and can even go as low as to engage in click fraud as earlier discussed.   

A Good Place To Start Pay Per Click Search Engine Marketing

If you have decided that Search Engine Marketing is right for you where should you start? Which PPC Search Engines should you advertise with?

Since the base of Pay-Per-Click is keywords, that is where your campaign should begin.  Keywords don’t necessarily have to be just a single word, but can be a phrase known as a keyword phrase.  Chosen keywords should be relevant to the content of your website and what you are selling.  Your prospects are finding you by searching for keywords that reflect your products.  A good way to come up with or test keywords you have decided on is to put yourself in the searchers position.  By pretending to be the searcher you can view the other sites that come up and will help in determining effective keywords. 

Not only should advertisers choose relevant keywords for Pay-Per-Click ads, but general keywords should be avoided.  They will typically bring in a higher volume of traffic to your website but the traffic will generate a lower percent of sales.  These general keywords will cost more for a high position than your target or specific keywords.  With a higher number of clicks at an expensive rate it is not profitable to use general keywords in Pay-Per-Click ads.  By advertising your targeted keywords you are likely to have a high conversion rate at a cheaper rate.  Variations of the keywords that you decide to target should also be added for example "bike" and "bicycle".

After you figure out your Pay-Per-Click keywords the next step is to determine what price each keyword will cost you and how much you want to pay.  Since the keywords cost per click rate is determined by what others are paying, some words that you have chosen might be too expensive for your budget.   If your PPC budget doesn’t allow for expensive keywords, they should just be avoided.  It is not worth paying for a keyword that has you on page 20, if you can’t afford to pay more to be higher.  By placing a high bid you can show up as #1 for that keyword.  If you decide that you don’t want to be number one but want to show up high you can adjust your CPC ( cost per click ) rate to do so. 

If you have a Pay-Per-Click budget to abide by, search engines allow you to set a daily budget so you don’t exceed your limit.  When just beginning your Search Engine Marketing it’s better to start with a low daily budget so you can learn how PPC works and don’t spend your money in an unprofitable manner.  After you are comfortable with your Pay-Per-Click campaign and how it works your budget can be increased or adjusted as needed.    

The description placed in your Pay-Per-Click advertisement has the job of attracting visitors that are interested in your product.  In order for a PPC ad to work best it needs to describe as best as possible what you offer in an effort to gain more potential purchasing customers.   To keep up with competitors your ad needs to be attractive to bring in more searchers.  By pointing out the benefits of your product in the PPC description it will better help entice consumers.  Superlatives (i.e. “Best”) should be avoided in PPC ad descriptions since it is known that the quality of the visitors obtained is lower and not to mention many search engines don’t allow them to be used anyway.  

How To Choose A Search Engine To Do PPC Search Engine Marketing On

There are many Pay-Per-Click search engines available, but not all are good traffic generators since they are not very popular.  The largest PPC sites currently available in order of popularity are: Google AdWords, Yahoo Search Marketing and MSN Live.  Since most people prefer one search engine over another it is best to advertise in all three.  Some budgets don’t allow for all three, in that instance advertisers should weigh the benefits of each to determine which will allow for their budget to be properly spent.

The traffic that is generated thru each PPC search engine should be reviewed.  Not only the general amount of traffic, but the traffic coming in and searching using your targeted keywords should be looked at.  The traffic should be high or be a volume that meets your budget before attempting or even considering advertising thru that search engine. 

The setup cost should be a determining factor in choosing a PPC search engine, since the prices are usually different for each.  Since the PPC setup cost is non-refundable make sure that you are confident you will advertise with them. 

Review time is another important factor in determining search engines.  Some PPC engines offer a nearly instantaneous posting while others have a few days up to a week turnaround time.

Although help is offered in each Pay-Per-Click search engine, some work better than others.  It has been found that each engine’s help centers works differently and at their own speed, some work faster and are more helpful than others.

Tools that PPC search engines provide should also be looked at.  Each engine offers bidding tools, but some are more effective and helpful than others.  The tools need to be easily accessible and useful in allowing you to spend your budget more wisely.  Yahoo allows advertisers to view competitors and what they are bidding whereas Google does not have a tool that allows this.

Search engines usually have ties with other websites that their ads are also placed on.  Google for instance has partnerships with AOL, and Netscape.  If your PPC ad shows up on top of one engine you are likely to show up on top on another site with which they are affiliated with which allows for more viewers and typically better results. 

The cost per click rate usually starts at $0.01 and sometimes goes up to $0.50 for a starting rate.  For example Yahoo allows for a starting bid of $0.10 and Google has a starting bid of $0.05.  This means that just to have an ad is more expensive than other engines and doesn’t necessarily mean you will have a higher placement.

Many Pay-Per-Click providers require a minimum balance or deposit to keep your ad up.  This minimum balance is used to cover what your daily budget is set at although some search engines require a balance of at least twice your daily budget.  Once your account balance is below the required minimum they will debit you for more money to keep up this balance to keep your ad up.

Search Engine Pay Per Click VS Shopping Site Pay Per Click

Shopping comparison sites like Price Grabber, Shopzilla and NexTag are available at a cost per click rate.  These sites allow advertisers to list their products and sometimes pictures of their products and only are billed when consumers click on their listing to visit their website.  Pay-Per-Click shopping sites work like Pay-Per-Click search engines, except they allow product listings instead of advertisements.  Note that there are also free shopping comparison sites available that are worth submitting to since they are free and can only help your business.

While some PPC shopping sites have their own spiders that work thru submitted websites and take the information they feel pertinent, other sites allow merchants to provide their own information.  Advertisers can submit product lists, prices and photographs of them to these paid shopping sites.  When a consumer performs a search using keywords contained in your information it will then bring up what you have submitted alongside similar products from other websites. 

Allowing information to be viewed side by side gives customers the option to compare websites.  Prices and even shipping costs from the big companies to smaller businesses can be compared easily through these PPC shopping websites allowing users to find the best deal available.  Once a viewer finds the website they want to purchase a product from they can click on that item and it will redirect them to that advertisers store allowing them to purchase directly from the retailer.

 Pay-Per-Click shopping websites are a pertinent for many online retailers.  A great deal of online sales comes from these shopping sites which can be a great source for income if it is tracked correctly.  If an online stores statistics are properly tracked, it can tell advertisers if these PPC shopping sites are bringing in enough sales to be profitable.

PPC Search Engine Marketing Management & Tracking

The most important factor of a successful Search Engine Marketing campaign is tracking, which should potentially be reviewed on a daily basis.  Tracking your Pay-Per-Click advertising can not only tell you if it is profitable, but it can also tell you what is and isn’t working and needs to be changed.  Although analytics take some time to set up, if done properly they can make an extreme difference in your campaign.

Pay-Per-Click tracking can tell you what ads visitors are clicking on to visit your website.  The ads are linked to certain keywords that you have bid on.  When set up properly you can know what keywords that are clicked on are actually bringing in sales or conversions.  With that knowledge of your campaign it allows you to get rid of or adjust keywords that are bringing in visitors but aren’t producing any or little sales.  It also tells you what keywords are making money so that you can adjust your budget accordingly.  This helps to get the most out of the money you are spending for Search Engine Marketing.

Monitoring which search engine visitors come from is important to know and can be found out thru your analytics.  If you find that little or no traffic is coming in from MSN or that they are not purchasing anything when coming in from MSN, than why spend money advertising with them.  Your budget that you had with MSN can be put towards a more profitable PPC search engine.

Tracking your Pay-Per-Click advertising can tell you if it is even profitable at all.  You might find that you are paying for a lot of clicks and no purchases are coming in.  If that is the case than Search Engine Marketing might not be right for your website and it is probably a good idea to do away with your PPC ads all together.  

Properly tracked Pay-Per-Click ads can be an important part of some online marketing campaigns; however they are not always successful and should not be the sole source of advertisement.  Search Engine Marketing works best when performed along with other forms of online marketing.

If you find this a bit overwelming or need help then give us a call or send us an email. We have a lot of experience handling pay per click search engine marketing campaigns so feel free to take advantage of it. Or if you prefer to learn PPC on your own visit WebDuck University to take one of our Online Marketing video tutorials or courses.

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