Pay Per Click
Pay per click, or PPC, is a type of advertising that compliments SEO practices quite well. Pay per click is an advertising method used on advertising networks, websites, blogs, and search engines in which an advertiser only pays for an ad’s placement when a user clicks on the ad to visit the advertiser’s website. Ads are displayed based on the keywords input by the user in a search engine, or according to the content of a website on a content page such as a website or blog. In a typical PPC campaign, an advertiser will bid on specific keywords or keyword phrases that they expect potential visitors to their site might enter in a search engine when searching for information, a product, or a service. On a search engine, the advertiser’s ad will be displayed as a “Sponsored Result” or “Sponsored Ad” near the organic results on the SERP. If the PPC ad is used on a website or blog, the ad’s placement will be determined by the webmaster.
PPC is a very popular method of advertising online right now. Search engines love this type of advertising because PPC can bring in large dollars, and advertisers like that PPC can be cost-effective and cost-controlled.
A PPC advertisement is an online ad that is linked to the advertiser’s website. Sometimes these ads are banner advertising:
Other PPC ads are text based. Google’s PPC program, Ad Words, uses text-based advertising that looks a little like this: Of course, these are just two examples. There are also ads that appear in columns, there are JavaScript and Flash-based ads, there are small ads, larger ads, and ads displayed in just about any way one could imagine to grab the attention of customers.
In 2007, Google Ad Words, Microsoft ad Center, and Yahoo! Search Marketing were the largest PPC network operators. The minimum click price, known as the Costs Pay Click (CPC), varies from operator to operator, but can start as low as $.01 per click. Of course, more popular search terms on more popular sites and search engines can cost considerably more. The fluctuations of CPC will be explored in greater detail in the section on Bidding.
The appeal of pay per click is that it allows advertisers to reach a large audience but pay proportionally for the opportunity. The advertiser pays the hosting site or company a set amount for each click that the advertiser’s ad receives. If one or 1,000 people see the ad but don’t click, then the advertiser doesn’t owe the hosting site anything. If every 1,000 viewers who see the ad click on the ad, then the advertising company will pay the hosting site a set amount for each click the ad received.
Let’s say SolidGoldWidgets.com wants to take out PPC advertising on a particular website. They realize that a number of potential customers that visit the site, WidgetsGalore.com, would probably also be interested in what they have to sell on SolidGoldWidgets.com. To set up a PPC campaign, Solid Gold Widgets. Com begins by making an agreement with the hosting site. The PPC campaign terms state that SolidGoldWidgets.com will pay the hosting site, WidgetsGalore.com, a set CPC, which is the amount of money SolidGoldWidgets.com will pay WidgetsGalore.com for each click their ad receives. In this case, Solid Gold Widgets pays Widgets Galore the bargain basement price of 1¢ for each click. The next month, the ad receives 500 clicks. SolidGoldWidgets.com will then pay WidgetsGalore.com $5, or 500 multiplied by 1¢.
Most of the large search engines do their own PPC publishing, or control the advertising themselves. Google uses the popular PPC program Ad Words for advertisers, which produces text-based ads that rely on keywords. Google then uses their own search technology to fit the ads on a SERP with keywords for which the user has searched. For example, if a user searches for “denim jackets,” the advertising will relate to denim jackets as well. Ad Words also allows outside users to post these PPC ads on their own websites, and then receives money for each one that the page’s visitors click. Yahoo!, Ask, and Windows Live all have their own PPC plans as well, and each of these companies is their own publisher.
Bidding
The first step in creating a PPC ad campaign is the bidding process. Basically, this process involves placing a bid on specific keywords under which an advertisement will appear. The amount that’s bid is dependent on a lot of factors, including:
The keyword itself – Popular keywords often cost more than less popular keywords. The number of visitors to the hosting website – If a hosting site, such as Google, generates a high volume of traffic, the host site’s PPC rates will usually be higher than the rates of less popular sites. The amount of money the advertiser is willing to spend on PPC – Advertisers typically set a budget before bidding and will select a hosting site and specific keywords based on their budget. Because not everyone searches for the same keywords, most companies would do well to expand the number of keywords under which they advertise. By concentrating advertising dollars on a single, costly keyword, the company may be losing out on revenue from less popular keywords. Since these less popular keywords cost less, an advertiser can gain increased visibility on a tight budget by changing their PPC advertising strategy.
If SolidGoldWidgets.com wanted to place bids on keywords, they’d first want to determine which keywords are most popular. The first thing their advertising professionals would want to do is search the online marketplace to see who else is in competition. Perhaps most of the competition uses the keywords “solid gold,” meaning that ad rates for these keywords cost more. SolidGoldWidgets.com may proceed to advertise under several keywords, or concentrate on other keywords that are less popular. Perhaps “widgets” is less popular overall, so the company has the opportunity to gain greater visibility in this keyword.
Budgeting
Each company needs to calculate how much advertising money is available to spend on a PPC campaign. The bidding process is a way to negotiate on the keyword rates. Small businesses, however, will probably see much less “bidding” going on in the bidding process if they cannot pay for many ads. The great thing about many publishers is that they allow their advertisers to set a cap on the amount of advertising for which they’ll pay. This can help these web companies, especially small ones, budget effectively and manage advertising costs.
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