"What is Pay-Per-Click?"
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.
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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