Many business owners often ask, “What is PPC advertising,” as they hear the term used in online marketing discussion but are not completely familiar with the concept. PPC, or pay-per-click advertising as it is often called, is a form of online advertising that allows businesses to reach new customers and expand their business. Through PPC you have complete control over where the ad appears, what your budget is, and when you want the ads to run and stop. PPC also allows you to see the impact your ads had by providing very detailed data about the performance of the campaign.
PPC allows you to reach potential customers when the search for words and phrases or visit websites that are related to your selected keywords. Google AdWords and the Yahoo! Bing Network are the two leading pay-per-click platforms, with Google’s AdWords commanding the majority of the market share. Both networks utilize a CPC (cost-per-click) bidding system that charges you only when your ads are clicked on.
Benefits of PPC Advertising
Get in front of your target customers at the exact moment that they are searching for your product or service
- PPC ads are shown to individuals that are actively searching for what you are selling, which are potential customers that are more likely to convert.
- You have full control of where and when your ads appear, as PPC gives you the ability to target specific geographic locations (countries, states, cities, towns, and even specific neighborhood areas).
PPC allows you to control your advertising spend
- CPC (cost-per-click) bidding only charges you when your ad is clicked and not every tie the ad is displayed.
- With full control over your budget, pay-per-click advertising allows you to set your daily budget and you will never be charged in excess of that amount.
- Programs such as Google’s AdWords does not have a minimum spending requirement in order to get started. This allows businesses of all sizes to reap the rewards of a successful and well thought out PPC campaign.
Data shows you what is and what isn’t working with your ads
- The popular PPC advertising platforms have very detailed reporting that allow you to see how often your ads are showing, how often they are being clicked on, what keywords are triggering those clicks, and what clicks are turning into conversions.
- This data allows further optimization to improve the performance of the PPC advertising campaign. Eliminating what doesn’t work and improving what does work allows you to maximize your PPC ROI.
How Pay-Per-Click Advertising Works
In order to get the best results from PPC advertising you must understand how to create ad groups with the correct keywords and destination landing pages that provides you with high quality scores, as the higher quality scores will cause your ads to be shown more and give you lower CPCs.
Ads Display Based on Keywords and Search Phrases
You select the keywords and search phrases that will cause your ads to show up in the search results. Let’s assume that you own a pizza shop in Chicago and you want to attract local customers. You might use keywords such as “Chicago pizza delivery” or “Chicago pizza” in order to attract local consumers that are actively seeking a pizza restaurant to visit or order from. Along with the search results, your ads would be displayed on other websites that are related to Chicago pizza.
Here is an example of where the paid ads are shown on Bing’s search results:
Ad Positions Determined by Ad Rank
There are going to be multiple advertisers all bidding on the same keywords and search phrases, so how do the search engines determine what PPC ads to display on the top? They use ad rank to determine the order of the paid ads they display for each search query. Ad rank is a combination of the following:
- Bid – the maximum you are willing to spend per click for a particular keyword
- Quality score – the score the search engine assigns according to the ad copy quality and how relevant your keyword and landing page is
- Misc – the expected impact that site links and ad extensions are also taken into consideration when the ad rank is determined
Focus on High Quality Scores
A PPC bid is based on the maximum CPC (cost-per-click) that you are willing to pay for each click on your ad. This doesn’t necessarily mean that you will be charged the maximum CPC for each click.
The quality score is based on the relevance of your keywords, ad copy, and landing page, along with the CTR (click-through-rate) of the ad. All of this is taken into consideration to assign a quality score. A high quality score will result in the ad being displayed more and with a lower CPC. It pays to focus on improving the quality score, as every savings is noticeable, especially when the campaign is scaled.