Pay per click advertising

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1 Pay per click advertising What pay per click (PPC) advertising? PPC is a type of advertising offered by search engines or other websites, in which advertisers pay the provider only when an advert is clicked on and the visitor is sent to the advertiser s website. This is now the dominant form of internet advertising and although there are many PPC providers, the largest providers are the three major search engines, i.e. Google Adwords, Yahoo! Search Marketing and Microsoft adcenter. When advertising on search engines, advertisers typically bid on keywords and phrases that are relevant to their target market. The bid amount (and some other factors) will then decide whether the advert will appear in the sponsored links or sponsored ads section of the search engine results pages when a potential customer searches for the targeted phrases. The business model behind PPC is to match customers (who are searching) and businesses (that have offerings that customers want). For example if a customer searches for widget A on a search engine, the consumer is shown adverts in the sponsored items section of the results page for businesses that have bid to appear for the keyword widget A. The customer can then click on their chosen advert and the business listing this advert will be charged for the bid amount. Other websites can also include PPC adverts; these are known as content sites and include many news, information and forum sites (or website any that sells advertising space). These websites often charge the advertiser a fixed price per click rather than using an auction system. It is important to identify between search based PPC and PPC on content websites. Most businesses find that search based PPC offers the greater rewards at the outset. What are the benefits of pay per click advertising? If undertake effectively, PPC advertising can be a low cost method of generating increased traffic to a website compared to other forms of advertising. The main advantages include: Immediacy of return on investment The results of PPC advertising can be seen immediately after a campaign has been started. Once an effective campaign is started, traffic should be generated to the website. Other traffic generating activities such as search engine optimisation can take many months to see an effect. Value for money Unlike other advertising, the advertiser is guaranteed some value when paying advertising fees, i.e. a potential customer searching for one of the businesses target keywords, has seen the advert on the results page, decided that it meets their needs, clicked on it and arrived at the business website. This is also means that visitors from PPC are likely to be more relevant than visitors from other forms of advertising. Control and flexibility PPC can be controlled easily by the business or a professional employed by the business. It is possible to set-up maximum costs per click for every keyword and also allocate a daily, weekly or monthly maximum budget. Keywords can be adjusted, added

2 or deleted according to current market conditions or promotions. Most PPC advertising providers have tools which can monitor the effectiveness of the campaign and changes can be made easily (a website analytics tool can also be used) to monitor the campaign. Simplicity and transparency The basic principles behind PPC are simple; the advertiser that is willing to bid the highest amount (in an automated auction) for a keyword will be ranked the highest in the sponsored links section of the search engine results page. The PPC provider will inform advertisers what the highest and lowest bid is for a keyword term. Some of the major providers do not just rely on the bid amount but have introduced a system that takes into account other factors (such as the quality/relevance of the advert/landing page and the volume of adverts placed by the advertiser.) Bid value is still the major factor that determines position in the results. How can pay per click advertising be used? A business can undertake PPC in-house or use a professional supplier such as a marketing consultancy, advertising agency or website developer to manage the campaign. A professional can also be used to support a small business undertaking PPC by providing advice, training and practical support. Both options will be looked into in detail below. Whichever option is chosen it is advisable that the business aims to understand PPC advertising before committing resources to it. Undertaking PPC in-house Before undertaking PPC advertising in-house it is important that a business has some knowledge of pay per click and specifically the PPC provider that is chosen. On the surface, PPC advertising can appear straight forward but there are subtleties involved in implementing a campaign to achieve good return on investment. There is literature available and many business training providers run courses on PPC advertising. Some of the steps needed to run a campaign include: Optimise the website / landing pages Landing pages are the pages visitors first arrive on after clicking on an advert. Effective landing pages lead the visitor straight to the products they want and are generally more successful for converting visitors into sales than sending all PPC visitors to the home page. Landing pages should reflect the keywords used on the PPC campaign i.e. Canon Camera keyword should forward the user to a landing page which features Canon cameras. Identifying pay per click provider There are several PPC providers, the resources section below identifies the three major providers. As each provider differs and there is a learning curve for each, most business will choose to use just one provider to begin with. The provider s website usually has a help guide available to use their service and to maximise the businesses return. Identifying keywords or content This is a key part of PPC advertising. If using PPC for the first time, it is usually more productive to use search based adverts instead of content adverts that appear

3 on other websites. Identifying which keywords/phrases to appear for is a key part of the process. The more popular a keyword/phrase, the greater the chance that the advert will be displayed (and clicked on) but the more expensive the cost per click is likely to be. A balance has to be drawn but more importantly, the keywords should be chosen for the relevance to the products or services being advertised. Selecting keywords such as cheap Canon Camera are more relevant to a camera shop selling Canon cameras rather than words such as digital camera reviews. Identify budget This involves allocating the budget required to achieve a return. Although there is a risk, if the campaign is undertaken effectively, the website is well designed and features products that customers wants it is highly likely that there will be a return. As the results from PPC are fairly instantaneous, it is possible to easily measure the campaign and allocate more / less resources dependant on the results. Identifying cost per click PPC systems have several options for selecting the cost per click the business is willing to pay. For example, it is possible to set a maximum cost per click per keyword, group of keywords or campaigns. Ideally the business should set the click per keyword based on the known value of the keyword. Create adverts Pay per click adverts typically consist of a title, two lines of description and a URL (website address). It is important that the advert is customised for the keyword selected. For example, if selecting the keyword Canon Powershot A480 the advert should be customised for this keyword, i.e. Canon Powershot A480, Lowest cost Cannon Camera as apposed to a generic advert that is used for all campaigns such as: Digital Cameras, low priced digital camera, Monitor the results and amending Campaigns should be dynamic and changed dependant upon their performance. PPC providers control panels or website analytics tools can be used to monitor this. It is important to monitor the campaign, groups of keywords and individual keywords for cost per conversion and volume of conversions. A conversion (i.e. an objective such as a sale) is the main purpose of advertising and there should be an identified maximum cost for the conversion. The business should also have a target for the number of conversions (or value) for the campaign. The campaign s performance needs to be monitored and adjusted according to this. Using a professional If a business does not have e-marketing or PPC experience in-house the best strategy is to employ the skills of a professional to manage the campaign. If a professional is used, the campaigns advertising budget needs to be around twice the value of the consultant s fees. For example, if the consultant is charging 200 set-up fee and 50 per month for a campaign, the 12 month budget for pay per click advertising spend should be at least If the advertising budget is lower than this, it will be hard for a return on investment to be made. If the professional is providing training and support, up-skilling the

4 business in PPC, the same rule does not apply and cost savings can be made in the long term. When approaching a professional for PPC consultancy/training/campaign management, it is important to identify what services are required and what the professional will supply (with any likely returns). Typical services include: Keyword selection Keywords that provide the conversion volume, and value required. Advert writing Ideally these should be specific to each (or a small number of relevant) keywords. Budget management Cost per click and campaign size Website optimisation for PPC Landing pages for specific keywords and other optimisation to increase the conversion and quality score. Metrics The professional should provide data on the number of click throughs and conversions via the PPC providers system or a third party analytics tool. It is important the business knows the cost per conversion and the volume of conversions, as these are important metrics for defining success. If a consultant manages the campaigns, it is important to know the breakdown between advertising spend and management fees. It is best practice not to have a long term contract and review spend on a monthly basis dependant on results (ideally the number of conversions/sales, volume and value). Results can then be monitored against other marketing. What are the disadvantages of pay per click advertising? Although PPC on the whole is an effective form of driving traffic to many businesses websites, it is not for every business. The main disadvantages include: Steep learning curve PPC is promoted by providers as a simple form of advertising but as it is now highly competitive and understanding the subtleties of the process is important to generate a good return. Businesses undertaking campaigns without knowledge of PPC strategies may spend more money than they make. Not understanding how to monitor and evaluate campaigns is another way in which money could be lost quickly. Using a professional such as a marketing consultant to manage a campaign or provide support can mitigate this. Cost and competitiveness As most PPC advertising is based on an auction system, where advertisers bid against each other obtaining competitive positions in the sponsored links section, PPC can be expensive for competitive terms. Sometimes a business can be priced out of the market by other advertisers who have the resources to outbid them. Click fraud This involves fraudulent clicking on an advert by a competitor or someone else, incurring costs to the advertiser for no return. Many of the major providers have systems in-place to limit this. It is rare that small businesses have problems with this but if it can be proved, most PPC providers will refund the cost.

5 Quality score As well as ranking by bid amount, several PPC providers consider other factors such as website or advert quality. This means that some advertisers have to pay more per click than others. Resources Examples of pay per click advertising services: Google Adwords Yahoo! Search Marketing Microsoft adcenter Articles: Search Engine Watch, small business PPC information PPC advertising Guide

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