Pay Per Click Advertising, PPC Networks, ROI

There are many well established companies offering online advertising space on search engines and on a network of 'content partner' websites. Advertisers can bid on keywords or phrases, with a minimum bid per click. These advertiser auctions never end, with the highest bid advertiser ad appearing at the top of the list. As 80% of prospects only trouble with the first three results, there is intense competition to bid to have an advert displayed at the top spot. PPC networks are available to any website meeting their quality approval guidelines. So, within hours an advertiser can buy their way to the top of the 'Sponsored Links'. PPC networks offer advertisers the ability to eliminate their advert appearing in certain geographies or content partner sites, deemed not relevant by the advertiser. This reduces unnecessary clicks that would have otherwise wasted advertising budget. Pay per click networks are developing innovating ways to advertise on mobile phones, geo targeting at the local level and presenting adverts via product xml data feeds.

Pay per click adverts also appears across a network of search engine partner websites. For instance, Google's Adwords appear across hundreds of thousands of approved websites. Webmasters of those sites simply register to become an Adwords advertiser. Google then manually approve those applications to make sure that those websites meet guidelines with regards to a quality, relevancy, decency and anti spam. Webmasters can then place a straightforward piece of HTML code on their website. When the web page is loaded by the visitor, a highly relevant contextual advert is displayed using Google's advanced search algorithm. Google algorithm immediately analyses the content of the page and displays a set of highly relevant adverts associated with the content of the page.

The owner of the website (known as a webmaster) also has control over how the adverts are displayed. The webmaster can also customise the appearance of the adverts in terms of their location, colour, size and whether or not the advert as an image, text, banner or even video.

PPC advertises need to write their own advert. It involves creating a title, a short description with a 'call to action', and specifying the url 'landing page'. This is the url that the web user will click through to. The advertiser can user various keyword tools to determine what search terms to bid on. The headline and description of your advert (the sale copy) has to compel the prospect enough to want to click though to your website. Otherwise, you pay per click campaign will attract the wrong kind of prospect and conversion rates will be small. As PPC networks limit the amount of words in your advert, it is essential you get straight to the point. In particular, you must highlight your unique selling point, set timeframes or deadlines, and explain the benefit for the prospect user.

These search terms can then be linked to the advert created and saved within the advertisers campaign. Before the advert goes live, the advertiser must make a deposit in their advertising account. This is then 'called off' each time a website visitor clicks on the advertisers advert. The outstanding balance gradually goes down until it must be refilled by the advertiser. Once the campaign is active, advertisers can constantly bid on those key phrases (at any time), in the hope that the end user will click on the advert, visit their website then buy something.

Conversely, if the search term is a niche one, or highly specific to a local area - it is likely few advertisers will be bidding on that 'long tail' search term. The advertiser with the highest bid for a search term (the one with the deepest pockets) will have their advert automatically displayed at the top of the advert listings. As the auction for keywords is never ending, the price does not necessarily go up and up. Instead, it finds a market equilibrium over which no advertiser is willing to bid any higher cost per click. This is the point at which there typically is no return on investment. By tracking the costs of a PPC campaign, against the margin generated from sales as a result of the PPC campaign, it is easy enough to calculate the break even point. All pay per click networks has advanced reporting and statistics. This means advertisers can understand the number of page impressions and click through rates, over any given period of time.

There are many compelling reasons to run a PPC campaign; Firstly, million of firms love pay per click because they do not have to spend very much up front to get instant access to their target market. In other words, they only pay for a qualified 'click thorough'. Unlike a poster or ad in a newspaper, you only pay when a visitor actually visits your website by clicking on your PPC advert through to your site. Your ad can be displayed thousands of times for free! Secondly, you receive qualified business leads. Unlike general advertising, you can target specific key phrases used by your prospects. By narrowing the sales copy of your advert, you can minimise false positive clicks and be fairly confident each prospect is generally interested in your offering.

Thirdly, by linking tracking measures on your advert, you can calculate the exact return on investment over a period. For instance, you can deduct your ppc click spend from your sales resulting from click thorough from the same ppc ads. Once you have sufficient average trends established, you can judge what the break even bidding level on keywords associated with a campaign. Fourthly, it becomes easy to budget. Most traditional forms of advertising require a minimum spend or commitment over a period, for your advert to appear in a publication. With pay per click, you can turn off the tap instantly by turning off your campaigns from appearing in a search engine or across a content partner site (therefore clicks will not result in depletion of your budget). Lastly, PPC provides flexible form of marketing. Webmasters can update the ppc campaign at any time, from anywhere, providing freedom to concentrate on other added value activities.

The critical success factors in making a PPC campaign successful are as follows:-

• Understanding what search terms buyers are using to find and purchase things with. This includes geographic terms as well as product based terms;
• The ability to create a compelling and unique advert title and description of around 20 words. The ad must be powerful enough to convince buyers to choose your advert above your competitors;
• Identifying the average cost per click over and margin per sale;
• Time and perseverance to constantly bid up and down, based on daily traffic peaks and troughs, or when competitive bidders leave the bidding temporarily;
• The capital to check and test a campaigns over the long term to find the break even point.

Lastly, think about whether pay per click is mutually exclusive with your organic online marketing strategy. A pay per click advert can appear next to top search engine listings in minutes (without much search engine optimisation effort). So is the time saved in adopting pay per click strategy worth the costs of advertising itself? The is no correct answer to this. The answer depends upon a number of factors related to the competitiveness of the organic key phrase, versus the break even point. If the key phrase is relatively niche, natural top rankings could be secure within months. Once achieved a top ranking can be maintained and all visitor traffic is essentially free. Conversely, a PPC campaign for the same key phrase may have a large number of competitors all bidding at high rates for the top spot.

We hope you found this short introductory guide to pay per click advertising informative!