Pay-per-click: Buying your way in
Imagine if you could advertise only to people who have actually expressed an interest in doing business with you. That's basically what happens whenever a prospective customer or client types a phrase into a search engine that's relevant to your business. But how do search engines decide which sites are worthy of top placement in their search results? Some of the results are ranked by the search engine's computers while others are simply paid advertisements from companies willing to buy their way to the top using pay-per-click (PPC) Advertising.
PPC is an online advertising format that allows you to buy your way to the top of search results pages for search phrases relevant to your business. Businesses buy advertising on specific search phrases, and are then charged each time a person clicks through to their website.
How does this work?
Try running a search on a major search engine like Yahoo or Google for a common consumer product like ‘DVD players’. When reviewing the results, you'll likely see a set of results labeled as ‘Sponsored Links’ or ‘Sponsor Results’. Some results may appear in the same format as the main search results on the page, while others are listed within colored text boxes along the site of the page. All of those results are paid advertisements from the sites listed within the ads.
The ads are ranked based on how much a business is willing to pay to advertise on each search phrase. (The ranking order in Google is a combination of the bid amount and the popularity of the ad.) In the example search for ‘DVD players’ the current top advertiser is currently paying $0.81 per click, one penny more than the #2 advertiser.
The ads are purchased through PPC advertising suppliers, and the two largest happen to be owned by Google and Yahoo. Google's program is called Adwords and displays results on Google.com, AOL, Ask Jeeves and many smaller search engines. Yahoo's program is run by an acquired company called Overture, and the results appear on Yahoo, MSN, AltaVista, and many other syndication partners.
Why should I pay for traffic?
For businesses that have had success with search engine optimisation, the idea of paying for visitors is not particularly enticing. However, if you can make more money off a visitor to your website than it costs to get them there, why wouldn't you pay for those visitors? Keep in mind that you can choose exactly what search terms you want to advertise on, and you only pay when a searcher actually clicks on your ad, so it generally comes down to deciding how much you can afford to spend for those visitors rather than whether it's worth doing at all.
How much should I spend?
The main factors influencing how much money can be spent on a PPC campaign are:
- How many searches are conducted per month using phrases relevant to your business?
- How much are you, along with your competitors, willing to pay for those terms?
The average monthly ad spend on PPC advertising is a couple of thousand dollars, but this varies immensely from less than $50/month for regionally targeted and niche businesses to millions a month by large national retailers.
The goal of any advertising campaign should be to bring in more money from the campaign than it costs to run it. PPC is no different, but the level of detail you can measure in PPC
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