When you perform a search in a major search engine such as Google or Bing, there are two kinds of results that show up. There are the “organic” listings, which are based on the search engine algorithm. There are also the sponsored listings, or advertisements. These advertisements are powered by a methodology referred to as Pay Per Click, or PPC. This has become one of the most ubiquitous forms of advertising on the Internet, and it is not limited to the search engine results page.
This is an entirely different model than that of traditional advertising. Traditionally, you would pay for a specific amount of airtime on the television or radio, or for a certain amount of space on printed media like a magazine or a newspaper. The payment structure of PPC is, to some degree, more like a finders fee or a commission. Rather than paying the search engine or publisher to display the ad, you pay them only when a user actually clicks on the ad, and visits a page on your website.
This payment is typically based on an automated bidding system. You choose the price that you are willing to pay, and every time somebody searches for a keyword of your choosing, your bid is compared to that of all your competitors. If you bid high enough, you will be listed in the advertising section of the search engine results, or an ad on a publisher’s website.
How Does Google Determine the Cost of PPC Ads?
As mentioned above, the cost of a PPC ad is based on a bidding process. However, whether or not you show up in the advertising space, and how high, depends on a factor that they refer to as Ad Rank. The higher your ad rank, the closer you are to the top of the advertisements.
Ad rank is the product of your maximum bid and your quality score. The maximum bid is simply the most you are willing to pay for each click, but your quality score is something more complex. The exact method used to determine your quality score is not revealed by Google, but they have released a list of factors that influence it. Google has said that additional relevance factors are used, but not released.
- The click through rate of the advertisement, which is the percentage of users who click on the ad when they see it.
- The click through rate of your account history, which uses the information from all of the ads and keywords in your account.
- The click through rate of your entire domain
- The relevance of your keywords
- The relevance of the ad to the keyword
- Your account’s past performance in the region where it will be displayed
How PPC is Better than SEO
SEO, or search engine optimization, is about trying to rank highly in the organic search engine listings. It can be a very effective strategy. PPC and SEO are not mutually exclusive strategies, unless of course you plan to monetize your site by publishing PPC advertisements. That said, there are some important advantages that PPC has over SEO.
There is no wait time between beginning a PPC campaign and bringing traffic to your website. As soon as you bid high enough, you will start to see results. SEO can take a long time to have results, and these results are not guaranteed by any means.
Exact Keyword Targeting
While SEO can get pretty accurate about the keywords it targets, it is still more of a shotgun, while PPC is a sniper. This makes it easier to measure the effectiveness of your campaign.
You can decide exactly how much to spend during any given period, change your mind on a whim, and there are little, if any, upfront costs.
Precise Landing Page
You control exactly which page of your site your visitors end up on in order to maximize your conversions. SEO, to some degree, could land a visitor on any page of your site.
SEO may require extensive changes to the layout of a site, or even to the fundamental design. It could require pages and pages of new content that don’t necessarily provide any real benefit to a site visitor. PPC requires none of this.
You decide where your ads are seen so that only specific locations are targeted. SEO brings in people from all locations.
A PPC campaign can be adjusted in response to incoming data at a moment’s notice. If a particular keyword turns out not to be profitable, you can immediately stop pursuing it as a traffic source.
Fewer Opportunities for Waste
You can spend money for ages on an SEO campaign and see no results. With PPC, you only pay if you are getting results. This doesn’t always guarantee a profit, but at least you are guaranteed to see some activity for every cent you spend.
Buy Your Position
SEO can never guarantee the number one position, but as long as you have enough money you can guarantee the top position in a PPC campaign.
How SEO Is Better Than PPC
Despite the numerous advantages listed above, PPC is not without it’s disadvantages. Primarily, there are two ways in which SEO is fundamentally superior to PPC. The fact that there are only two, rather than the numerous advantages listed above, does not mean that PPC is “better” than SEO. Both are effective tools, and are effective in different situations.
Users Don’t Trust Ads
This is nothing to laugh off. Despite the fact that your advertisements will usually be listed above the organic search engine listings, many users are likely to simply ignore them and go directly to the organic listings. In fact, the vast majority of users do exactly that. This is why a PPC campaign will never bring in as much traffic as an authority site that has earned a solid ranking close to the top of the search engine results.
SEO Has No Cost Per Click
While it takes a great deal of upfront costs and usually takes a long time to be successful, SEO has one serious advantage over PPC, you do not have to pay for a single visitor that comes to your site. In other words, additional traffic does not require additional payment. Some SEO campaigns don’t even require you to continue paying for SEO once you reach a certain level of success. For this reason, the long term ROI of an SEO campaign is often higher than that of a PPC campaign.
Kinds of PPC Ads
Most of the discussion above is focused on search based PPC, but this is not the only way to undergo a PPC campaign, it is just the most popular. Here are the three kinds of PPC ads, and what they have to offer.
Search Based PPC
Discussed at length above, this strategy is most effective for local businesses, because of the fact that it can be used to target specific regions. This works best on users who already know about the products that you sell, but don’t know that you are selling them. In short, it brings in hot leads.
PPC on Content Networks
This is when you display an advertisement on a content-based website such as a news outlet or a blog. In this case, you are targeting users who have a problem and are researching this problem on the web. Once again, you can restrict the display of the advertisements so that they only show to users in specific locations.
Demographic Driven PPC
This is a strategy that allows you to display ads to users with a specific demographic profile. This method is most commonly employed on social networks such as Facebook. If you have a very specific customer base, or if you have separate landing pages for different demographics, this can be one of the most targeted approaches available. Because social networks are inhabited by people in a social, rather than a buying, mindset, there is some question as to how effective this can be.
Common PPC Campaign Mistakes
Sometimes, the best way to learn what to do is to start by figuring out what not to do. Here are some of the most common mistakes that advertisers make when trying to use PPC to increase their profits.
Clamoring for the Top Spot
Your ad is still very visible in the #2 spot, and the spike in advertising cost for the #1 spot can often make quite a difference.
Treating Search and Content Traffic the Same
Users who click on ads in the search results and users who click on ads on a website are not necessarily in the same frame of mind. It is best to approach these two different audiences differently, and test them separately.
Just because the internet is global, that doesn’t mean your customer base needs to be. Even if you target a global audience, users are more psychologically prone to work with a company that recognizes their location.
Conflating CTR and Conversion Rate
Don’t just track whether visitors click on an ad. Track whether that click leads to a purchase or some other positive action on your site. If all it does is get them to visit your site, there isn’t much benefit.
Going too Broad
You will receive more visitors per dollar if you target very specific keywords than if you target broad industry-wide terms. And, assuming the ad actually takes the user to a relevant landing page, this will also improve your quality score because of the increased relevance. Users will be taken directly to the part of the site they are looking for.
Do NOT copy the competition in your niche. Say something unique and interesting to stand out from all the other advertisers on your keyword.
Unsuitable Landing Page
The advertisement should reflect the content of the landing page. If an ad promises something that isn’t there, most users will immediately leave. Even if it’s on the page, they won’t notice it if it’s not in plain site. Internet users have a very short attention span.
Including Your Phone Number
Many studies have demonstrated that users will not call you just because they see your number in the advertisement. This space is better used doing something else.
Things You Should Do To Increase PPC Effectiveness
Bid for Your Own Brand Name
Competitors often try to bid for your brand name, stealing traffic from you. Don’t let competitors steal your traffic. It is especially important to check your own affiliates to make sure that they aren’t doing this.
Use Exact Tracking
Every single visit to your site from PPC advertising should be tracked by the exact keyword. If you aren’t doing this, you will never be able to judge the effectiveness of any given campaign, and you won’t be able to improve your results.
Use the Keyword in the Ad
This is basic, but it’s surprising how many advertisers make this mistake.
Use Seasonal Promotion
Making your ads seem up to date and relevant, especially with regard to holidays and current events, will have a noticeable effect on your results.
Specify Negative Keywords
If you are paying for a “broad match” keyword, it means that you will receive traffic from users who searched for your keyword with additional words added. If these are words like “free,” it wouldn’t make sense to advertise for them, because these users will be looking to pay nothing for your products. You can specify keywords like this that don’t convert.
Spotting the Frauds
If your ads are also displayed on content networks, some of these sites are complete frauds. Take the time to spot websites that send low or no conversion traffic. You can drop these sites so that they stop sending you fake traffic.
If a competitor is using a tactic that goes against Google’s terms of service, contact them about it. It’s surprising just how fast they will resolve the issue.
Test Singular And Plural Versions
This can also include other alternative versions of the same keyword. In many cases, you will find that they have different conversion rates and click through rates.
Research Your Audience’s Search Patterns
Much of this research should ideally be conducted outside of the search engines. This includes surveys, polls, and so on in order to identify information that you might not be able to find.
No matter how well your ad campaign is working, you should continue to refine it phrase by phrase and look for ways to keep improving your ROI.
Rotate New Ad Campaigns
The “best” ads according to Google are those that have the highest click through rate. You should be rotating the ads to find out which has the highest conversions early on, since the click through rate can be meaningless at this point.
Record Your Data
Lead data should be stored into a CMS system that is easily sortable and quantifiable. The goal here is to identify which ads bring in the highest quality leads, and try to determine what about those ads is so effective.
Use Analytics Tools
While free analytics tools can be very helpful, professional tools are much more in depth and provide you with the kind of information that can be extremely valuable for your campaign.
Watch Your Competitors
Changes in your competition can have a significant impact on your own success. Don’t copy them, but keep an eye on them to see what they are doing, and watch out for competitors who are copying you.
Who Should Consider Using PPC?
Virtually any time of business should consider whether PPC can be beneficial for them. It is a misconception to believe that your business has to be “online” in order for you to benefit from the internet. The fact of the matter is, more people use the internet today to find out about local businesses than the phone book. It can prove beneficial for businesses of all kinds: big, small, online, offline, global, or local.
That said, just owning a business is not a guarantee that PPC will be useful for you. As discussed above, SEO may be a better use of resources, and there may be many other investments your business could make that may prove more lucrative. It is not useful or beneficial to make blanket statements like “every business should use PPC.”
The key thing to remember about PPC is that, for the most part, it is only useful for selling products that customers are already aware of. You are attempting to funnel traffic that is looking for the kinds of products that you sell to your website. PPC can’t be used to spread awareness about a product that people aren’t already aware of. If they don’t know about the product, they won’t be searching for it, so they will not see the ad.
Another thing to keep in mind is that PPC may not be effective for businesses whose primary source of income is advertising. Using advertising to direct people to a site that uses advertising is simply asking users to jump through too many hoops, and it is questionable whether or not this complies with the terms of service of these networks in the first place.
The Best Way to Learn PPC
Most importantly, use it. No matter how much helpful information you can find hear or elsewhere, the only way to become successful with PPC is to try it, use it, test it, and keep refining your strategy. It is entirely up to you how much you spend on PPC, so the risks are as low as you want them to be when you are first starting out. A PPC campaign that isn’t working can be ended as soon as possible. You can test strategies on a few small, exact keywords and see which strategies are working the best for you. Many of these strategies can then be scaled to whatever size your budget allows.
Do not allow yourself to suffer from analysis paralysis like so many people first trying to break into the industry. Trial and error is the only way to know for sure what works, preferably if you track and record each and every trial and error so that you can perfect your technique.