What is Pay Per Click?

PPC is a paid form of advertising offered by Search Engines. It works as follows:

1. Advertisers bid on keywords that explain their business, products, or target audience.
2. Advertisers are then charged the bid price all time somebody clicks on the advert, which is displayed when a searcher types one of the selected keywords into the search engine.
3. Some search engines also show the adverts on websites that arrangement with similar topics as the keywords being bid on.

Advantages of Pay Per Click

The mainly important benefit of Pay Per Click is that it is very fast. Within hours a Pay Per Click campaign can be setup and driving targeted traffic to a site. Other forms of Internet marketing, SEO, can get months before any results are seen.

Attaining good position is simple, but it does need putting in the highest bids. Also, no changes need to be made to the site itself. Lastly, there are no restrictions as to how many keywords can be bid on. This is especially helpful to sites that have a lot of different products.

Limitations of Pay Per Click

The costs associated with the bidding method are the largest drawback of Pay Per Click. Over time a Pay Per Click campaign can become very expensive. It is essential that ROI of a Pay Per Click campaign be closely monitored.

Bids require to be regularly monitored as competition for top positions can be fierce. Bidding wars may break out for popular keywords thereby driving the price of top positions beyond the reach of smaller companies.

Any Pay Per Click campaign is open to click fraud. Unscrupulous competitors may send fraudulent clicks through to your site in order to drive your advertising costs up. Monitoring a campaign for signs of click fraud is important.

Choose a Pay Per Click Provider

The 1st part of setting up a Pay Per Click campaign is deciding where you want your adverts to show. At present the top international Pay Per Click providers are Google and Yahoo.

Google

Google is the greatest Pay Per Click provider, with more than 60% of search page views in Europe. In South Africa, Google is by far the most dominant as it caters for the local market, while Yahoo does not. Its Pay Per Click advertising product is called Ad Words. There is a once-off activation fee of US$5, after which only clicks need to be paid for. Clicks can cost as little as $0.01, but some highly competitive terms (especially law related) can cost upwards of US$15. These are displayed on the right-hand side or top of the page under the sponsored links section.

Adverts can also appear on the search sites within the Google Network that include AOL, Netscape, EarthLink, Ask Jeeves, CompuServe, AT&T Worldwide and Shopping.com. A Google Ad word also has a content network. Adverts appear on websites that have joined the Ad sense program. Some of these sites include About.com, Lycos, The New York Times, The Weather Channel, How Stuff Works and many more. It should be noted that the ROI on the content network is far lower than the search network.

Google has an online learning centre where anyone can learn the ins and outs of the Google Ad words program. Upon completing the course you can take the Google Advertising Professional exam which is part of the process of becoming a recognized Google PPC specialist.

Yahoo! Search Marketing

Yahoo’s Pay Per Click product is called Sponsored Search which enables any advertiser to find listed in the paid search results on search engines like Yahoo!, AltaVista, Info Space, Allthe Web and Net Zero. Overture tool claims to reach more than 80% of UK internet users through its network of web portals and search engines. Although Yahoo! is well known and used in South Africa there is no option of displaying adverts locally and is only of use to advertisers targeting an international market. Setting up an account is free, but an early deposit of $30 in the US is required. Clicks start from £0.10 or US$0.10.

Yahoo offers a contextual advertising product called Content Match which is similar to Google’s. However, the criteria for having Yahoo adverts on a website are far tougher thus giving it more credibility and generally offering advertisers with a better ROI.

Yahoo! bought Overture tool in October 2003. It operates as a wholly owned subsidiary. Overture tool has already rebranded to Yahoo! Search Marketing in the US and UK.

Mirago

Mir ago offers up to 9 million searches per day in the UK and half a billion worldwide per month. Mir ago caters mostly for the UK market, but is growing in Europe.
Its Pay Per Click network of sites includes Lycos.co.uk, dogpile.co.uk, shopperuk.com and infospace.co.uk. To open a Mir ago account a £25 deposit is needed and clicks start from £0.10. Mir ago is not as saturated with advertisers like Google and Overture tool and therefore offers a cheaper alternative albeit with limited traffic.

Miva

Miva handles about 2,000 queries a minute globally and generally one billion per month in Europe. Miva does not have a search component. It is a network of partner sites including Euro sport, Lastminute.com, Supanet and Auto express.

Its paid-for product is called PPC Ads and it will soon be launching PPC Ads in the UK. For both, advertisers bid on keywords and are listed according to bid price.

Determining a Visitor's Worth

This is important for advertisers to launch the worth of a visitor. 1stly, the maximum CPC acquisition needs to be established. Then an average CPC needs to be calculated. For example, if a sale is made after every 100 visitors to a website at a cost of $50, then the average cost per click is $0.50. Now, if the average profit from a sale is also $50 then the advertiser is breaking even on his/her advertising spend. In order to make a profit the average cost per click needs to be less than $0.50. If the average cost per click rises above $0.50, Pay Per Click advertising becomes unprofitable.

Determining the Target Audience

This is very important that advertisers establish who their target market is for all forms of advertising including Pay Per Click. 1stly, the geographic location of the target market needs to be decided. If a business ships its products worldwide, then international viewers should be targeted. If the business only ships within a single country like UK then only that country should be targeted. Furthermore, if a business like a sports removals company can only offer its services to people within a specific city or region, then only people from this area should be targeted. Google allows advertisers to choose whether to target an international viewers, individual countries or even areas defined by latitudes and longitudes. Other factors regarding the target viewers like age, education and economic level should also be kept in mind.

Analyzing the Website

The website should be analyzed to decide the potential success of a Pay Per Click campaign. If a Pay Per Click campaign drives traffic to a poorly designed site the likelihood of success is minimal. In cases like this, a company’s money would be superior spent on improving the website.

The site should also be analyzed in order to decide likely landing pages. Pay Per Click allows advertisers to choose where on a site the visitors should be sent when they click through on an ad. Every keyword.