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Pay Per Click (PPC) Advertising Basics

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 13-09-2011

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Pay per click (PPC) is an advertising option chosen by many Internet Marketers whose product profit margins justify the advertising investment.

Basically, you place an ad on a Google ( or other sites and search engines), pay the site owner for each click-through (that is, every visitor who clicks through to your site) and visitors come to your site to view the chosen product or service. If they buy your product you must figure out whether the investment in advertising was worth it.

Some of the terms used in PPC are as follows.

  • Ad group: Where and how your ads and keyword lists are organized and organization should be on top of your list.
  • Campaign: This is where your ad groups are organized. It is also where you set your  budgets or how much to spend on each campaign. You can also set certain parameters like the geographical area in which the ads will run and the demographics and time frames.
  • CPC (cost per click): The amount you pay each time your ad is clicked.
  • CTR (click-through rate): The percentage of how many times your ad was clicked, divided by how many times it was shown.
  • Destination URL: The address of the Web page that the ad points to. This is your landing page and it is an imperative that it reflects the usres serach phrase (keywords)
  • Display URL: The Web address displayed in your PPC ad. This can be different than the actual landing page which may be too verbose.
  • Impressions: How many times your ad was shown when a user searches your chosen keyword(s). You don’t pay for this.
  • Keyword: The words and phrases you have chosen to bid on.
  • Match type: This is how close you want the search engine to match the users query to your list of keywords for the ads . The types are broad, phrase, or exact.
  • Maximum CPC: The dollar amount you set that you are willing to pay for each time your ad is clicked.
  • Conversion Rate: This is the ration of the number of site visits from your ads to the number of actual sales made.
  • Campaign Cost per Sale: This is the ractaul cost in PPC advertising for each sale. This is the indicator which tells you whether your campaigns are paying for themselves.

    These are the terms you will become familiar with when you start a PPC campaign. In the next post we will discuss these factors in greater detail.

     

    Steve Williams

 

PPC – Landing Pages and why they are Important

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 23-08-2011

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Landing Pages ( the actual page the visitor “lands” on when they click on your Ad) is important for a number of reasons.

1. It impacts the cost of your PPC advertising because its releveance to the search phrase counts in Google’ quality score for your ad and the higher the quality score the less you will pay for your ad.

2. It impacts the buyer and their purchasing decision.

Essentially, Google and the buyer are after the same thing…some assurance that this is what they were looking for when they clocked on an ad for Boston Puppy Training.

The user of course now needs more convincing before he or she will make the purchase. They must be convinced that its the product they want at the price they want and they must want to buy it from your site.  This is all about confidence and your site must generate the required confidence. Furthermore this level of confidence will need to be higher if the product cost is high or the product is not an everyday item. For example, a $20 CD of a current artist is neither a high dollar investment nor a specailist product so it requires a lower confidence level by the visitor. Make the product easy to find, make the site modern and funky looking, make the payment quick and easy to make and the delivery time quick and that’s about all that is required.

However, if the product costs $500 and its something specialized like an accessory for your car then all kinds of doubts can enter the mind of your prospective buyer such as , will it fit? are these guys legitimate? what if I have to send it back? etc etc. A high degree of confidence is required by the user and your site must meet that expectation.

So in effect the landing page must reflect relevance to the search term and it must generate a confidence from the user that matches the investment risk they are going to make if they purchase from you. The reason why we need to achieve this particularly in PPC marketing is because we need to maximize our conversion rate when users click on our Ads.

 

 

PPC – Some Definitions

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 23-08-2011

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Pay per click (PPC) is an Internet advertising model used to direct traffic to websites, where advertisers pay the hosting service when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market. Content sites commonly charge a fixed price per click rather than use a bidding system.

Cost per click (CPC) is the sum paid by an advertiser to search engines and other Internet publishers for a single click on their advertisement, which directs one visitor to the advertiser’s page.

In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, PPC implements the so-called affiliate model, that provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites. The affiliates provide purchase-point click-through to the merchant. It is a pay-for-performance model: If an affiliate does not generate sales, it represents no cost to the merchant. Variations include banner exchange, pay-per-click, and revenue sharing programs.

Websites that utilize PPC ads will display an advertisement when a keyword query matches an advertiser’s keyword list, or when a content site displays relevant content. Such advertisements are called sponsored links or sponsored ads, and appear adjacent to or above organic results on search engine results pages, or anywhere a web developer chooses on a content site.[1]

Among PPC providers, Google AdWords, Yahoo! Search Marketing, and Microsoft adCenter are the three largest network operators, and all three operate under a bid-based model. Cost per click (CPC) varies depending on the search engine and the level of competition for a particular keyword.[1]

The PPC advertising model is open to abuse through click fraud, although Google and others have implemented automated systems[2] to guard against abusive clicks by competitors or corrupt web developers.[3]


There are two primary models for determining cost per click: flat-rate and bid-based. In both cases the advertiser must consider the potential value of a click from a given source. This value is based on the type of individual the advertiser is expecting to receive as a visitor to his or her website, and what the advertiser can gain from that visit, usually revenue, both in the short term as well as in the long term. As with other forms of advertising targeting is key, and factors that often play into PPC campaigns include the target’s interest (often defined by a search term they have entered into a search engine, or the content of a page that they are browsing), intent (e.g., to purchase or not), location (for geo targeting), and the day and time that they are browsing.

Flat-rate PPC

In the flat-rate model, the advertiser and publisher agree upon a fixed amount that will be paid for each click. In many cases the publisher has a rate card that lists the CPC within different areas of their website or network. These various amounts are often related to the content on pages, with content that generally attracts more valuable visitors having a higher CPC than content that attracts less valuable visitors. However, in many cases advertisers can negotiate lower rates, especially when committing to a long-term or high-value contract.

The flat-rate model is particularly common to comparison shopping engines, which typically publish rate cards.However, these rates are sometimes minimal, and advertisers can pay more for greater visibility. These sites are usually neatly compartmentalized into product or service categories, allowing a high degree of targeting by advertisers. In many cases, the entire core content of these sites is paid ads.

Bid-based PPC

In the bid-based model, the advertiser signs a contract that allows them to compete against other advertisers in a private auction hosted by a publisher or, more commonly, an advertising network. Each advertiser informs the host of the maximum amount that he or she is willing to pay for a given ad spot (often based on a keyword), usually using online tools to do so. The auction plays out in an automated fashion every time a visitor triggers the ad spot.

When the ad spot is part of a search engine results page (SERP), the automated auction takes place whenever a search for the keyword that is being bid upon occurs. All bids for the keyword that target the searcher’s geo-location, the day and time of the search, etc. are then compared and the winner determined. In situations where there are multiple ad spots, a common occurrence on SERPs, there can be multiple winners whose positions on the page are influenced by the amount each has bid. The ad with the highest bid generally shows up first, though additional factors such as ad quality and relevance can sometimes come into play (see Quality Score).

In addition to ad spots on SERPs, the major advertising networks allow for contextual ads to be placed on the properties of 3rd-parties with whom they have partnered. These publishers sign up to host ads on behalf of the network. In return, they receive a portion of the ad revenue that the network generates, which can be anywhere from 50% to over 80% of the gross revenue paid by advertisers. These properties are often referred to as a content network and the ads on them as contextual ads because the ad spots are associated with keywords based on the context of the page on which they are found. In general, ads on content networks have a much lower click-through rate (CTR) and conversion rate (CR) than ads found on SERPs and consequently are less highly valued. Content network properties can include websites, newsletters, and e-mails.

Advertisers pay for each click they receive, with the actual amount paid based on the amount bid. It is common practice amongst auction hosts to charge a winning bidder just slightly more (e.g. one penny) than the next highest bidder or the actual amount bid, whichever is lower. This avoids situations where bidders are constantly adjusting their bids by very small amounts to see if they can still win the auction while paying just a little bit less per click.

To maximize success and achieve scale, automated bid management systems can be deployed. These systems can be used directly by the advertiser, though they are more commonly used by advertising agencies that offer PPC bid management as a service. These tools generally allow for bid management at scale, with thousands or even millions of PPC bids controlled by a highly automated system. The system generally sets each bid based on the goal that has been set for it, such as maximize profit, maximize traffic at breakeven, and so forth. The system is usually tied into the advertiser’s website and fed the results of each click, which then allows it to set bids. The effectiveness of these systems is directly related to the quality and quantity of the performance data that they have to work with – low-traffic ads can lead to a scarcity of data problem that renders many bid management tools useless at worst, or inefficient at best.

 

PPC Bid Management

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 23-08-2011

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Search engines such as Overture, Google Adwords, Search Yahoo and Miva offer top positions among the sponsored listings for particular keywords/phrases you choose. The idea for bidding is you have to buy/bid on keywords/phrases relevant to your business. The highest bidder gets to be on the top of the search result listing and the second highest bidder, of course, gets the next top listing and so on. Every time a visitor clicks on your website, you will have to pay the same amount that you bid on that particular keyword.

PPC can be very costly, time consuming and sometimes not worthy. But if you know how to go about the step-by-step procedures, PPC is a welcome change to traditional advertising.

If you do your searches for products, articles and auctions in the net, you usually type in a keyword or a set of phrase to guide you in your search. Either you use Google or Yahoo Search depending on where you are most comfortable at and where you usually get the best results. As soon as you key in the search button, immediately a long list of keywords or phrase will be displayed containing the keywords you key in. The first or the top link that you saw is most likely the one who bids the highest for that keyword you type. In this way, businessmen will produce the desired results; they get to be advertised, at the same time, saving and spending only for the clicks they need that might translate to potential sales.

The way to start PPC bid management is to identify first the maximum cost per click (CPC) you are willing to pay for a given keyword or phrase. CPC varies from time and even search engine to search engine too. Maximum CPC can be measured by averaging the current costs of bids (bids range from $0.25 to $5). Average of these bids is to be used as the maximum CPC to begin with. As your ad campaign progresses, the actual conversion rate (visitors turning to potential buyers/sales) will be determined and you may have to adjust your CPC (bidding rate) accordingly.

When you start to bid, see to it that you adopt different bidding strategies for various search engines. Search engines have their own PPC systems that require different approaches. It is also worthy to identify different bids for the same keyword phrases in various search engines.

Another thing, it is wiser not to bid for the top spot for two reasons: 1) It is very expensive and impractical, and 2) Surfers usually try different search queries in various search engines before they settle on the right one that fits to what they are looking for. This hardly results to conversion. Try to bid for the fifth spot instead and work your way up.

If you are now going steady on your PPC biddings, it is time for you to develop your own bidding strategy accordingly. It is important for you to track down which sites bring the bulk of your traffic and identify the ranking of your paid ads. This will help your bidding strategy to be effective and you should also decide where you want your ad to be positioned. Usually your maximum CPC will limit your choices.

Bid gaps (e.g. $ 0.40, 0.39, bid gap, 0.20, 0.19, 0.18) occur when there is a significant price increase to move up one spot in the PPC rankings. It is best if you take advantage of the bid gaps by filling them in so you can save up your cents to other bidding opportunities. Often there are keywords worthy of lesser bids to get the appropriate ranking on the list and produce a good number of clicks and higher conversion rate rather than bidding higher but having a poor conversion rate. You have to put in mind that overbidding too is not good but rather the best position for the most effective bid.

Using pay-per-click bid management in promoting your website will only be successful if you take time building many lists across many engines and studying the performance of every listing. In this way, you can make the most value from what you spend in the bidding process. The key is to use the necessary precautions to stay ahead of the competition.

 

PPC – The Commercial Factor

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 23-08-2011

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It is not difficult to drive PPC traffic to your site. Properly constructed ads will do this and minimize the cost of doing so but driving traffic is of no real use unless you make money.

Sure, if you are a multinational or you have some venture capital backing and there is another agenda such as gaining market share and medium term profit is secondary thats fine but this blog is about Joe and Jill  Average who wants to earn some money from their website now.

At the end of the day its all about math and here are the components of the equation.

  1. The Conversion Rate – This is the number of sales you make of your product divided by the number of site visits from the Adwords Campaign
  2. Cost per Conversion –  This is the cost of your Adwords Campaign for the specified product divided by the number of conversions

So, lets say that your current ad costs you $2 per click and your Product Margin ( Sales Price minus cost price) = $30

If for every 100 clicks on your Ad you made 5 sales (conversion rate of 5 divided by 100 = 5%)  your Cost per conversion would be

The cost of the Google Campaign for 100 click ($2 per click) = $200

The conversion rate of 5% would give you 5 Sales

5 Sales would give you a Margin of (5 Sales X $30 per sale) = $180

This means that the cost of the Clicks was $200 and the sale margin was $180 and you just lost money.

What are the options?

The options are, lower you ad bit price, increase your conversions or increase your sales margin.

Find some of the strategies to do this in our next post.

 

PPC Advertising – Choosing Keywords

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 23-08-2011

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Certain keywords or phrases that people type into a search engine lead to hundreds and hundreds of search results that pertain to that specific keyword. Businesses that want to advertise on the net using a PPC campaign have to come up with a plethora of keywords that is associated to the business that they are running; so when potential customers type in these keywords, it will lead them to their business site.

This is pretty much the whole concept that operates behind PPC. This is how a PPC campaign brings in traffic to your site, with the selection of the right keywords that people can search through the net.

Some keywords tend to be more expensive than others, especially popular ones. It is vital to select the right keywords, in order to get your money’s worth. This is why it is important to manage you PPC campaign wisely. Sometimes you are better off opting for the less popular keywords that are not so expensive, especially if you have a limited budget. Some businesses even hire the help of a consultant to manage their PPC campaigns.

Unlike organic listings you can simply pay (if you have the budget and provided you ad isn’t very poo;y designed) to get your keyword ranking in the paid searches on Google.  However, it is not always to your advantage to adopt this strategy. Firstly. you can minimize the cost of each click by properly constructing your adds and by making sure that the ad and the landing page is relevant to the keyword you are targeting.  For example, using the ad copy strategy in earlier posts you should have created and ad which identifies the “pain” experienced by the end user, offered a solution and displayed a “Call to Action”  following this your landing page should be optimized for the target keyword. Take a look at the posts in our SEO from scratch category for some tips on this.

If you get all this right then you will guarantee that the cost per click will be as low as possible. However, a number of other factors will come into play:-

What will the cost per click be?

What will the conversion rate be?

What is the margin per sale?

Take a look at the post entitled PPC – The Commercial Factor for more detail on this.

 

 

Planning and Implementing your PPC Campaign

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 22-08-2011

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It is important to curb your initial enthusiasm if PPC is new to you. So don’t setup a PPC campaign without thinking about it and planning your approach itherwise you will fail.

Start by gathering information using the guidelines below.

1. Know your product.

Take an inventory of the product and/or services that you have to offer (before anything else).

2. Stay within the budget.

Determine your daily or monthly budget; and stay with it. This means keeping your budget in mind, avoiding bidding wars if possible.

3. Bid just right.

Know how to bid right – a bid that is too high can exhaust all of your money, while a bid that is too low can make you lose that spot.

4. Watch the bottom line.

Measure your profit margin against your spending or expenses. Know when to stop and terminate your PPC program – if you spend more on advertising but have little or no sales at all.

5. Find the right keywords.

Decide which keyword phrases to opt and bid for. Do some keyword research, either by actually looking at existing search terms or with the use of online keyword suggestion tools, to know which terms are mostly used when searching for items that are related to your business. Focus on specific keywords, not on general ones.

6. Write effective ads.

A good PPC ad is that which can persuade and move a searcher. The basic copy of your ad should include:

  • Identify the “pain”
  • Offer a Solution
  • Call to Action (“Click here”)

Here is an example ( remember, that with Gogle Ads you only get 3 lines.

Boston Puppy Training This line identifies the Pain and also includes a long tail keyword

5 Day Obedience School This is the solution – get some Obedience training

Book online Today This is the Call to Action

www.bostonpuppytraining.com

 

7. Maintain a professional-looking site.

Your web content should be regularly updated and checked for spelling and grammatical errors. There should be no broken links or images. The website should be simple – designed in such a way that it will be easy for visitors to navigate and load. Include contact details to create a good impression among potential customers.

8. Split Test

Write two ads and measure the effectivenes of each After a week or so dithc the one with the worst results and write another one. After a week ditch the least effective and write another one and so on and so on. This way you will continue to imporve the ad effectiveness using real time statistics.

 

 

What are the Steps in Setting up a PPC Campaign

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 22-08-2011

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PPC advertising is usually done with the following standard procedures:

  • Setting up an account and/or deposit funds.
  • Creating a keyword list.
  • Choosing (and setting up) an account with a PPC search engine.
  • Bidding on the ad placement, including the search result words or phrases.
  • Writing out an ad copy.
  • Setting up the ‘landing pages’ for your ads.
  • Placing the advertisement in the search engine.

 

There are many benefits to Pay Per Click advertising, making it an effective way of promoting a business ‘online’. Some of them are listed below:

  • Get launched immediately. PPC advertisements are implemented very quickly – they can go ‘online’ within an hour after winning the bid and paying for it.
  • Obtain specific, pre-qualified, and quality traffic. PPC provides you with a quality or a well-targeted traffic. Visitors are narrowed down into ‘qualified’ people who are actually looking for specific products and/or services that you offer – those who are more likely to become a ‘lead’ (a convert) and complete a transaction (either by buying your product or subscribing to the service that you are offering
  • Widen your reach. PPC advertising provides additional traffic to your site, aside from the natural or “organic” search engines.
  • Track your investment. PPC advertising makes use of a tracking system that will determine exactly who comes to the website and what they do once they arrive – the length of their stay on the site and the number of pages (including the actual pages) that they view. These are valuable tools in determining statistics such as return on investment (ROI), acquisition cost-per-visitor, and conversion rates (the percentage of visitors who are converted into customers or leads).

What is PPC?

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 22-08-2011

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PPC stands for Pay-Per-Click – a popular advertising technique on the Internet. Found on websites, advertising networks, and especially on search engines, PPC advertising involves sponsored links that are typically in the form of text ads. These are usually placed close to search results, where an advertiser pays a particular amount to visitors who click on these links or banners and land on the advertiser’s web page.

In essence, PPC advertising is all about bidding for the top or leading position on search engine results and listings. Advertisers do this by buying or bidding on keyword phrases that are relevant to their products or services – the higher the bid, the higher the spot on the search results, the more the people will find the ad (and click on it) to go to their websites (this is why some people call it “keyword auctioning”). Advertisers would then pay the bidding price every time a visitor clicks through the website.

PPC advertising is also known under the following names/variations:

  • Pay per placement
  • Pay per performance
  • Pay per ranking
  • Pay per position
  • Cost per click (CPC)

 

Google Adwords Fundamentals

Posted by Steve | Posted in Pay Per Click Advertising 101 | Posted on 17-03-2011

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Hi again,

Here is a quick post on some Google Adwords basics. This is for the newbies ( and some of the not so newbies).

Let’s take a look at the fundamentals of pay per click advertising  (PPC). Pay per click advertising involves opening a Google adwords account, constructing an advertisement based on your chosen keywords, bidding for an ad position, and defining a landing page for that advertisement.

We won’t go into the details of registering in the Google adword account we will just assume for the purpose of this post that you already have one set up but you are not experiencing a great deal of success or you are unsure where to start. We will also assume that you now what market you are in and what keywords are important. ( More on this in a later post).

Let’s start with the actual ad.  Your advertisement must include the following three components. Your Chosen keyword or Key Phrase. Your target’s problem or pain and a “call to action”. Therefore if you were constructing and ad around the keyword phrase puppy training the first line of your ad should include the words puppy training. The second line of your ad should identify a  problem the user may be experiencing and possibly some solution to that problem. (This can be difficult but you can make some assumptions). In the case of puppy training think what you would like to achieve because it is likely that you will want the same thing as most people.

Start with a title line which matches your Keyword or Key Phrase. The next line should identify a solve the  problem. The last line should be a call to action. See the example below which Google will see as an ad with a very high relevance for the search phrase “Puppy Training”

Toilet Training for Your Puppy

Your Puppy will never Pee Inside Again

Get the easy 7 Day System NOW

www.puppytraining.com

Now, in order for your ads to appear  you will have to bid a sufficient amount of money per click. Google will guide you to some extent how much you should bid for your ad to be shown. How much you have to bid will depend on a number of factors. The most important factors are the relevance of your ad to the search key phrase and the relevance of the landing page it points to.

The landing page is the page the user will land on when they click your advertisement. The name of this landing page and the content of this page should be relevant to the search phrase used. For example, if your website is named www.joethevet.com this is not a relevant landing page for the user and Google will devalue the advertisement. A better landing page would be  www.joethevet.com/puppytraining.htm.  Better still a domain called www.puppytraining.com (sorry…that one is gone!).

Again, the content of the page should include references to puppy training, which was the original search phrase, and will give Google the impression that the page is relevant to the search.

These three components are all about relevance to the search phrase. It is Google’s job to give accurate results based on the users intended search phrase (keyword(s). If you ensure that your ads are as relevant as possible in all these aspects Google will reward you by making your ad appear at a lower bid than those competitors who have not constructed  their ads and landing pages with the same relevance is yours.

Google does this because it wants to make as much money as possible from advertisers. If your ad is better than somebody else’s it will be clicked on more frequently so it will have a more prominent ranking than your competitor. Let’s say for example that your competitors bid is four dollars at their ad is poorly constructed and the ad is only clicked on 10 times every hour. Google  makes $40 an hour by positioning that ad at number one.

If you construct an ad that is significantly better because it is more relevant and users click 20 times an hour your ad only has to be a little over half the cost of your competitor and Google will make more money. In the example above if your ad bid was $2.10 Google would make 20 times $2.10 which equals $41 and they would therefore make more money on your ads being at number one than if your competitors ad was in number one. While the exact value of your bid may not be as simple as this the general principle is correct. Make your ad better and you will pay less.

I have to stress that this is an oversimplified example to illustrate a point. The full explanation of the Google Ad Ranking and PPC Cost can be found at the url below. http://www.youtube.com/watch?v=K7l0a2PVhPQ&feature=related

In these posts I am sharing some of the basic principles of marketing and advertising your products on the Web. In the early stages of the taking of very simple view of these principles. So far we have covered a few of the more important basics like Google ranking and why that impacts the domain names you should register and this latest article on Google ad words. In future articles I’ll get into much more detail? as the main purpose here is to cover the most common mistakes which cost you time and money.

Steve Williams

Don’t forget to check out this video “Make $100 per day on Clickbank – FAST”