How PPC Advertising Works
PPC advertising is simply advertising your website through the
use of the pay-per-click search engines. To grasp an
understanding of ppc advertising, you need to understand what a
pay-per-click search engine is if you don’t know already. A pay-per-click
search engine is basically a search engine that takes
the guesswork out of getting top-ranking in a search engine and
in effect, enables you to buy your rank so to speak.
When using a ppc search engine you bid on keywords or keyword
phrases that your targeted prospects may use to find whatever
your website offers. When you outbid competitors that have bid on
the same keyword or keyword phrase, your website will be ranked
over theirs. Because you “pay-per-click”, you only get charged
your bid amount for actual visits to your site that result from
your ppc advertising rather than being charged a flat fee for
placing an ad.
Some pay-per-click search engine services, like Yahoo! Search
Marketing for instance, only consider the bid amount in ranking a
site. Others, like Google Adwords, may also consider the
popularity of an ad based on click through rates in ranking a
website. For the purpose of ppc advertising, this is really a
good thing because it enables those with relevant products or
services to achieve a decent ranking even if they don’t have an
enormous ppc advertising budget. It is also good for those using
the search engines to find information because relevant, popular
ppc advertisements will appear in their search results.
The most popular ppc advertising options include Google Adwords
and Yahoo! Search Marketing (formerly known as Overture). Google
because it is the most widely used search engine and Yahoo!
Search Marketing because it provides listings in several search
engines including Yahoo!, MSN, Alta Vista, and Netscape as well
as others.
The first step to designing an effective and profitable ppc
advertising campaign is to determine your budget. Budgeting for
ppc advertising involves not only determining how much money you
can spend on your ppc advertising campaign, but basing that on
the monetary value of a click to your website since you are
paying per click. Throughout your ppc advertising campaign you
must monitor it to be sure that you are getting a good return on
your investment.
Your conversion rate, the number of unique visitors divided by
the number of sales, plays an important role in determining the
value of a click to your site for ppc advertising budgeting
purposes as does the average net profit per sale. By dividing
your net profit per sale by your conversion rate, you can
accurately determine the value per click to your website. The
price per click that you pay for your ppc advertising should not
exceed this value. If it does, you will be spending too much on
your ppc advertising and you won’t get any return on your
investment.
Of course, it is ideal to pay less than the value per click so
that your ppc advertising will generate profit rather than eating
up your revenues. To boost conversion rates it is vital that you
use relevant keywords that will put your site in front of those
most interested in what you are offering. However, if the bids on
a choice keyword are too high, a little brainstorming combined
with a keyword analysis through Wordtracker will give you
additional ideas for keywords for your ppc advertising that have
lower bids on them and may be just as effective. You may also get
some ideas for keywords by looking at your competitors’ source
code to see what they are using.
Reports from your ppc advertising provider will help you to
monitor your ppc advertising. Also, the information provided
through web logs will tell you where your traffic is coming from
so you can determine which ppc advertising bids are performing
the best. If you approach ppc advertising logically and monitor
it regularly making adjustments as needed, ppc advertising is a
powerful tool for profitably driving traffic your website.