The following describes the typical Pay Per Click environment. There are a number of variations on this theme
PPC (Pay Per Click) ads are paid advertisements that appear at the beginning of search results and on various other internet pages. Typically the ads that are listed are determined by either a bidding process or a flat fee. Open bidding for pay per click keywords usually involves determining a maximum amount that you are willing to pay and bidding no higher than that point. The highest bidder will appear in the most prominent position at the top of the list for a given search terms. The primary benefit of pay per click advertising is that the ad may appear multiple times, the advertiser only pays when a visitor actually clicks on it. Ideally this means that a qualified visitor is coming to your site.
Pay per click services are usually owned by or have business relationships with search engines. The search engine will either receive a database of keywords and the sequence of ads from the pay per click service or they will fetch the appropriate ads from the PPC provider in real time when the search is made. The link on the ad typically points back to the pay per click service provider where they record the click and send the visitor on to the selected advertiser’s site. The term pay per click search engine specifically relates to a database search site that is compiled entirely of paid listings. What we want to do here is move away from the paid search engine listing concept and on to the more profitable course of pay per click marketing in general. The reasoning for this is simply that the stricly paid search engines are not very popular and with a well designed pay per click plan you can reach more potential customers while getting more value for your dollar.
Selecting Pay Per Click Keywords (ROI)
Understanding “ROI” is the key to making paid advertising work for you. It stands for “Return On Investment” and in the pay per click advertising world it is essential to understand and too often overlooked. Most pay per click services will let you see the current bidding for the keywords you are considering. Because of the auction environment, pay per click services that have arrangements with high traffic sites will typically demand higher prices for keywords. The maximum price for a keyword however normally relates directly to the dollar value of sales an advertiser expects per a certain number of paid clicks.
Example 1: If you expect a 5 percent level of sales for the actual number of visitors to your site then you need to calculate how much 20 clicks (since 1 click is 5% of 20) will cost compared to your individual sale. At that rate, if you are selling a book for $15.00 and the top bid is $1.00 for your selected keyword you would be losing money at the rate of $5.00 per book to be the top keyword bidder. You would be paying $20.00 for 20 $1.00 clicks for the one $15.00 sale.
Example 2: On the other hand, with the above book example, if the top bid is $0.20 and you expect to sell to 1 out of 20 visitors, your pay per click investment per book sale drops to $4.00.
Example 3: It also may be worth it to you to be the 2nd, 3rd, 4th, or 5th place bidder. In this situation the 5th place bid for your keyword might be at $0.05 bringing your total pay per click cost per sale down to $1.00. The 5th place bidder will not get the volume of clicks that the first place bidder will get but it should still receive some traffic. To follow through with this concept, the merchant may find that the pay per click position 3 or 4 may maximize the return on investment.
Finding Pay Per Click ROI balance: Example “2” and “3” demonstrate a crucial aspect of ppc marketing. If our fictitious book seller has a cost of $10.00 per book s/he is making a profit in both cases and may even be making some more profit on handling fees. Though the 5th place spot may look appealing, the larger volume in the second place spot may very well make it more profitable.
Another critical concept to profitability in the pay per click and search engine world is to look into a more targeted keyword phrases. The bidding is usually lower on more specific keyword phrases. If your book is “History of the Widget” you might find that the keyword “widget” receives 100,000 hits but the bidding level isn’t feasible for your ROI but the bidding level of “widget history” might be more reasonable though it may get less traffic. In this situation there is the added benefit of more qualified searches relating directly to your product but in other cases more specific keywords might not be so apparent. Your pay per click service should allow you to check the bidding on various phrases and many have tools to give you an idea of the number of hits a keyword can expect. Finding the right balance for your particular application means starting out slow with very few keyword groups and watching the effect of changes very carefully.
Selecting a Pay Per Click Service Provider
Selecting the Pay Per Click provider that is right for you may seem a little challenging. Smaller, newer PPC providers may be less reliable and in some cases might even send a number of fraudulent clicks through that will cost you money. This is not to say that you should avoid all new pay per click search engines and ppc providers (almost everyone starts out small), but the larger, well established companies typically have more resources and more highly developed programs to assure their advertisers are receiving the clicks they are paying for as well as tools that can help determine keyword selection.
We recommend that our customers start out very slowly with one of the largest pay per click providers, Overture. The same principles will apply to other pay per click providers. Overture’s sign up process is very straightforward and you can set your initial bids at $0.10. During the sign up process you will be asked to create an initial ad and request a keyword or keyword phrase. You have plenty of time to do this, so take your time. The keyword selection tool is very nice and easy to use. Think about what keywords someone searching for your product might use to find your site in a search engine. Always open your account with a $0.10 keyword bid. Though you will most likely not be near the top of the list, you can change it later, but for now you want to have to become familiar with their advertiser tools. Overture requires an initial $50.00 deposit which will be used toward paying for your clicks. Merchants who are new to pay per click will want to start out with Overture‘s PRE-PAY plan. Selecting the pre-pay plan during sign up gives you the best control of how much you will ultimately be spending.
After signing up, click on the advertiser log in link and bookmark the page before entering your username and password. This will assure you can easily get to the advertiser area whenever you want. At this point you want to log in and become familiar with the tools for adding advertisements and keywords.
When you are ready to make changes to your keywords and bid pricing making minor alterations and watch your account area carefully to be sure the changes are having the desired effect. Overture‘s listing manager will show you what the existing bids are and how your bid ranks. We recommend that you find a very low volume keyword phrase so that you can take a few days to become familiar with how things work. Then make alterations to maximize your return on investment per our discussion above.
Don’t be bashful!
Though we recommend starting out at a slow pace, pay per click advertising is very simple to do and can bring in many new qualified visitors. If you do not feel comfortable doing this yourself, bring in someone with a little more internet experience, go over this page with them, and have them walk through the process with you. Always remember that the name of the pay per click game is return on investment. Keep track of what is happening with your results. Know what you are spending and watch the effect on your sales. If something isn’t working, make changes. Do not use the pay per click provider’s auto-generated recommended bids. Set your own low bid and work your way up. You do not have to be number 1, the best ROI can be in the number 3 spot.
And remember… you are in control. Enjoy the power!
Pay Per Click Quick Tip
Search Engine Optimization (SEO) may raise your site to the top of a search list due to keywords and other factors relating to your page. Pay Per Click ads will typically display a specified number of listings above the regular listings in the search engine results. The benefit of the Pay Per Click advertisement is that it is typically seen first by the person doing the search or it is usually placed in a eye catching section of the page.
Pay Per Click Quick Tip
Before selecting a smaller pay per click provider get some opinions or experiences from other people. Run some inquiries in your favorite search engine for their name to see if any comments show up in the results. Also check for “pay per click” topics in some of the popular message boards like WebmasterWorld.com.