Pay-per-click (PPC) advertising is when an advertiser pays for each qualified click that sends a search engine user (i.e., visitor) to the advertisers web page. PPC requires the advertiser to bid on key words or key word phrases chosen by the advertiser. There are many PPC advertising services available to choose from. Google AdWords and Overture are probably the two most popular in use today.
The PPC search engine allows you to buy a top position in the search engine results for the particular keyword or phrase you choose. The PPC search engines can deliver targeted and qualified visitors to your web page at an economical advertising cost if you manage the program carefully with a clear objective. PPC provides the advertiser with assurance that their ad is being delivered to the targeted audience.
PPC advertising uses a bidding process where the highest bidder or highest activity value, depending on the search engine, for a particular keyword or phrase will receive the top placement on the search engine results page. The PPC search engine will place your ad text in a special location on the results page when a user searches on your PPC keyword or phrase search term.
As an example, Google AdWords appear on the right side of the search results page while the organic (i.e., natural) search results appear on the left side of the page. In the case of Yahoo! Search, the sponsored ads appear on both the left and right side of the search results page. The top 2-3 sponsored ads appear in the top positions on the left side above the natural search results and the next 3 sponsored ads appear at the bottom of the left side and on the right side of the search results page along with other sponsored ads.
PPC advertising is a good way to obtain web page visitors when you dont have a top ranking web page to get you the necessary natural search engine placement. Statistics show that over 80% of search engine users prefer the natural search results as opposed to sponsored ads. Nevertheless, the search engines deliver a huge amount of visitor traffic to the sponsored advertisers especially in the competitive keyword markets.
The typical PPC advertising campaign is based on the bid per click. For example, you bid $0.10 for a particular keyword or phrase that is accepted by the search engine. Whenever a search engine user clicks on your sponsored ad then you are charged $0.10 by the search engine. This amount is deducted from your account funds. Your placement in the search engine results page depends on the search engine. For Google, the placement is determined by your bid price and the ads click-through activity. For Yahoo, the placement is determined by your bid relative to other bids.
PPC can be an excellent method for getting visitor traffic to your web site but it can also cost you a lot of money. You need to be extremely careful and monitor your cost of using PPC versus the revenue generated. As the old saying goes, do the math. Calculate your return on investment (ROI) on a continuous basis to determine if you are making a profit on your PPC campaign.
As an example, assume your bid for a particular keyword is $0.10 and the product you sell has a profit margin of $15 after product costs (excluding PPC costs). If your conversion rate (the number of visitors that buy your product) is 1.0%, only 1 of your visitors will buy your product out of 100 visitors. Your net profit for every 100 visitors from your PPC campaign will be $5 ($15 profit margin less $10 for PPC).
It is a good idea to experiment with the different PPC search engines to find the one that works best for you. In addition, you need to spend the necessary time and effort to select the keyword or keyword phrase that has a profitable conversion rate for your specific web page. A higher conversion rate implies more profits to you.
Try to avoid the senseless bidding war with your competitors. Seriously evaluate whether having the number one placement position is worth the PPC price you pay. What about position numbers two, three and so on. Will you get enough clicks in one of those positions to make your PPC campaign a success Do not automatically assume that you have to be in position number one to make a lot of money using PPC. It all comes down to experimenting and testing.
There is no such thing as the perfect PPC campaign. Evaluate the performance of your PPC campaigns on a continuous basis. Are you leaving money on the table by not adjusting your PPC bid to a lower level Should you increase the bid price to get more traffic Is your conversion rate changing What are your competitors doing Should you be considering different keywords in your campaign PPC advertising is a great way to get traffic but at a definite price. PPC requires a thorough knowledge of the PPC search engines that you use and constant monitoring and evaluation of your campaigns.
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Copyright (C) 2004 F. Terrence Markle All Rights Reserved
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About The Author
Copyright (C) 2004 F. Terrence Markle has worked for over 20 years with public and private companies. He has an MBA in marketing and finance. He has been involved with Internet-related businesses for over 3 years. His primary focus is the marketing of affiliate programs.
By knowing the most expensive keywords on the internet, you can create websites and web pages based on these keywords. On these sites and pages, you can serve expensive ads and/or promote affiliate offers that reap high bounties when clicked or completed.
The challenge lies in driving traffic to these sites. One way to drive traffic is through search engine optimization, whereby you create a website that ranks highly on the search engines and receive free traffic. Or, if you already have an existing well-ranked site, you can create new pages linked from your existing pages. A second way to drive traffic is through online advertising.
With regards to advertising, one key is to understand correlations between keywords. By determining correlations between inexpensive and expensive keywords, you can advertise on the inexpensive keyword (via pay-per-click (PPC) advertising on search engines) to drive traffic to your website that serves ads based on expensive keywords. For instance, advertising on the keyword painting ($0.20 keyword), and sending visitors to your site about the related topic home remodeling ($2.00 keyword) allows you to profit from the wide spread between the keyword prices of the two correlated keywords.
Likewise there are many opportunities to run banner and other ads through online advertising networks to drive traffic to your website. These ads can run on both painting and home remodeling websites. The cost of CPM (cost per impression) advertising typically does not reflect the price of the keywords. That is, a banner ad on a painting website typically costs the same as a banner ad on a home remodeling website. This sharply contrasts the price of PPC advertising on search engines which vary widely based on the keyword.
There are two other ways to profit from knowing the most expensive keywords. The first doesnt even require you to own or operate a website. In this method, you advertise using inexpensive means (e.g., via pay-per-click advertising on inexpensive keywords or CPM advertising) and direct traffic to high paying affiliate offers. The second method is to set up your own search engine. There are several companies that allow you to easily set up a search engine that serves PPC ads syndicated from Google, Overture or other PPC search engine networks. Once you create your engine, you can drive traffic directly to your PPC results, and get paid every time someone clicks on one of the results. Likewise, on your search engines home page, you can include many links to expensive keywords, so that when someone clicks on it, the engine shows expensive ads based on those keywords.
Understanding keyword pricing is critical to the online advertising, PPC search engine and affiliate marketing businesses businesses that combine for over $25 billion a year in revenues. With a market of this size, generating substantial profits, if you have the right information, is really not that challenging.
Dave Lavinsky is the President of TopPayingKeywords.com, a firm which tracks and publishes databases of the 15,000+ most expensive PPC keywords.