The web is a platform for media, and as with all platforms of this kind, there three core groups involved in it, aside from those who keep the web up and running. There are publishers, advertisers and the audience. Now, the web is vast and that means there are countless members of each of these groups, divided into all kinds of separate demographics, but the idea is the same online as it is in broadcast media like TV or radio or even with print media like magazines and newspapers. Advertisers pay the publishers to deliver content audiences want to consume in exchange for delivering marketing message which hopefully bring those consumers to the advertisers’ businesses. Looked at this way, it’s all relatively simple, but what we want to do right now is look deeper at a type of advertising that is essential to the web today: pay per click or PPC advertising. This type of marketing is unique and whether you are a publishers with a webpage or an advertisers looking to reach audiences, this is an option well worth considering.
The Definition of PPC and Its History
PPC stands for Pay Per Click and, while you may also hear this kind of advertising called Cost Per Click or CPC, PPC is the more common term so we will use that. Basically, this is a form of advertising that is unique to the web. It involves an advertiser paying only when a customer clicks their ad and is then delivered to the destination they have specified for that ad, generally a sales page or their website.
Publishers, too, are paid when this happen and publishers are the people who run the site that the PPC ad the consumer clicked appeared on. Keeping all of this functioning is the job of the PPC network that delivers the ads, tracks the clicks and handles business on both sides.
The above model is, of course, something of an oversimplification, but this is the basis of how PPC functions. As you can see, it is fairly intuitive and offers very little in the way of hassles to both the publisher and the advertiser which is part of what has made it so popular.
Advertisers are only paying for the consumers who respond to their ad rather than merely paying for those consumers to be exposed to their ad and possibly not even notice it. Publishers don’t have to go out and sell ads on their own because the network delivers everything to them and pays them. Provided that everyone is playing fair, which is normal, then everything works out quite well.
There are different ways that these systems are implemented, but those are the general facts. What those new to Internet marketing may not realize is that PPC marketing has actually been around for quite a while. It was first developed in 1998 and brought to the market by a company called Overture which was later bought by Yahoo.
After this, Google introduced AdWords in 2000 and now Microsoft AdCenter is another major player in this market. It is not hard to see why PPC took off so rapidly and why today Google alone does well over $30 billion in sales of just these types of ads. The profit potential here for those who understand PPC marketing truly is immense.
What is CTR and Why Does It Matter?
You may see the term CTR mentioned when PPC is discussed and what this term stands for is Click Through Ratio. What this is, in essence, is a formula developed to explain the percentage of people exposed to an ad who actually follow through and click on that ad. In other words, if 100 people are shown your ad and 1 of them clicks it, you have a CTR of 1%. If 5 people click it, then you have a CTR of 5% and so on.
This ratio is important because it tells you about the effectiveness of the ad in question – something that matters both to publishers and to advertisers. Why? Because it clearly matters to customers who are in charge of what they do or do not click on. A low CTR tells you that something is wrong.
Perhaps your ad is not attractively worded or does not feature the right image. Perhaps it is poorly placed and the viewers’ eyes are simply not even registering it. Maybe the problem is that you are targeting the wrong audience with your ad – there are all sorts of possibilities here, but the fact remains that a low CTR means something needs to change.
Percentage of high and low CTR
What percentage makes a high or low CTR is going to depend upon a lot of factors, ranging from the network to the subject matter of the ads and a lot more. You’ll need to research how your particular ad network operates and try to read about the experiences of others, or even talk to them, to discover what a good CTR worth aiming for would be. In the broadest possible sense, a CTR of at least 1% is generally considered positive. Lower than that and serious changes need to happen.
Advertisers need to remember that a low CTR means they may end up paying more for their ads on networks such as Google AdWords because it can affect their quality score. Publishers need to remember that they may not earn as much when they have a low CTR webpage to an ad network.
Most ad networks really want to give the end viewer, those members of the audience, the best experience that they can and showing them relevant ads they care about and which deliver them to companies that meet their needs is important, especially to search engine ad networks.
Flat-Rate PPC vs Bidding Style PPC
When it comes to PPC ad opportunities, there are two different routes which advertisers can pursue. Some networks will charge a flat rate, using a rate card which displays those costs per click, for their ads. This is generally more common on specific sites than with entire networks, but exceptions do exist.
Usually, the more attractive the content on a given page is to the audience, and the more likely it is that those who visit it are looking to buy something, the more expensive the clicks are. This can be a good method for some advertisers who want to negotiate good rates for themselves by either signing a long-term contract or by purchasing a high volume of clicks in advance. If the publisher (or network) sees incentive, they will usually work with the advertiser in those instances.
Bidding system PPC
Bidding system networks operate differently, having advertisers bid for placements with those willing to pay the highest price per click getting the top (or best) placements throughout the network. That is the general concept, but there are many more factors involved, especially when it comes to a network like Google AdWords which has generated billions from their bidding style PPC network.
Networks like AdWords consider the quality of the page that a consumer will land on once they click an advertiser’s ad. If the page is considered highly relevant to the search query the user entered, then the quality is therefore higher and the advertiser will pay less. This is because networks want their audiences to like clicking ads and feel it gives them a good idea. Clearly, users who feel positively towards PPC ads are more likely to click them and this brings the network, its advertisers and its publishers a lot more revenue.
Keywords Are Essential to the success of a PPC Campaign
When an advertiser is looking to use PPC marketing, they will need to identify a number of keywords that consumers might enter into search engines in order to find them. This is primarily for bidding style PPC networks, but it is crucial and must be understood in order to succeed in PPC marketing.
Keywords such as ‘dog treat’s should be chosen by advertisers that have those items for sale, but some advertisers will also want to consider keywords like ‘dog training with treats’, for example, as a way to broaden their marketing net. This selecting of keywords can get very complex and, in the end, it is both an art and a science to discover what motivates consumers to visit the advertiser and make a purchase.
Certain keywords sell for several dollars per click and others for mere pennies. There are a lot of factors involved such as how likely a given keyword or keyword phrase is to generate a sale, how many people search for that keyword each day or month, how focused that keyword is on a specific topic.
What publishers will want to do is pay attention to these keywords, too, so that they can properly create content that satisfies the needs of those who visit their sites by typing in certain keywords and keyword phrases. When they approach content creation this way, they can generally look forward to more clicks to ads on their page and tightly targeted ads that will matter to their visitors, so it ends up being a winning situation for publishers and everyone concerned.
How Auctions for Keywords Work
Many people get confused as to how the bidding style systems work, but it is actually not as complex as you might think even though it’s not as simple as just outbidding a competitor for a given spot or keyword. Simply because a competitor has the biggest budget does not always mean they will get top placement with their ads. Networks care about quality, as well. In order to understand this bidding process, we need to go through it step by step first.
The first thing that advertisers have to do is decide on the keywords they want to bid on and place those bids, setting a maximum amount per keyword that they want to spend as well as a maximum amount to spend per day and, when applicable, other restrictions. They then create ads and tell the networks which ad to show for specific keywords. Once this is set up, and the network has approved what the advertiser wants to do, the bidding system takes over.
Google Adwords and PPC
With Google AdWords, and other networks too, the bidding on keywords happens automatically. A consumer enters a search and the system determines which keywords matter most and then selects those. The competing advertisers’ bids (and other factors, such as quality of the landing page) are calculated and whoever has the best quality destination along with being willing to pay the most (or some formula involving those factors) will be the advertiser whose ad shows up in the key position. Then the next positions are bid on, and so forth, until all the ads are shown.
If you’ve ever searched for anything on Google and noticed the ads at the top of the page and to the right, then you’ve seen this system at work. It happens within fractions of a second and it is remarkably efficient. These auctions take place countless times per day for every search. Every time a consumer clicks an ad, the cost of that click is deducted from the advertiser’s budget. Once they reach their spending maximum for the day, the next highest bidder will get the top spot.
Now, the ads we see on webpages work similarly, with ads being shown based on the keywords contained within the page’s content, in its meta tags and so on. The bidding process still happens in these instances, too, but the publisher of the webpage the ads are displayed on gets a portion of the income from the consumer clicking an ad. This is how people make money with these ad networks if they have good quality content on their pages.
Costs to Be Aware of in PPC Marketing
When you are spending money to do PPC marketing for your business, you need to be aware that there are a lot of places where you can end up spending money without expecting to. Your budgeting needs to include these extra costs so that you do not get caught off guard by them and end up overspending. PPC is highly effective, when done properly, but it is easy to overspend and this is why you want to exercise caution when getting involved with it.
Often, the first cost you will encounter is some form of set up fee. These can sometimes be waived during special offers, but they are common enough that you should prepare for them. Then, there come the deposits to your advertising account. Usually, a network will want you to put a minimum sum in to cover the cost of your advertising campaigns. There is no billing in PPC, you will have to pay up front in almost all cases. Every click has a minimum cost associated with the keyword, placement and so forth. Be aware of this in advance when you start budgeting. If your keywords cost $5 per click, as an example, and you put in $50, after 10 clicks your ad will be done showing – that’s not likely to be helpful.
Monthly minimum budgets are almost always required by PPC networks, too, and if you aren’t expecting these it can be a shock. You will want to carefully read through all of the information the network provides you with and go from there. That is the best way to make sure you are fully educated in how everything works.
How Do Businesses Benefit From PPC Ads?
Businesses of any kind are going to benefit by using PPC because it brings them laser targeted traffic that would cost them far more in time and money if they did it through other methods. PPC allows for immediate play by marketers at any level, as long as they have the money and meet the requirements of the PPC network.
A business must decide how it is going to approach budgeting for PPC ads first in order to truly benefit. They need to evaluate how much they are willing to spend to make a sale. PPC is generally fairly cheap compared with other methods out there and this is why people turn to it, but it is not always going to be the least expensive route – you have to evaluate what makes sense for the business and the situation they business is in, as well as other market factors.
The automation of the PPC approach is a time and labor saver, for the most part. You do need to manage the PPC account in order to get the most benefit from a campaign, but that is true of nearly any kind of advertising. Reaching the sheer size and quality of audiences which PPC marketing makes possible is precisely what makes it so attractive to businesses that advertise with it. They know they can bring in a huge range of customers and that most of those will be interested in what they have to sell. They also know they can get detailed and accurate tracking the whole way through, something broadcast and print media simply cannot compete with.
Is PPC a Smart Idea for Earning an Income with a Website?
Yes, it can be a very solid source of income if the site in question has good quality content and a decent size, steady audience. By signing up for a program like AdSense, for example, publishers of websites will be able to earn each time an ad is clicked. The ads are served based on the keywords contained within the content itself so that visitors are being shown relevant ads. High traffic sites focused around a given topic that get a lot of organic search traffic tend to benefit immensely from PPC ads.
It should be noted that as lucrative as PPC ads can be, they are not for all sites. Some sites will have content that is not allowed on PPC networks or there may be some other reason they are rejected from the program. Also, networks usually do not pay out right away and those who want more rapid income will need to look elsewhere. Then there is the consideration that diversity matters and relying solely on PPC for all income is most likely not a wise move, though some sites do this.
Those with several focused and highly trafficked websites may be able to make their living with PPC ads, but this is the exception rather than the rule. Beginners should start out experimenting, working with how they approach ad placement and seeing the results they get for their efforts. That is the best way to discover how lucrative PPC can be for your situation.
Training is a Smart Investment As is Getting Pro Level Assistance
Whether you are an advertiser or you publish a website you want to earn from, getting training is the wisest move you can make. Learning from others that are skilled at earning through PPC marketing is going to put you miles ahead of those who fail to take the time and effort to do this. You want to get the most you can for you time and the work you put in, so be sure you are following techniques and strategies that are going to give you the best results. There are online courses as well as books which can help you become a master PPS marketer.
If you run a business and your time is limited, consider outsourcing someone to help you handle PPC marketing. This can save you a lot of time and a lot of expense, too. Those firms and individuals who are good at this kind of marketing can produce jaw dropping results. It may seem like an added expense, and it is, but think of it as an investment because they could get sales coming like never before. There are plenty of people who earn their sole living managing PPC accounts.
To Succeed in PPC You Must Have an Intelligent Strategy in Place
The reason studying is advised in PPC marketing is because you need to know what’s worked in the past and what’s failed so you can develop your own strategy. Each business needs a unique approach when it comes to PPC marketing and it is your job to discover what that is. If you want to earn from showing those PPC ads on a page you publish, you still need a strategy. Without a good strategy, you can end up flailing and squandering your resources. Put in the time to think things out and draft a plan you can stick to. That’s the only real way to succeed.
If you do all of this, then you can look forward to serious success with PPC marketing and enjoying the profits it has been able to bring plenty of other advertisers and publishers alike. That’s why it’s a type of marketing worth getting good at.