ss_blog_claim=73b1cd073bba6e6518705e046b696b7d Pay Per Click Definition

Monday, April 28, 2008

Pay Per Click Definition

What is PPC?
Pay-Per-Click is a paid form of advertising, popularized mostly by the "search engine" Overture (formerly GoTo). The concept is fairly simple. Businesses bid to be placed at or near the top of the search results for particular keyword phrases. The bidding is done on a "per-click" basis, meaning that a company pays a specific amount every time the engine sends them a visitor. In addition, the top results on Overture also show up in the results of many of the popular search engines (usually listed as "sponsored" or "featured" results). Google has a similar version of PPC (AdWords Select) that has taken over some of the engines that used to display Overture results (most notably AOL Search).

Pay-Per-Click campaigns have some advantages over traditional search engine optimization. First of all, they require no changes to a current site's content or look to obtain top positions, just a willingness to pay. Also, the implementation of a pay-per-click campaign is relatively quick- it can take just a few minutes to start getting targeted traffic, versus sometimes months for standard SEO campaigns. Finally, unlike search engine optimization, the implementation of a PPC campaign is relatively easy and does not necessarily require any specialized knowledge (although experience with search engine marketing and keyword research is a definite advantage).

Of course, there are limitations to this type of advertising. New bids can lower the positions of other firms, and many will react by raising their bid to regain a previous ranking. Monitoring of positions becomes crucial. These campaigns can also become prohibitively expensive, depending on the competitiveness of the keyword phrases and the aggressiveness of the competition. In addition, many of the "savvier" search engine users have learned to recognize PPC results as paid advertising and bypass them without consideration.


Determining Visitor Worth
Determining how much each website visitor is worth is vital to the success of a pay-per-click campaign. If it costs $50 in click-throughs to make a $40 sale, the campaign has failed. The formula is relatively simple, but some specific historical data is necessary. In the most rudimentary form, it is the profit from the website over a given period divided by the number of total visitors for the same period. If a site netted $1000 in profits from goods or services in a given period, and there were 2,000 visitors during the same period, each would theoretically be worth 50 cents (profit divided by visitors). But this is only the breakeven point. Depending on the desired profit margin, the optimal price to pay per click would probably be something much less than 50 cents. Popular keyword phrases can often run more than this, so it then makes sense to bid less money on less popular terms to pay an acceptable amount per visitor.

Selecting Keyphrases
As with typical search engine optimization, keyword research is critical to the success of a PPC campaign. Unlike typical search engine optimization, there aren't practical limits on the number of phrases to target. Usually, there is no extra cost to add as many keyword phrases as possible. This makes the keyword selection process easier, since there is not a good deal of resources committed to optimizing a site for a particular keyword set. Under-performing keywords, while still an annoyance, do not cost extra (except for the time involved in setting up the account). To help identify keyword phrases, Overture has a tool on their site that allows advertisers to see how often particular search terms are actually typed in their engine. It also gives out popular suggestions based upon the terms you enter.

Writing descriptions
With a typical search engine description, the object is to entice as much traffic into a site as possible in the hopes of converting that traffic into customers. With PPC, a different approach is mandated. It is undesirable to pay for unlikely prospects, so the description is designed to eliminate the "tire kickers" while attracting highly targeted traffic. For this reason, the description should describe exactly what the business offers- a company wouldn't want to pay for every visitor looking for "insurance" if they only sold renter�s insurance, for example. At the same time, proven marketing copy techniques should be employed to insure that the description is enticing enough to attract ideal prospects.

Monitoring and Analyzing
It is crucial to the success of any PPC campaign that it be monitored regularly, since positions can and do change every day. Since the top three Overture or Google AdWords results are what typically show up on most partner engines (some display more), the competition for these spots can be fierce, and bidding wars are common. If the price gets too high, it is usually prudent to withdraw and pursue a different keyphrase (the only way to really "lose" a bidding war is to pay too much for each visitor!). Apart from position monitoring, it is important to track and analyze the effectiveness of individual keyword phrases on a monthly basis. Viewing click-through rates and studying visitor habits can lend valuable insight into their motivations and habits, and help to further refine a Pay-Per-Click campaign.


Pay Per Click campaigns can bring large numbers of highly targeted visitors to your website. However, these campaigns can become prohibitively expensive (and unlike "traditional" search engine optimization, the costs of any PPC campaign are likely to increase in the near future due to the increased popularity of this form of advertising). It is crucial to the success of the campaign that you pay a reasonable price for each visitor, that each visitor is highly targeted, and that you monitor your positions to maintain your exposure over time.

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