Pay Per Click (or PPC) is an online advertising model that first made its appearance in 1996. With PPC, the advertiser pays the publisher of the ad every time the ad is clicked. This is in contrast to Cost Per Mille (also known as Cost Per Impression) in which the advertiser pays the publisher for every 1000 times the ad is viewed. While both are popular internet advertising strategies, in this article we will focus on Pay Per Click and how to successfully use it to grow your online business.
How does PPC Work?
Just like the name suggests, with PPC you pay each time your ad is clicked. There are two different models of Pay Per Click, flat-rate and bid-based. With flat-rate the publisher has a predetermined rate that will be paid for each click. This model is most commonly seen on comparison shopping websites such as eBay or PriceGrabber.
The more popular model is the bid-based. In this model, advertisers bid on how much they will pay for each click for a particular keyword. These auctions are often run by advertising networks such as Google AdWords or Bing Ads but sometimes by the publisher of the ad. Bid-based PPC ads are most often seen on search engine result pages.
Why Use PPC?
If used effectively Pay Per Click advertising can be fast, versatile, and low-cost. You can potentially generate traffic within minutes of placing the ad. If you aren't generating the traffic you desire you can fine-tune your campaign within hours or days, rather than the weeks or months it can take with other forms of online advertising. Finally, if you’re smart with what keywords you bid on, PPC can be a bargain. While some keywords can be very costly, upwards to over R500 per click, others can be as cheap as R0.10 per click. Try using a specific keyword (such as “organic dog food”) instead of a broad keyword (such as “pet food”).
How to Use PPC Effectively
While PPC is a great advertising model, it’s not fool-proof. Here are a few smart tips to keep you on track.
1. Set a smart budget
While this might seem obvious, setting a smart advertising budget is key. First, track conversions. A conversion is anytime someone takes a desired action on your website, such as making a purchase. Multiply the conversion rate your ad generates by the total number of clicks and multiply that by your profit for each conversion. The product of this formula is the amount to spend on a keyword to break even. Obviously you’ll want to spend much less to generate a profit and you’ll never want to spend more than that amount.
Conversion Rate x Total Clicks x Profit Per Conversion = Cost Per Click to Break Even
2. Use smart keywords
One way to help you stay on budget is to thoughtfully choose your keywords. As mentioned above, pick specific keywords over broad terms. While specific keywords might not get as many clicks, there is a lot less competition. Is it better to spend to spend $1 per click and get 50 visitors or to spend $30 per click for 200 visitors? If you have trouble trying to come up with specific keywords there are many online tools that can help such as the Google Keyword Planner.
3. Word your ad smartly
You can have a smart budget and use smart keywords, but if your actual ad is unfocused and poorly written no one will click it. Even more, if your ad’s wording doesn’t follow the rules of the PPC service, it might not be published at all.
Here are some general tips for writing a smarter ad.
- Know your audience and write your ad accordingly
- Use your keyword in your ad
- Include a specific call to action
- Be creative
PPC and You!
This article only covers the tip of the PPC iceberg. When it comes to Pay Per Click advertising, there is always something more to learn. Competition is constantly evolving and the only way to stay on top is to commit. PPC is a great advertising model but you can’t just create an ad and forget about it. Check out your competition, read articles about PPC advertising, pay close attention to your own ads, and adjust them when necessary. With time, commitment, and smart practices, you can create a successful Pay Per Click advertisement campaign.