Pay Per Click (PPC) Definition:
Pay Per Click (PPC) is a paid form of internet marketing which directs visitors to a website. Advertisers pay a fee to a publisher or search engine (normally a website owner or network of websites) each time an ad is clicked on by a visitor.
Search engines such as Google and Bing account for the majority of the PPC market. In January 2018 Google had an 85% share of the search engine market in the UK compared to just 11% for Bing. Google is also dominant in the US with a 63% market share in January 2018. Microsoft sites accounted for 24% and Oath 12%.
For this reason Google’s AdWords is the dominant paid search advertising service in both the UK and USA. AdWords allows you to place search results for your website on a search engine results page (SERP’s) by paying for them. The top paid search results appear above organic search results, but most users still tend to be more likely to click on organic search results than a paid ad.
How Does AdWords Work?
Firstly you need to select keywords that a prospect might use in Google to find the product or service that you are marketing. You can then create a advert that will appear on the SERP based on the selected keywords. However, to appear on the SERP you will to have to bid against other marketers on how much you are prepared to pay AdWords every time a prospect clicks on your ad. The more you are prepared to pay-per-click the better the chance your ad will appear in the search results.
Your ability to appear in paid search does not solely depend upon the bid price. Google also considers what it calls a ‘quality score’. This is based upon how relevant and useful your ad is to the user and the search terms used. The quality score also takes account of how many clicks your ad has previously received (i.e. the click-through rate) and the relevance of your landing page.
For example if the user enters “buy-to-let property investment” and your advert displays “Buy-to-let property investment opportunities”, once the ad is clicked it needs to take the user directly to a page offering buy-to-let investment details. A generic property homepage would get a lower quality score and so your ad might not appear in the paid search placings.
Indeed, if your maximum bid is less than a competitor’s bid, your ad could still be placed above their ad if your quality score is higher.
Before beginning a Google AdWords campaign you will need to decide how much you are willing to pay for each click (cost-per-click or CPC). Your maximum bid amount can be calculated using the formula:
Max CPC = (profit per customer) * (1 – profit margin) * (website conversion rate)
Once you have set your maximum bid amount and your daily budget you can choose the automatic option. This means Google selects the bid amount for you by taking account of your budget and in theory gets you the most clicks possible within your budget.
A less popular option for AdWords is cost-per-impression (CPM) where you pay for every 1,000 times your ad appears on the SERP. In this instance users don’t have to click the ad for you to be charged.
For goods Google Shopping displays a separate box at the top of the SERP with sponsored shopping results relating to the search term. You can create Product Listing Ads (PLA) to include relevant details, rich images, product prices and your store name.
PPC or SEO?
Research suggests that 71% of searches resulted in a page 1 Google organic click. The first five organic results account for around 67% of all clicks and positions 6 to 10 get less than 4% of clicks. Page 2 and 3 only get 5.6% of clicks. This means only around 15% of clicks go to PPC ads. Further, organic rankings generate higher quality traffic and are easier to convert than PPC generated leads. According to Moz for every click a PPC ad gets an organic SERP results generate 8.5 clicks.
Percentage of Clicks By Position on Google SERP
For PPC to be successful it is necessary to have consistent hands-on management and expertise to set up and manage campaigns. Firstly a budget needs to be agreed, maximum bid calculated, copy for ads written, keywords and a converting website. However, to establish your presence online and to maximise your budget it is important to have a mix of organic and paid campaigns. The biggest limitation of PPC is that once a campaign ends so will your rankings and traffic.
Ideally you should allocate most of your search engine marketing budget to an ongoing SEO campaign. This will help establish your position in the rankings through content marketing, build trust and strengthen your brand. PPC campaigns can be especially useful for limited-time campaigns like scheduled events like new product launches, fundraising events and sales.
PPC can be an important strategy for generating traffic to a website that lacks organic search rankings or for short-term campaigns related to planned events. However, to ensure a sustainable search engine marketing strategy it is important to combine PPC with ongoing SEO campaigns. This will help to optimise your budget and ensure that your rankings and traffic will not dry up when you turn off PPC spending.
Also see affiliate.
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Types of A/B tests – How to optimise your website’s performance using A/B testing.