The “ABC’s” of PPC

Pay Per Click advertising goes by many names including paid search, sponsored search, cost per click, sponsored results, etc. I’m sure many readers of this blog have at least a rudimentary knowledge of PPC and how it works, but in the name of etiquette I should at least give some kind of introduction so we’re all clear on the fundamentals – please bear with me.

Pay per click is a simple process really, but may conjure emotions of awe or intimidation thanks to the gigantic technological strides Google, Yahoo, and MSN have taken over the years. The premise behind pay per click advertising is that competition drives the cost of each click you receive for your ad. You have to consider how much you will pay on any given keyword or phrase based on a sound business model incorporating an overall online marketing strategy. The hope is that the person clicking your text, picture, video, or animation is interested in what you have to say and wants to learn more, or even better – purchase something (good times).

Bidding is often misunderstood because those who have dabbled in sponsored search notice that they never really pay their maximum cost per click. The beauty of cost per click campaigns is that with there is a lot of competition, resulting in jostling for position. Position for a particular keyword is dependent on a lot of different factors such as keyword match, budget, geo-targeting, position preference, day parting, and ad quality (more on this later). The search engine in question takes all these ingredients and bakes a cake that is your search results page. At the end of the day, you see a number of impressions for your ad, a number of clicks, and an average CPC value for your ad. You may bid a maximum of $5.00 per click for a certain keyword (or match type), but if someone bids $5.25 for that same keyword, they’ll be paying $5.01 because of your bid, and your click will depend on whatever the next highest bid happens to be for that keyword.

Overwhelmed? Not yet? Good, because as Seth Godin mentioned in his book “The Dip,” those that stick with PPC and invest enough time and effort into their campaigns end up with results.

I’ll leave keyword selection to another post because there seems to be an emphasis on getting it right the first time. REALLY? If you don’t make mistakes — if you don’t take a chance — you may miss out on diamonds in the proverbial rough. For now, I’ll give you the benefit of the doubt that you have a thumb on the pulse of your business. If you don’t know your business and the terminology in your industry that may possibly relate to search queries, it might be time to give up your marketing job — seriously.

Don’t lose faith in marketing fundamentals when starting a PPC campaign. Test and track, test and track — over and over until you get the results you want. All major sponsored search programs will offer up some kind of traffic estimating tool that will give you a clue as to how many impressions (the amount of times your ad is displayed), clicks, position, and overall cost your campaign will generate based on the keywords you choose and your maximum bid. Don’t put too much faith in numbers the search engine gives you, they are habitual liars and are almost always overestimated.

Take Home Message

Like any new business endeavor, your success in a CPC campaign will depend largely on the effort you put into establishing sound online marketing strategies, not endless financial investment in the hopes to one day turn a profit. Invest your time in learning more about the intricacies of each search engine’s program, use your marketing experience and competitive advantage, and most importantly — subscribe to this blog.

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