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Pay Per Click Advertising (PPC)


About PPC:

Pity all those poor, pre-Web marketers who are stuck with coupons, direct mail, cold-call telemarketing, or television to connect customer interest in an ad to customer action that takes place at a later time. By contrast, the internet enables banner advertisers to reach viewers while they're actively engaged in a related activity on a Web site. Better yet, search engines (SE's) allow advertisers to supply answers to viewers at the very moment they're asking the question.

PPC ads, link viewers' search queries to advertisers' answers, first appeared on GoTo.com, the first PPC program ever back in 1999. It later became Overture which was purchased by Yahoo! These "text-only" ads look like classifieds and typically appear to the right of, and/or on top of and/or at the bottom of natural search results on an SE.

PPC clearly distinguishes itself from old-fashioned advertising in several important ways:

  1. Your ads display only to users with a predisposition to your product or services - when users are interested enough to enter a chosen search term, resulting in a highly targeted audience.
  2. You only pay based on the number of visitors (click-throughs) visitors you receive, not on the number of times your ad is viewed.
  3. You set the price of your ad campaign.
  4. You set the time of day and geographical location - when and where you want your ads to dispaly.
  5. You can directly track sales or conversions to your ads.

Spending on PPC ads, which now generates more than $2 billion in advertising revenue annually, is expected to grow to around $8 billion by 2008, according to Forbes magazine. In September 2005, The Economist magazine found that "PPC advertising is the fastest growing sector of the advertising industry," accounting for more than 40 percent of all online advertising in the U.S. [1]



When to use PPC:

PPC is used any time you want exposure to your company, goods and services. You can maximize your ROI, by putting your PPC budget to work when it will do you the most good. Here are some examples:

  • When you first launch your site for greater visibility and branding
  • Wile you're waiting to get out of the Google sandbox, for link campaigns to kick in, and/or for search engines to spider new pages.
  • When you add important new products, services, content, or features to your site.
  • When you can't get first -page traction in natural search results for a particular keyword.
  • During seasonal campaigns tied to holiday giving (especially December, February, and May or at key points in your own annual sales cycle.

How to use PPC:

Under pay per click you bid competitively on specific keywords, setting the maximum amount you'll pay each time a viewer clicks through to your site.

Except on Google and Yahoo, the ad provided by the highest bidder usually appears at the top of the list of sponsored searches, with other ads appearing in descending order of bid amounts. On Google, and Yahoo it's a combination of bid price and "Quality Score" which has mostly to do with keyword relevence between your ad and your landing page and your Click Through Rate (CTR).



How to pick the best keywords:

How to pick keywords is a subject in itself. Some tips to remember are:

  • Get inside the head of your market. Brainstorm 10-20 top level keywords. Then use a keyword tool like "Overture" or "Wordtracker" to get hundreds or even thousands more.
  • Use the keywords your target audience uses. Not the ones you think they use. (Check your stats for "referring keywords to your site.)
  • Use keywords which your competitors use. Check competitors by checking bid prices on potential keywords you're thinking of using with a tool like "Keyword Locator", "Overture" or Google Adwords to check which keywords are most used by your competition.
  • Use as synonyms tool like "Wordtracker" to come up with likely keyword synonyms that your target market may also be typing in.
  • To improve visibility / quality points on Google Adwords and YSM, it can help to have the same keyword used in your ad appear in the tags and text of your landing page.
  • Trial and Error. Typically 20% of your keywords will be pulling in 80% of your conversions. Monitor keywords with different ads, analyze which combinations are best and optimize to maximize your ROI.

How to create a winning PPC ad:

  • Clearly describe what's unique about your product or service, focusing on user benefits. Be precise. How does your business, meet the needs of your customers? What can visitors do at your business location/website? What can you do for them that no one else can?
  • Place your business name in your ad text. Let your users know exactly who you are: give your business name in the text of your ad.
  • Put your most important keyword in the title. If you're selling flowers and you find that the keyword 'red roses' gets you the most clicks, try putting the term 'red roses' in the title of your ad. Successful keywords are a sign that you're reaching the right audience for your message. (If you're running a local business ad, your business name is already the title of your ad.)
  • If you sell to a precise location, name the location. Do you deliver flowers in London? The title Send Red Roses in London is likely to win you more clicks than just Send Red Roses.
  • Capitalize the first letter of each word in your title and your URL. For example: Buy Fresh Red Roses instead of Buy fresh red roses. Avoid gimmicks such as using ALL CAPS, or repeating words or exclamation points (as in Buy, buy, buy!!!).
  • Use words that draw attention, like "New", "Exclusive", "Special", "Now" and "Save" while avoiding generic superlatives such as "The best" or "#1" Simplify. Use plain language and short words.
  • Include a call to action. Tell your users directly what you want them to do. Include action terms like "Buy", "Shop", or "Browse". Say, "Buy Fresh Red Roses" instead of "Flowers for Sale".
  • Use search terms or synonyms in the headline and/or the text of your ad. This may mean writing a whole lot of different ads.

PPC Campaign Optimization Tips:

  • When advertising is expensive, link should be specific and contain feature and price! (Qualify them early - no tire-kickers!)
  • When ads are cheap, be broader and use the word "FREE" if applicable.
  • Start testing campaigns in low-cost PPC networks like Miva. Then go to Overture/Yahoo Search Marketing and Google Adwords. Then go to other PPC's.
  • PPC is trial and error. Your goal is to find the combination of PPC ad content and keyword search terms that yields the highest conversions.
  • If you have the budget, put some extra funds in the first week or two of your PPC campaign so you can see which search terms perform best for CTR and conversion.
  • Use a Geographic Filters to target your demographic market. Are you local, regional, national, international? What cities are you most interested in targeting?
  • Use filters to run your ads during the hours & days when your target market is online. (Look at your traffic statistics to see when that is.)

Who the Main PPC Players are:


Calculating ROI from PPC:

In the world of paid search marketing, calculating your ROI helps you determine which ads and keywords to continue using, which ones to scrap and guide you in the development of future marketing campaigns.

If you sell multiple products and services and advertise each of them individually, you'll need the following information for each of your products and PPC campaigns in order to calculate the ROI on your paid search investment:

  1. Ad cost: The amount you spend on paid search campaigns, such as on keyword bidding.
  2. Clicks: This refers to the number of visits to your site from paid listings.
  3. Number of Sales: The number of complete orders from paid listings.
  4. Revenue: The dollar amount generated from paid listings for that product.

Sample ROI Calculations

Now that you have your information in hand, use these simple formulas to begin calculating:

  1. Ad profit: Revenue minus ad cost
  2. CPA (Cost Per Acquisition/Sale): Ad cost divided by number of sales
  3. ROI: The percentage of ad profits divided by ad cost, multiplied by 100

Example 1. You sell a $30 piece of Software. At 15 cents a visitor, 100 visitors costs- $15 (Ad cost). If you have a 3% conversion rate, you're selling 3/100 visitors. 3 sales gets you $90 (revenue). Your Ad profit is then 90-15 = $75! ($15 dollars to make $90) This means your ROI (Ad profit/Ad cost) is $75/$15 = 5 (Not bad!) You can also calculate ROI across a whole PPC campaign.

Example 2. At an average of 40 cents a click, $100 (Ad cost) produces 250 clicks. If we have a 2% conversion - we get 5 sales! Cost per Acquisition is (100/5) $20.

Spend no more than 10 percent of your average sales amount on advertising.

Example 3. If your average sale is $100, limit advertising to $10. Divide $10 by 50 to get an average bid of 20 cents per click. Of course this is on the average and you can bid more on some words and less on others.


What Resources are available for me to get started with PPC?

Google Adwords


Adwords Home Page

Help Center

Learning Center

Yahoo Search Marketing


YSM Home Page

YSM Main Page

Sign Up For Sponsored Search

Contacting Us

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