Pay-per-click advertising is one of the most
cost-effective methods of getting leads known to Internet business
owners. It gives you instant traffic, and allows you to test your
business model in real time.
At the same time, pay-per-click advertising (or PPC) is not as
simple to use as the PPC companies will have you believe. If you jump
into the system without preparing for ‘tracking' your results, doing
deep keyword research, establishing your ROI and most importantly,
testing your ads, you'll lose a lot of money really fast.
Before we start talking about the major PPC engines, here's a brief overview of what you need to know.
The Basics Of Pay Per Click
There are some terms that you should know if you want to understand
any discussion on PPC. Some of these are self-explanatory, some you
might have heard before. Either way, go through this section and make
sure to read those parts that you don't know of.
The PPC Model
In the PPC advertising model, you have three core elements –
keywords , ads , and bids . These three elements are combined with ‘
placement ' to create an advertising model that displays ‘relevant' ads
on search engines (in response to keyword searches), portals and
websites that opt to display such ads on their pages (the ads to be
shown are determined by a keyword analysis of the page).
For a PPC campaign, you need to know the keywords that you are
targeting. For example, for a niche site that promotes a time management
product, I would create a list of keywords that included keyword groups
containing terms related to time management, productivity, saving time,
self improvement and maybe even business soft skills. As I've told you
before about keyword research, you should have a big list so that you
capture most, if not all, of your target traffic.
The next step is to write the ad copy for the ads that will be
displayed for your searches. The ad copy is extremely important because
along with your bid amount, this will determine the ‘conversion rate'
(explained below) of your ads. Write concise, compelling ad copy that
highlights the benefits of your website / product, and avoid fluff.
Once you've written your ads, it's time to bid . The bidding
mechanism differs from PPC engine to engine, but the idea is the same –
your bid amount is the maximum cost (usually calculated in U.S. dollars)
that you are willing to pay for each keyword. It's important to know
how much you can afford in terms of bidding costs so that you avoid
going into bidding wars with your competitors, and also so that you
don't spend more than you make through this campaign.
Cost-Per-Click
Cost-Per-Click ( CPC ) is the amount you pay each time a potential
customer ‘clicks' on one of your ads that they see on their search
engine results or on websites. This is often less than the maximum bid
amount you set for each keyword.
Conversion Rate
Conversion Rate is the ratio of clicks over impressions (the number
of times your ad is displayed on searches or page loads on websites). A
typical conversion rate is between 2 to 3 percent – that is, for every
100 impressions, you get 2-3 clicks on your ads.
Conversion Rate is closely tied in with the quality of your ad copy , and also with Placement , which I'll discuss next.