What is Pay Per Click : Google’s PPC Advertising Model
Pay-Per-Click is a modern form of Digital Marketing, highly used by advertisers for several reasons. One, is to generate instantaneous brand recognition. Two, by increasing efficiency, it is designed to help reach the intended target market. Three, it aids in driving sales and online traffic to the advertiser’s website.
PPC functions exactly as its name suggests. In the simplest terms; an advertiser pays a publisher to advertise its business on the publisher’s page. An intrigued visitor viewing this ad clicks the link and is directed to the advertiser’s home page. This is called Pay-Per-Click advertising. However, there are many facets behind this simple-like marketing tool.
The focus is upon Search Engines advertisement. The former type involves the advertiser to bid upon key word phrases that best describe and incorporates the business. The key phrases will also depend upon the needs and wants of the targeted customer. Here are examples of key words for a travel agent, “holiday”, “cheap flights”, “low cost”, “travel abroad”, “destinations” and so on.
The technique is that a customer will type in a word, depending upon the need of their search, into Google or any particular search engine of their choice. The search will then list many sites which offer this business. The customer clicks the site and automatically the publisher is paid by the advertiser. The sale does not need to be made for the publisher to be paid. In return, the advertiser experiences instant online traffic and the possibility of closing a sale via the promotional offers and attractions of its home page. Examples of successful worldwide, commonly used search engine providers include Google Adwords, Yahoo! Search Marketing, and Microsoft AdCenter.
The prices for the key phrases would depend upon bidding or it could be, in some cases, set at a rate. The latter, is known as Cost Per Click. When bidding the higher the bid, the bigger the chance of redeeming the top spot in the listings of the search results for the intended customer. This bidding takes place in the format of a normal auction. Every bidder signs an agreement which permits them to proceed competing with other advertisers, in a private auction. All advertisers have informed the publisher beforehand the highest amount at which they will purchase. A visitor triggers an ad spot and this becomes part of a Search Engine Results Page. The bids are then compared depending on the factors, which will be explained below. From this the winner is determined. The bids could begin from £0.50 per click to £20.00 for valuable phrases such as “best mortgage deals”.
The rates are based upon the content of the advert. If the content is guaranteed of attracting beneficial customers then it will have a higher CPC. On the other hand, content attracting low value customers will hold a lower CPC. If advertisers would like lower rates due to long term use or high value contracts, they are able to negotiate.
There are numerous factors to consider when placing a bid upon a key phrase. These factors could help determine the success of the marketing tool. For example, their intent, whether it’s a recreational browse or a likely sale. Secondly, the time of day and the day. Thirdly, seasonal searches. Again, taking the travel agent as an example, searches for this business is high during summer season when families, university students and couples are planning a trip, or festivals that open up an opportunity such as Christmas and Diwali or the Olympics. The factors could provide insight into initiating a better strategy for the business.
To measure the success of the ad, the rate of conversion to sale is very important. For example, if the ad has cost the company £0.50 per click and this ad has experienced 10% of conversion to sale, then this marketing strategy has been successful. It would mean that cost per sale for this ad would equal to £5.
PPC has beneficial advantages for use. These are listed below:
- Building awareness
- Drive sales
- Easy access to your target market
The main disadvantage involves competitors. A competitor, any time at will, can interfere with your strategy by clicking on your ad randomly to drive traffic. This not only can alter useful analytical data but can also cost the company money as each click has a value.