The Basics of Pay Per Click

Pay per click advertising can be a great business tool.  It can be used to beef up traffic and get your business' name out there for a fairly low price.  

Waiting around for organic search engine results to build can be painstaking, PPC offers businesses a fast return on their marketing bucks.  Before you jump into PPC with both feet, you need to understand a few key principals and a little PPC jargon.

How does PPC work?

Pay per click advertising allows a website owner to advertise on search engines under a special sponsored listings section.  Internet users type in a particular term or keyword and the search engine displays the results of websites that may be of interest to the searcher.  

PPC lets a website owner bid anywhere from $0.10 on up for a particular keyword.  When an Internet user types in a search for that keyword, the website's PPC ad is displayed along with the organic search results obtained from the actual content of the website.

Every time a PPC ad is selected by an Internet surfer, the website owner is charged the amount that they bid for that keyword.  

A sample of PPC at work -

If I have a website that sells purple flip flops, I may bid on keywords such as: summer sandals, flip flops, purple shoes, women's shoes, etc.  

While bidding on a keyword, the amount of your bid determines the ranking of your ad on a search engine results page.  

The keyword "flip flops" may be currently owned by my competitor's site as first ranking for $0.12 per click.  If I want that first rate spot, I need to bid $0.13 and see if the competition outbids me.  

If I am willing to settle for a ranking that will show on the first one or two pages of results, I can bid less and still be ranked for that particular keyword and be seen by potential customers.  In this way, PPC ads are an inexpensive and effective advertising tool.  They can be used to gain exposure for your business or website.

Getting in the know: a lesson in PPC related jargon.

PPC- pay per click -   This is a marketing strategy where a website owner bids on keywords that determine when an ad for the website will be displayed.  The owner pays for each visit to the website that comes form these ads.

Keyword -   This is the search term typed into a search engine by a consumer to locate information, services or products.

ROI - return on investment.  This is the amount of money gained by a company by investing in PPC ads.  This is the bottom line value of how successful the PPC ad is.

CTR- click through rate.  It refers to the number of times your PPC ad was displayed in proportion to the number of actual clicks the ad received.  Better ads receive higher CTRs.

Click  Each time a user selects a link to a website by using the sponsored ad, a click is generated.  This is referred to a click because the visitor clicks the mouse over the desired link, the consumer interacts with the ad.

CPC -cost per click.  CPC refers to the monetary value that each user click costs the sponsoring website's company.

Above the Fold  This term refers to the portion of the website that is initially viewed without scrolling down or to the right.  This is prime real estate for ads.

Click fraud - This term refers to clicks made on your PPC ads that are not made to honestly explore the listed website.  Your competitors may click your ads to drain your budget so that they may get keywords at a lower price. 

Website owners that host your PPC ads may fraudulently click on those ads to generate revenue for themselves.  Click fraud occurrence has been estimated to be as high as 20%.  It is an unavoidable part of PPC advertising.  Many PPC search engines have instituted programs to identify and stop PPC fraud.  If you suspect click fraud, you can report it to your PPC search engine for investigation.

Landing page - A landing page is a website page that consumers are directed to when clicking on your PPC ad. This is not the same thing as your homepage.  Most website owners create specialized pages for their PPC ads to be directed to. These landing pages are not filled with distracting information and provide the details promised in the PPC ad copy.

Keyword bid -  This is the highest dollar or cent amount that you are willing to pay every time a  visitor uses a PPC ad to reach your website.  It is important to keep these price as low as possible to avoid receiving a PPC bill that your budget cannot afford.

There are many things to consider when instituting a pay per click ad campaign and the process can become very complicated and confusing if you are just beginning. Check out our other pay per click articles to help you become a PPC guru and get your business on the fast track to financial success.