Pay Per Click Advertising – an Introduction

by John Eberhard

Over the last few years, we have seen the rise of Pay Per Click Advertising. This term refers to paid advertising that a company can run on search engines such as Google or MSN, so that when a person enters a specific search term or phrase, your ad appears.

For instance, if someone goes to a search engine and enters "antivirus software", you will see regular search results that come up for this term, but on many search engines, you will also see paid advertising, usually labeled as "sponsored links." That means that some company that sells antivirus software has paid to have that listing appear when anyone enters the search term "antivirus software."

One can choose any word or phrase at all and choose to have your ad appear when people enter that phrase on that search engine. However, you want to select words or phrases that are at least somewhat popular, i.e. that a lot of people are entering. That way you get decent exposure for your ad.

One of the biggest advantages to pay per click (PPC) advertising is that you only pay when someone actually clicks on your ad and thus arrives at your web site. You start an account with Google or MSN, and every time someone clicks on your ad and comes to your site, your account is debited. This has an advantage over most other types of advertising, where you pay whether there is any result or not. With PPC advertising, you only pay for actual traffic coming to your web site.

Google, Yahoo, MSN and Ask are currently including sponsored links as part of their search results. For Google, the most popular of all the search engines currently, the sponsored links appear in the narrow, far-right column (and also with the top three results along the top), whereas the regular search results appear in the wider left-hand column. Google’s PPC program is called "AdWords."

There are a number of other benefits to this type of advertising. First of all, with search engines, one always has the advantage that the web visitor went there specifically to get information on what you sell. If you sell antivirus software and you can put your ad in front of people that are looking for antivirus software, it doesn’t get much more targeted than that.

Secondly, it is very easy and quick to get started. You can start an account and have your listings up and running within hours. And you don’t have to struggle through and worry about the myriad requirements of the search engines in order for you to be listed high in the regular or “organic” results. Not to say you can’t do that too, but what we’re saying is that PPC advertising is a lot easier and is very effective.

Getting Started

Google is the largest PPC program in that it has by far the most traffic. Yahoo Search Marketing recently merged with MSN Ad Center, so if you start an account on MSN your ads will also appear on Yahoo.

Determining Your Best Search Terms

One of the first things you will have to do is to select the key words or key phrases on which you will pay to have your ad appear. Here’s how we recommend you do this:

1. Try to adopt the viewpoint of a person who would be looking for your product or service. Think about what words or phrases they might type into a search engine in order to find your product or service. Start making a list.

2. Go to the web sites of one of the companies competing against you. From your browser select View | Source. This shows the HTML source code of that particular web page. Near the top you will see a paragraph like this:

<META NAME="keywords" CONTENT="pay per click search engines, pay
for placement, pay ranking search engines, bid position, pay per
click">

This is called the meta-tag area of a web page, which is hidden when you view the page normally but is visible when you select View | Source. Meta-tags on a web site help in order to achieve good rankings in the regular (non-paid) search results of a search engine.

After where it says CONTENT=, and within the quotation marks, are search terms or phrases that that company thinks are significant for their product or service. Those are phrases where they hope to appear near the top of the regular listings when people type those phrases into a search engine.

I used to advise people to go to a free site to see what the search numbers were for all the keywords before they got started with a Google AdWords account. Now I advise people to just put them all up in an ad campaign on Google and see how the numbers look after a week or so. Google also has a keyword tool which you can use once you start your account.

Bids and Bidding

For PPC advertising, during the process of setting up your account and your ads that are connected to specific key phrases, you will be asked how much money you want to bid for that keyword. In other words, how much money you are willing to pay each time someone clicks on your ad and goes to your site.

In general, the higher you bid, the higher your ad will appear amongst all the ads of all the advertisers running ads for that keyword. It is definitely not necessary to be in the #1 position in order to get people coming to your web site.

In general we recommend bidding $1.00 per click when first setting up an account or new campaign. Then review your account over the next week and see how high that places your ads. And see if you are getting a fair number of clickthroughs. If your ad is appearing low and your clickthroughs are low, raise the bid.

Budgets

Google and MSN allow you to set a budget for your campaign. So figure out what you want to spend for your clickthroughs for a month and divide by 30, and that’s your daily budget.

I’m going to say some things that may discourage you from doing PPC advertising. In setting up and managing dozens and dozens of PPC accounts over the last 6 years, I have observed that you have to a monthly budget of a certain size in order for your campaigns to be successful.

In the beginning I used to have client accounts where their budget was $200 per month, $300, $400, etc. Hard experience has shown me that budgets of this size rarely work. For whatever reason, I have seen that accounts with small budgets like this have not had successful campaigns in about 80% of cases. I have seen that accounts with monthly budgets of over $1,000 have been successful in about 90% of cases.

I define a successful campaign as getting an adequate number of sales or leads, with a viable cost per lead or sale. So if you can only afford $200 or $300 per month, I’d advise you not to do PPC advertising. Wait until you can afford to do a larger budget.

Writing Your Ad

The next important issue is the writing of your ad. The ad will consist of a headline, ad text, and an Internet address. On Google AdWords, you get a strict limit of number of characters per line for the headline (25 characters including spaces), and two lines of text with 35 characters each.

The headline will appear in bold. So you want to grab the person’s attention with your headline. It is often a good idea to include the key phrase in the headline, though this is not a hard and fast rule.

One of the many advantages of pay per click advertising is that you can write your ad copy, and put the ad up, and then see what the response is, and if it does poorly, it basically doesn’t cost you anything.

You can experiment with different wording for your ad and your headline. Whenever you make a change, Google automatically records data on the change, so you can review your “change history” later to see which changes you made when. Then when your response goes up or down, you know what the change was that caused it and when that change was made.

Your Landing Page

When you set up your ad on Google or MSN, you will have to choose a "landing page" for the ad. That’s the page where the person lands when he clicks on your ad. A few tips on how to work your landing pages:

1. In all cases, it is best NOT to have the landing page be the home page of your site. We recommend to create a new page whose sole purpose is to be a landing page for that paid ad on one of the search engines.

2. Do not put navigation buttons on the landing page to the rest of your site. Design the page so that the only thing they can do on that page is fill out the form you want them to fill out. This will always increase response, and giving them full navigational buttons to every other page under the sun on your site will always lower response. Giving them only one option controls the process to a much greater degree.

3. Design the landing page so that there is a bit of sales text on the top of the page, including any graphics as needed, and then there is a phone number and a form on the lower part of the page. If possible, do not make them click through to yet another page to fill out the form or buy the product.

Geo-Targeting

Google and MSN now have a feature called geo-targeting, where, when you set up your campaign, you can select where your ads will appear geographically. So if you have a local business that sells to the public in the greater Los Angeles area, you can select the metro LA area and your ads will only appear there. This is very important so that you are not paying for people to click on your ads in places where you can’t sell your product or service to them.

Managing and Measuring Your Campaign

On Google and MSN, by logging into your account you can see various statistics on your account. Here are the most important things to look for in measuring how you’re doing:

a. Impressions: These are the number of people that saw your ad, meaning they entered one of your specific keywords or phrases, and your ad appeared. You can see the total impressions by day, for the week, and you can break it out so you can see the impressions for specific key phrases.

High impressions means that you have selected key phrases that a lot of people are entering.

b. Clickthroughs: This means the number of people that, having seen your ad, clicked on it and arrived on your landing page. The search engines will show the clickthroughs as a raw number and also as a percentage compared to the impressions.

High clickthrough percentages means you have been successful in writing an ad that a good percentage of people were interested enough to click on, to go to your site.

c. Conversion Rate: This means the percentage of people that clicked through and went to your site, that actually did what you wanted them to do. If you are selling products right on the site, the conversion rate means what percentage of people that arrived there actually bought the product. If you are advertising to generate leads, the conversion rate is the percentage of people that clicked through that filled out the form and sent you their information.
In order to have this conversion rate information, you have to put what is called “conversion code” on your “thank you page” that people come to after they fill out your form. Many people don’t know about this (both Google and MSN have it) but it is a vital tool in measuring the effectiveness of your campaigns.

The conversion rate is a measure of success of your landing page. If you are getting good conversion rates that means you have done a good job of writing and designing the landing page. If your conversion rate is poor, that means you need to look again at the landing page and figure out where you could change it to make it better, or at what points you might be losing people.

In our experience:

1. A good clickthrough percentage is anything over 0.5%. If you are getting 1.0% or better, that’s pretty good. If you are getting less than 0.5%, you should test some changes to your ad. Remember that a poor clickthrough percentage is a reflection of your search engine ad, not your landing page. So make changes to your ad, not your landing page, when trying to improve it.
2. A good conversion rate is anything from 3% to 5%. The highest conversion rate we have ever gotten on a web site is 50%. If you are getting 2% or less, you should test some changes to your landing page and try to improve it.

And likewise remember that a poor conversion rate is a reflection of your landing page, so make any needed changes there.

Summary

In the constantly changing landscape of the Internet and Internet marketing, pay per click advertising is currently a very successful tool. If you are selling a product or service that costs over $200, we recommend you try it.

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One Response to “Pay Per Click Advertising – an Introduction”

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  1. The marketing blog is nice and thanks for sharing this with us. Good information.

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