Pay Per Click Advertising

What Is Pay Per Click Advertising?

Pay-per-click is an internet advertising model used to drive traffic to websites. Pay Per Click has grown to cover not just search engines but also websites of every type in which an advertiser pays a publisher.

Why Pay Per Click Advertising?

Extremely targeted.

High conversion rates since the visitors who come through from an advert.

Completely scalable and suit the budgets of all organizations.

Quick to set up and showing immediate results, great for testing new markets.

How Pay Per Click works

Advertisers bid on keywords (words and phrases) that they feel are relevant to the products or services they offer. When a person enters these search terms into the search engine, the advert will show. If the user purchases the product or service, the sponsors will lead to a return on those investments.

However, if users do not click on the advert, there is no charge to the advertiser and it's free.

Pay Per Click is an auction-based system, the more an advertiser is willing to pay for each visitor, the higher their adverts will show. 

Google does not set the prices for adverts within its search results. They are decided by the market and the more profitable the products or services are, the more advertisers are willing to pay for traffic.

Pay Per Click Terminology

Impression, The number of times that an advert is served up in the search results.

Click-Through Rate (CTR), the number of impressions divided by the number of clicks, so the higher the CTR, the better your advert is performing.

Cost Per Click (CPC), the amount you pay when someone clicks on an advert.

Average Position, the position in the results where your advert normally appears.

Bid, the maximum price you are willing to pay for a click. The more profitable the products or services are, the more advertisers are willing to pay for traffic.

Pay Per Click allows businesses to pull in prospective customers and by only paying when those users click through to their website, to generate returns. Pay Per Click also offered a quick, flexible, and accountable way of attracting inquiries and making sales. Advertising in this way is completely trackable and offers an unprecedented level of control. 

Pay Per Click allows businesses to pull in prospective customers and by only paying when those users click through to their website, to generate returns. Pay Per Click also offered a quick, flexible, and accountable way of attracting inquiries and making sales. Advertising in this way is completely trackable and offers an unprecedented level of control. 

The difference between the Search and Display Networks

The Search Network is where adverts appear next to the search engine results page. For example, if someone is searching on Google for “iPhone 12” and they see an advert from a discount iPhone retailer, it very relevant very likely to be in the market at that time and seeking out a supplier. 

Bidding

Once you have chosen your keywords, you need to choose a bid amount. With Google Adwords, you can influence your ad’s position by setting its maximum cost-per-click (CPC) bid, the highest price you’re willing to pay when someone clicks on your ad. SO, you should think about how much a website visitor is worth to you and put that amount in for now. 

Now, the questions are.....

How much profit is there in a sale?

How many visitors does it take to make a sale?

Tips to do it

If you divide the number of visitors by the amount of profit then you have the maximum amount you can spend acquiring a new customer. Your bid should never exceed this figure.

Reference

Morgan, G. & Gurnwe, C. (2011)  Pay Per Click Advertising. Bookboon.