Pay-Per-Click Advertising

What is it?

Pay-per-click or PPC advertising refers to internet-based online ads that incur charges only when when they are clicked on. PPC ads appear primarily on the major search engines (Google, etc.), but can also appear on social networking sites (Facebook, LinkedIn), and third-party content websites with an infinite range of themes.

In cases where a web user is utilizing a search engine, PPC ads are displayed alongside the regular search results (see image below). The appearance of these ads is triggered by keywords in the searcher's query, and thus, the ads are shown "in context" and in theory only to interested viewers.

If the searcher is interested and clicks on your ad, he/she jumps to your website and you (the advertiser) are charged a per-click fee. If the searcher is not interested and does not click, you pay nothing. This performance-based pricing model is hugely different from that of traditional "pay & hope" advertising, and largely behind the success of PPC.

With PPC advertising, search activity and results can be measured precisely, and in most cases, will deliver qualified visitors at a reasonable $/visitor. Campaigns are managed completely online through a secure administration screen.

PPC's greatest strength lies in its ability to provide pinpoint targeting of ad delivery and thus also spending. No longer are advertisers forced to pay for ads that are delivered -- but not acted upon.

Where do my ads show up?

Ads are displayed alongside the search engine's regular organic search result listings and identified as being "sponsored". Optionally, ads can appear inserted into the pages of other websites that have content relating specifically to your ads (aka the "content network"). In cases of proprietary site-specific ad campaigns (eg. Facebook, LinkedIn), ads are shown on those websites.

Many searchers do not realize that PPC ads are paid for, and simply consider them to be part of the search results. Most ads are in plain text format, although graphical formats such as banners also exist.

The image below shows the layout of a typical search results page:

How much does it cost?

The amount you pay in click charges depends upon how many times your ads are clicked on, in combination with the $/click you are being charged. The $/click can vary widely and is determined primarily by the level of competition for ad space and your maximum bid price. For example, in a modestly competitive field, click charges could average approximately $0.50- 2.00/click. Extremely competitive fields with very high per-transaction sales values might see per click charges of $5 or even higher.

A small business might spend between $5-20 per day in total, whereas larger businesses or those where PPC ads are proven producers might spend $50, $100 or even more per day. One thing to remember: more spending = more traffic = more results, since you only pay when your ads have been successful.

Click charges accrue in real time, and are billed for approximately once or twice per month. Payments are normally made automatically through a credit card kept on file in the account. Spending can be very tightly controlled using protective budget limits and by varying bid price levels. Also, campaigns (and even individual ads) can be turned on/off anytime as desired.

Fees charged by third-party PPC management services (like Cubehouse) are separate from the cost of the ads themselves (the click charges). Some management firms charge a flat percentage of the ad costs or mark-up the click charges, some for setup and/or management fees only, and some a combination of the above.

At Cubehouse, we charge only for our setup and management fees -- the accounts with the search engine companies are set up in your name, and you pay for click charges directly and with no mark-up. By holding your own accounts, you retain full control and can transfer or take over their management as you like and at any time.

Will PPC work for my business?

PPC works well for most businesses, assuming the campaign has been properly set up and optimized. PPC might not make sense for businesses with very low profit-per-sale profiles, because the cost of the ads could exceed any incremental profits.

PPC is not recommended for businesses with poor web sites. The ability of your web site to convert visitors into purchasers is critical to obtaining a positive ROI for your ad spending.

Who offers PPC advertising?

The major search engines offer integrated pay-per-click advertising services. These include Google AdWords (Google Search), Yahoo! Search Marketing (Yahoo! Search) and Microsoft adCenter (Windows Live Search). The largest and best-known of these is Google. We recommend that clients try first advertising on Google on a trial basis, and then expand into the other networks as warranted.

PPC ads are also available that run on other (non-search) websites, including social networking sites like Facebook. These are either syndicated ads that originate from the large search engines, or, that are managed by the website itself.

How do I get started?

It is highly recommended that you use the services of an experienced professional to set up, optimize and manage your PPC ad campaigns. PPC campaigns can produce outstanding results, but the costs can really add up. It is imperative that your ad budget is spent as efficiently as possible, otherwise your ROI could suffer (or maybe even be negative).

The goal is to direct spending on targeted, qualified visitors only -- with a minimum of wasted clicks. To minimize the $/click paid out, campaigns must be carefully designed to reach the intended audience only, utilize strategic geographic and negative filtering, incorporate effective ad copy, and be optimized over time.

We are big believers in PPC ads and have seen them produce outstanding results. To discuss the use of pay-per-click advertising for your website, please contact us today.

Can I do it myself?

Yes, if you are willing to invest the time and effort into learning how to set up and run a proper campaign, plus, commit to a lot of trial and error spending. Be forewarned: spending even a modest amount per day can quickly add up... if half of that is effectively being wasted due to improper setup, lack of optimization, poor targeting, etc. -- you would have been far better off to enlist some experienced help.

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