PPC - Pay Per Click

PayPer Click (PPC)is a method of purchasing and payment for online advertising. The advertiser pays a rate in proportion to the number of clicks received (click-through rate), or simply when a user clicks on the commercial. As any other mean of Digital Marketing , it can dramatically increase the businesses revenue if used in he correct way.

Together with Search Engine Optimisation, it is part of what is called Search Engine Marketing . PPC started at the same time when the Internet came around, and it was a revolutionary way to advertise. Before the Internet, if a company wanted to promote a product or a service, they had to pay the publisher (i.e. TV, radio, papers and so on...) in advance. With PPC companies only pay their providers if the advert is clicked. Around the same time Larry Page and Sergey Brin created Google and together with Eric Schmidt they copied the very first idea of PPC and made it what it is today.

It is possible to use PPC in many different sites on the Internet. For example, many adverts very often appear on Facebook, Linkedin and other social networks. However, the most efficient form of PPC belongs now to Google and it uses a tool called Google Adwords to build and create adverts. With Adwords, Google generates most of its revenue which is around sixteen billion dollars. One of the greatest things Adwords can do, if used correctly is to give the chance to the company using it to be at the front of the search page. When a search is performed, what appears in the middle of the page is called the Organic or Natural Search . PPC will be issued at the top and the right end side of the screen. Most of the people, when performing research will not click on the adverts, however, the very few that do still generate an enormous revenue to Google.

87% of web users access the Internet to perform a search, therefore, businesses have an excellent opportunity to reach everybody and show them the products they sell. Many times when using SEO, as well as PPC companies, can go to other search engines and do their PPC there where it is not as expensive as it is on Google where everybody goes. A company may even get the traffic it needs to generate real revenue through search engines like Bing or Yahoo. However, figures show that 84.46% of people use Google.

The way PPC works is quite clear and straight forward. First of all and most important is the clarity of purpose a company should have since using PPC involves spending money. When people click on the advert the company pays money consequently, they have to be sure PPC can make an impressive and immediate difference to their revenue.

Designing a Conversion Journey the team can think about how to move people along and where exactly in the journey PPC can be utilised to make the biggest impact. If a potential customer is searching but does not appear ready to buy that is not the right moment of using PPC, SEO would do much better. PPC will come along where the potential customer becomes a real customer.

Profit Margin and Conversion Rate are other two primary factor a company should consider when using PPC.

When a product is sold, and its Profit Margin is subtle the seller will not make much money. If the money is spent on PPC for that particular product, it will obviously cut on the company profit. On the other hand, if a company has a product that makes a good profit margin, it is then they should invest their money on PPC.

The website Conversion Rate is when a company brings a certain amount of people to the website, the amount of those that will turn into real customers.

Before using Pay Per Click, a company should perform a little search to find out what people are looking for on the Internet. Google offers an excellent range of free tools like Google Suggestions, Google Trends and Google Adwords that can help to understand the search performed. As it happens with SEO the company using these tools has to brainstorm the keywords they want to use for their adverts. Following the search will also ensure the right keywords are found and that the advert is displayed where there are few competitors.

Google Adwords is possibly one of the best tools available on the Internet to build adverts. Since it is a Google's tool, it is in their interest to tempt companies to use it. It is thou advisable also to use other tools to put together the keywords plan. With the Adwords planner, a company has to sign-in with Google even if no money is requested to join. Once that is done they can start putting their ideas in the planner; they can direct them to their website, check how many people are searching for their product and so on. They can also ask Adwords to check a particular geographic area or a country, or different languages or to take out from the search negative words like "free" or "cheap" since they would attract the wrong potential customers. The tool as explained is then extremely flexible. Once the keywords are inserted, Adwords will come back with a page that shows the search activity across the year. The page will highlight the number of people searching for a particular term or product. The page will also break down the keywords and will give other suggestion the company may find useful. Clicking on the individual links Adwords will show how many clicks a product has received in a month and how competitive the chosen search terms are. If the word is very popular, the company has to pay more money to advertise. PPC is then a sort of auction where businesses will have a budget they can spend. Google will tell them how much is the minimum price for a particular term depending on its popularity.

When that is done, the company has everything they need to create an advert.

The space provided by Google Adwords is not very big and if the link used for the web page is, Google will create another link to put the web address in. The company writes the advert on the left-hand side of the screen and Google will show the preview on the right. Businesses can create more than one advert at once (at least two versions for every advert should be created) because if it is written in two different ways, one of the two would be more efficient than the other. The software will find that out. If an advert is not adequate and potential customers will not click on it, the company producing it will not pay any money to Google, but at the same time, it will not generate any profit. Once the company has finished creating their adverts they are sent to Google for approval. The result is usually positive and very quick, however, sometimes an advert might not be approved simply because it contains (i.e.) a spelling mistake. The approved adverts will be online and the company will be able check which among them are the most effective and eventually remove those that do not get clicked.

The company's job is also to understand the psychology of the person that is searching the Net. Google provides advice in their Help Section on how to produce quality adverts. Videos, training, guides, are all available in this section and it is in their interest to have good products on their page since through good products they make money.

To write good quality adverts Google gives some suggestions like:

1) Be relevant: display the search query in the advert

2) Highlight benefits not failures. Focus on services/products to add value for the customer

3) Be different: say something no one else is saying

4) Include call-to -action

5) Abbreviate when sensible to do so

6) Appeal to customers on mobile therefore build a mobile friendly website

7) Match the ads to the landing page

8) Experiment: try different things, keep testing until the working formula is found

When companies put their adverts together, Google allows them to do something called Keyword Matching which means that an advert will appear only when particular words are entered. That is called the Exact Match. The Negative Phrase Match , on the other hand, is when an advert will not show up if words like "cheap", "low-cost" or "free" are entered in the search box.

As the advert is put together, a preview can be performed. PPC Preview Tools on Google will allow seeing what the adverts looks like. The advert can be also compared to those of the competitors and it can be changed until the company is happy with it.

How much is the right amount to spend for an advert? Here is the equation:

Max CPC = (profit per customer) x (-1 profit margin) x (website conversion rate)

Regarding bidding strategies, there are many different approaches that can be applied:

1) bid whatever it take to be first

2) fine tune for a specific position

3) bid bare minimum

4) bid high and then lower (CTR Quality Score)

5) bid what is worth for you

How much a company will pay varies on many different factors:

1) the keywords they choose i.e. if it is a lucrative term the price is higher

2) bid prices for those keywords

3) the quality of the landing page i.e.where Google determines how much the company will pay. If a customer has a good experience clicking on a page the company will pay less

4) The effectiveness of the PPC paper copy

If a company is not careful the so-called Bidding Wars may arise: companies will bid more and more money on a phrase to be number one in the search results. Competitive industry will spend money just to be better than their competitors. When this happens, if companies are not careful, they end up spending a significant amount of money, and the only company that will win will be Google.

Google owns a piece of software called Google's PPC Quality Score with which they assess PPC activity evaluating various factors:

1) click-through-rate

2) landing page

3) historical performance

4) various relevant factors

5) ad relevancy

6) keywords relevancy

If Google gives a company a good quality score, then the company will spend less than other competitor companies.

The definition that Google offers of Quality Score is:

"The Adwords system works best for everybody; advertisers, users, publishers and Google too when the ads we display match our users' needs as closely as possible." - which means that if Google wants to make money, the service they provide must be good. This is what they call "relevance" and they measure it by giving quality scores: "The higher an ad's Quality Score, the more relevant it is for the keywords to which it is tied. When your ads are highly relevant, they tend to earn more clicks, move higher in the Ad Rank and bring you the most success" .

PPC needs to be explored first as a customer to see if it may work for a company. To do that search terms should be tested. Once the search terms is done the business should check which terms they prefer comparing them to others.

Google makes Pay Per Click adverts much more visible adding a symbol that says "ads". Still many companies will appear on a search result page even if they are not selling the product or the service a person is looking for just because they are bidding on the same keywords. It may be that the company cannot use PPC properly, or that they have outsourced a company that is not doing a proper job.

Google suggests that companies should also do experiments on:

1) Headlines

2) Body copy

3) Offers

4) Call-to-action

5) the destination URL

6) Landing pages

Pay Per Click is then about experimentation as many other areas of marketing.