Pay-Per-Click (PPC) advertising is an online advertising model through which a business pays each time users click on one of their online ads.
How Pay-Per-Click Ads Work
Although there are several types of Pay-Per-Click ads, the most common are paid search ads. These appear when users search for things online using a search engine (like Google), and, more specifically when searching for something to buy, like pizza or shoes. Each of these searches triggers a Pay-Per-Click ad attached to a keyword in that search (botox, for instance). So, if you own a clinic that provides Botox and filler treatments, for example, you can buy an ad that appears every time someone in your community searches the term “botox.”
But advertisers cannot simply pay to ensure that their ads appear in a more prominent position than a local competitor. Ad space is sold by what is known as the Ad Auction, an automated process that Google and other search engines use to assess the relevance and validity of advertisements that get attached to keywords. The process is a bit complicated, but it goes something like this:
- Advertisers identify keywords they want to bid on, how much they want to spend on those keywords, and then create groupings of keywords that they would like associated with their ads. The keyword “botox,” for instance, might be in several ad pools for such search terms as “botox treatments” (most obviously) but also for “wrinkle remove,” “anti-aging,” or even “lip enhancement.”
- Someone within your community searches for the term botox using Google, for instance.
- Google immediately searches the Adwords pool for advertisers who want to “buy” that keyword, assessing each advertiser for relevance and validity.
- If your keyword is selected to be entered into an auction, it looks at two factors to determine how your ad ranks in relation to all other bidders in the pool. Your ad rank is the total of your bid (the maximum amount you will pay for the keyword) and the relevance of your ad to the search (known as your Quality Score).
- The price you pay is calculated by the Ad Rank of the advertiser below you divided by your Quality Score plus one cent.
Here is an example:
- You bid $2 for the keyword
- The Quality Score of your ad is 10/10
- Which gives you an Ad Rank of 20 (2×10)
- The advertiser below you bid $4 with a Quality Score of 4, giving them an Ad Rank of 16 (4×4)
- So, when the auction is triggered, you end by paying 16 (their Ad Rank) divided by 10 (your Ad Rank) plus one cent, or 16/10 = $1.60 +$.01 = $1.61 per click.
So, what can you expect to pay? This depends on the industry you are in and the ad quality you produce. The average cost-per-click lies between $1 and $2, but in some highly competitive keyword markets (like law and insurance), that number can rise to $50 per click or more.
How a Pay-Per-Click Agency Can Help You Meet Your Advertising Goals
A Pay-Per-Click agency can help you make the most of your PPC ads in several important ways:
- Geotargeting ensures that your marketing dollars generate the highest possible return on investment. If your Botox clinic is in Green Bay, Wisconsin, there is little value advertising in Boston, LA, or internationally. Pay-Per-Click ads geotargeted for Green Bay and surrounding communities will provide the biggest bang for your buck. And your agency can adjust your geotargeting easily if you suddenly find an influx of customers from a particular part of the city or nearby town.
- Your agency can identify and manage top keywords so that your ads’ relevance score is always high, and you win more auctions. By spending most of your marketing budget on the most potent keywords possible, you immediately increase your return on your Pay-Per-Click investment and begin gathering data that sharpens your keyword focus for future auctions.
- Your agency can also help you optimize the use of negative keywords. These allow you to exclude search terms that are like your keywords but might be more directly connected to a different product or service. Mastering the art of negative keywords takes time and patience, so you are best served by letting your Pay-Per-Click agency manage this part of your campaign.
Adding Value in Uncertain Times
Pay-Per-Click ads allow your business to focus on working smart, even during temporary shutdowns or scaled-back operations in these uncertain and ever-changing times. The daily use of social media throughout the COVID period has increased almost 40 percent as people rely on Instagram, Facebook, and Twitter for information, entertainment, and only shopping (which is also showing a spike in engagement).
Building a strategic and carefully managed Par-Per-Click campaign now is a cost-effective way to make the most of this online surge as you either pivot your business to more online delivery or adjust your model to make the most of partial re-opening. The advantages of Pay-Per-Click compared to traditional online advertising include:
- You only pay for your visits, which means a direct relationship between cost and performance. The higher the performance, the higher the cost. You see an immediate expense reduction if your ad does not perform well.
- Data feedback is immediate and detailed with Pay-Per-Click ads, including for such vital metrics as impression, click-through rate, and conversions.
- Optimization is relatively easy since you can assess the effectiveness of an ad’s performance (as well as its variants) and make modifications quickly so your ad reaches your audience more effectively with each click.
- Your ads reach the right audience through keyword segmentation and geotargeting so that you do not waste money sending ads to places your customers are not.
- You control your budget to know what you will spend every day. The only surprise you should ever have with a Pay-Per-Click ad is its success, not how much it cost.
Contact Summit Crew today to help build your first Pay-Per-Click campaign or sharpen the focus of your campaigns already underway.