Pay Per Click Advertising

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Pay Per Click Advertising

What is Pay Per Click Advertising?

Pay Per Click Advertising simply refers to a form of Online Marketing whereby a company pays a particular source to advertise on their website, for example Google AdWords. Payment is charged per click-through to your website from the ad on another's website. This could be another company or individual's site or a search engine such as Google for instance. For the purpose of this explanation however, we will focus on Pay Per Click Advertising through the major Search Engines.

Pay Per Click Advertising refers to the form of Search Engine Marketing that sees company websites advertised in the sides and top of Search Engine Results for selected Keyword Searches. These listings appear as Sponsored Listings within the major search engines. As the name Pay Per Click Advertising suggests, payment for the advertising is based on the number of clicks an ad receives.

How does Pay Per Click Advertising work?

Pay Per Click Advertising is a step by step, often complicated process. Its success is dependant on a range of variables, such as Budget Determination, Keyword Selection, Search Engine selection, Bid Placement, Ad Creation and Campaign Review, each of which are explained below.

1. Budget Determination: The first step to creating a Pay Per Click Advertising campaign is determining a suitable budget to allocate to the campaign. Determining the budget is almost entirely up to the company looking to advertise. The only budgeting restriction is any minimum spend requirement as set by the Search Engine itself. These are generally nominal, between $25-50 in most cases. These spend requirements allow almost any website to undertake a Pay Per Click Advertising campaign, making this among the most accessible forms of Online Marketing.
2. Keyword Selection: The next step in Pay Per Click Advertising is to select the most appropriate Keywords for which the company wishes to advertise. This is often seen as the most important step as it indicates which Searches will display the company ad. To begin with, brainstorming should be undertaken to identify as many possible keywords and terms that are relevant to the company and its industry. Once this list is established, Keyword Selection must be based on two major factors. Firstly, research must be carried out to highlight the most searched for words or terms on the brainstormed list. This indicates the level of exposure each ad is likely to gain. The list should be ordered starting with most searched down the list to least searched. Once this is completed, further research should be undertaken as to the competition for each of the Keywords or terms in the list. The intensity of competition for each keyword or term will indicate the price of that keyword or term. This is thanks to the bidding system in place on the major Search Engines (see below).
3. Search Engine Selection: Once a budget is determined and keywords or terms are chosen, the advertiser must select the Search Engine on which they wish to advertise. There is a whole range of Search Engines online, many of which offer Pay Per Click Advertising. The largest of these, in order, are Google, through Google AdWords, Yahoo, through Yahoo! Search Marketing, and MSN, which has recently teamed up with Yahoo! Search Marketing. Each of the different Search Engines has their own advantages and limitations. Some are more popular than others, increasing exposure as well as expense. Others are smaller and therefore less expensive, but can be riskier due to lower exposure. In most instances, the most successful Pay Per Click Advertising campaigns work across a combination of Search Engines.
4. Ad Creation: Once the above steps are completed, a Pay Per Click Ad must be developed. These Advertisements become the visual touch point for the company's targeted consumers. The design of these ads has several restrictions placed on them by the Pay Per Click Search Engines. We will discuss the restrictions in place via Google AdWords, due to the popularity of this Search Engine. Many of these restrictions are replicated on the other Search Engines as well.
5. Bid Placement: Pay Per Click Advertising works on a bidding system whereby a company places a maximum bid for each keyword or term they wish to advertise for. This bid not only indicates the maximum the company is willing to spend on each click (Cost-Per-Click), but also plays a major part in determining the placement of the company's ad for that keyword or term. Recent alterations to many Pay Per Click Search Engines, particularly on Google, increased the evaluating scope meaning not only the Cost-Per-Click determines the ad placement. Also considered is the Organic Search Engine Optimisation of a Landing Page, i.e. how relevant is the page to the user's search. This has been termed “Quality Score”. This prevents companies from being placed above others simply because they have a larger Online Marketing budget.
6. Campaign Review: One of the greatest benefits of Pay Per Click Advertising is the ability for businesses to monitor their campaigns. Pay Per Click Advertising is a highly effective, highly measurable form of Online Marketing. Every time a consumer clicks through to a company's website, their actions within the site can be tracked. These actions can include number of pages visited, sales made, contact enquiries, newsletter sign-ups and more. Each of these actions can be allocated a particular value based on the dollars earned for the company. In turn, each click received can then also be allocated a value. The ability to track each click allows a Pay Per Click Advertising campaign's performance to be closely monitored and enables the campaign manager to constantly review the campaign, maximising the clicks which receive the most value and ensuring the overall campaign ROI is maximised. With the right selection of keywords, a Pay Per Click Advertising campaign can be a very cost effective form of Online Marketing. Each keyword can be individually evaluated, allowing careful monitoring of the campaign and ensuring only the most valuable keywords are retained.

What are the limitations of Pay Per Click Advertising?

Pay Per Click Advertising does have its limitations. The competition for keywords can at times be intense, driving the Cost-Per-Click to increase, in some cases rather dramatically. At times, this competition can be so intense that the Cost-Per-Click can reach $10 or more, especially on the more popular Pay Per Click Search Engines. For small-medium businesses, this competition can completely blow the Online Marketing budget, making it very difficult to effectively reach their target market. This limitation has been seen to be within the Pay Per Click Advertising key term bidding model. The advent of the Quality Score Indicator has somewhat reduced this limitation, as now it is possible for businesses to be seen in the paid search listings even if they can't quite match the financial clout at times thrown around by their larger counterparts.

One of the toughest limitations to overcome within the bounds of Pay Per Click Advertising however is consumer distrust of paid ads as compared to the Organic Search Results. Online consumers are increasingly learning that the Pay Per Click listings are in fact paid advertising, and that the only true indication of relevance to a particular search term is found in the Organic Search Results. Whilst this can be partially overcome through effective ad creation and content development, it is an issue that cannot be totally avoided. However, one positive of the Pay Per Click Advertising model is that businesses only pay when someone clicks on their ad. If a particular consumer chooses to ignore the paid listings, at least the advertiser doesn't have to pay. However, in order to reach the greatest depth and breadth of a market segment, it is important to combine effective Search Engine Optimisation with Pay Per Click Advertising.

How can Exa help?

Exa's team of Online Marketing professionals have a proven track record of getting our clients found through the major Search Engines. Contact Us to speak to an Exa Consultant today and discover how we can help your business exceed its goals.

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