Buying your way to the top with Pay Per Click Advertising

Imagine if you could advertise directly to ONLY those people who have actually expressed an interest in doing business with you.

That is basically what happens whenever a prospective customer or client types a phrase into a search engine which is relevant to your business. But how do search engines decide which sites are actually worthy of the topmost placements in their search results?

It turns out that some of the results are ranked by the search engine’s computers, while others are simply paid advertisements from companies willing to buy their way to the top using Pay Per Click Advertising.

Pay Per Click Advertising (PPC for short) is an online advertising format which allows you to buy your way to the top of search results pages, for search phrases that are relevant to your business. Basically businesses buy advertising on specific search phrases, and are then charged each time a person clicks through to their web site.

So how does this work?

Try running a search on a major search engine like Yahoo or Google for a common consumer product such as “DVD players.” When reviewing the results, you’ll likely see a set of results labeled as “Sponsor Results” or “Sponsored Link”. Some results might appear in the same format as the main search results on the page, while others might be listed within colored text boxes along the side of the page. All of these results are paid advertisements from the sites listed within the ads.

The adverts are ranked based upon how much a business is willing to pay to advertise using each search phrase. In the example search for “DVD players” the current top advertiser is currently paying $0.81 per click – one penny more than the advertiser in 2nd position.

The ads are purchased through pay per click advertising suppliers, and the two largest happen to be owned by Google and Yahoo. Google’s program is called Adwords and displays results on Google.com, AOL, Ask Jeeves, and many smaller search engines. Yahoo’s program is run by an acquired company called Overture, and the results appear on Yahoo, MSN, AltaVista, and many other syndication partners.

Why should I pay for traffic?

For businesses that have had success with search engine optimization, the idea of paying for visitors is not particularly enticing. However, if you can make more money off a visitor to your web site than it costs to get them there, why wouldn’t you pay for those visitors? Bear in mind that you can choose exactly which search terms you want to advertise on, and you only pay when a searcher actually clicks on your ad, so it generally comes down to deciding how much you can afford to spend for those visitors rather than whether it’s worth doing at all.

How much should I spend?

The main factors influencing just how much money can be spent on a PPC campaign are:

1. How many searches are conducted per month using phrases relevant to your business?
2. How much are you, along with your competitors, willing to pay for those terms?

The average monthly ad spend on PPC advertising is a couple thousand dollars, but this varies immensely from less than $50/month for regionally targeted and niche businesses to millions a month by large national retailers.

The goal of any pay per click advertising campaign should be to bring in more money from the campaign than it costs to run it. Pay Per Click is no different, but the level of detail you can measure in PPC is significantly higher than most types of advertising. For example, with relatively inexpensive (some are even free) tools, you can determine which ads are responsible for generating the most sales or leads for your business. Beyond that, you can determine just how much money you spent on a specific advert to generate a sale or a lead. By measuring what’s working, you can aggressively advertise on terms that prove to be winners for your business while shutting down ads that don’t deliver.

Tips for Success

1. You should advertise on a large number of relevant search phrases. Brainstorm beyond the first dozen terms that come to mind when you describe your business. Advertise on the terms used to describe your products, using the product names, the product codes, and the questions a prospect might type into a search engine that your services answer, and more.
2. Create unique ads for each search phrase. It takes a lot more time to write a unique ad for every search phrase relevant to your business instead of creating one ad for all of your search phrases, but the extra work will in time definitely pay off. Ads that are "aligned" with the corresponding search term will receive more clicks, which then results in more targeted traffic, and in some cases results in paying less per click (on Google Adwords) due to the intricacies of how the advertising is priced.
3. Direct visitors to the most appropriate page of your web site. If you place an ad for a specific product within your online store, don’t send visitors to your homepage this just forces them to dig for what they just searched! This will only frustrate your visitors and increase the chance that they’ll simply hit the dreaded Back button.
4. Track your results. Spending your money without measuring the return on investment does not make good business practice. At the very least, you should consider installing the free tracking tools that are available through Google Adwords and Overture to measure which terms are delivering the best results for your business. Beyond that, consider using a third-party statistics tool with conversion analysis to compile the results of your various pay per click advertising programs into one easy-to-manage interface.

People are searching for what your business sells at this very moment! If your site is not showing up near the top of the results, your competition thanks you.