Pay Per Click (PPC) 101: How It Works
Are you wasting precious advertising dollars on dead-end campaigns?
What if there were a way to spend less time and money, yet still generate quality leads?
Pay per click (PPC) advertising allows you to place your brand in front of the right audience instantly through paid ads. That means your marketing just got a lot easier (and cheaper).
But what is PPC? In this article, our digital marketing pros break down the PPC model, platform options, and strategy tips to help your business stay relevant online.
What is PPC?
In a nutshell, PPC or pay per click is an online advertising model where marketers run ads and only pay when someone clicks on said ad.
Pay per click is an extension of paid digital marketing. When used correctly, it serves as an excellent tool to gain exposure amongst your target audiences without spending your entire ad budget. If you’re interested in learning more about how paid digital ads help generate leads, we’re happy to help.
Now that you know what pay per click advertising is let’s dive into how it works.
How Does Pay Per Click (PPC) Work?
Like we mentioned earlier, PPC is a model where the marketer, business, etc. pays each time someone clicks on the ad. The model can appear complex, but once you understand how PPC works the rest falls into place, allowing you to use your ad budget more efficiently.
It all starts with an online search. The search engine pulls results from all over the internet, which also triggers an auction for all of the ads seeking placement (including yours) in that search. This auction is where your paid search campaign is truly tested.
So, what determines an ad showing up on the first page versus the second or even at all? The outcome depends on a few key performance indicators within your campaign:
- Bid amount – This ties into your overall campaign budget and keyword bid amount.
- Ad relevance – Is your ad the best fit for the search? If not, consider when your target audience searches for and optimize your ads based on those unique search inquiries.
- Geotargeting – Target the specific locations you’d like your ads to show. If you’re a Columbus-based health clinic you probably do not want your ads showing in California.
- Mobile-friendly campaigns – Make sure your paid ads are showing up on people’s cell phones and tablets.
These are just a few of the many pieces search engines scan when deciding who wins the auction for ad placement. The “first prize” winners obviously get first page placement while the others follow behind.
The two top search engines for paid search advertising are Google ads and Microsoft Advertising aka Bing ads. Each possess unique qualities that you may find useful.
Google vs. Bing
Before determining if Google and/or Bing paid advertising is right for your business, you must understand the differences between the two. This will help you make an educated decision with your marketing dollars and get more conversions for less money.
Formerly Google AdWords, Google Ads is where marketers can run paid search advertising campaigns on Google. No matter the type of campaign you decide to run, it will fall into one of three advertising networks:
- Google Search Network
- Google Display Network
- YouTube Network
There are several different campaigns available within the networks:
- Search Network campaign
- Display Network campaign
- Shopping campaign
- Video campaign
- App campaign
Each campaign uses different placement objectives to better target your audience and increase the likelihood of converting traffic. Here’s an example of a paid search ad for a MINI Cooper Countryman for sale in Columbus:
Looking at the top two paid search ads, we can conclude each ad was accurately placed given each ad’s content. Geotargeting was also a factor, as you’ll see in the second ad, a MINI dealer in Dublin, OH was pinged. We’re unable to see the bid amounts, but given that the official site most likely has a high digital marketing budget we can assume they’re able to bid higher more often.
Remember, many factors go into winning an auction outside of budget. This is why Google’s algorithm exists in the first place. Not only does it deliver relevant search results to the end user, but it also allows businesses a fair chance to compete with each other for ad placements.
In the end, Google has much higher search numbers than Bing, but that doesn’t mean using this alternative platform should be excluded from your digital marketing.
Bing ads work on the same PPC model as Google. You pay only when someone clicks on your ad. While the similarities are clear, the differences between the two can make or break your online advertising strategy.
Starting with placement, keep in mind Microsoft owns Bing. They also own AOL and Yahoo search engines. Because of this umbrella, ads ran on Bing will also be visible on AOL and Yahoo. More networks put you in front of more people.
Consider this: Bing Ads reach 63 million searchers that aren’t reached with Google AdWords. Just because Google has a higher number of searches doesn’t mean you’ll achieve the impressions you want.
Check out the Bing search below using the same MINI Cooper search we tested on Google. Keep in mind these ads would also show on Yahoo and AOL.com.
As with Google, relevant ads won the auction. You can see the visual similarities and differences between the two platforms.
Bing may not have the highest number of searches, but it does have more exposure than Google. According to our PPC experts, Bing also costs less in the end. This is a direct result from the lack of competition for marketers on Bing.
Will Bing deliver cheaper clicks and conversions for you? It may, but the only way to know that is to dive deeper into your industry’s trends as you finalize your PPC master plan.
Defining Your PPC Strategy
Any successful PPC campaign starts with strategy, and before creating a strategy there are a few questions that you need to ask.
What are you selling?
Are you a logistics company trying to bring in new employees or are you a clothing brand wanting to sell your upcoming line of clothing? What you are selling is important to what type of PPC advertising you use.
Who is your audience?
Knowing your audience is a huge piece of building out your PPC strategy. Depending on your audience you may want to target mobile phones and tablets more than desktop, or ads on YouTube over search ads.
What are your goals?
Is your goal to create and spread brand awareness? Then search ads may not be the best strategy for you. Instead, display ads would be more effective as they are much cheaper per impression than search ads. If your goals are more lead-driven (i.e. Click-to-call or click-to-directions), then you may want to consider search ads.
What type of campaign makes the most sense for your goals?
As mentioned above, your goals largely determine what type of campaign makes the most sense for you. There are more types of campaigns than just paid search and paid display. If your site gets a lot of traffic, but you aren’t seeing the conversions you would like, then you should consider remarketing efforts. Through remarketing, you can keep your brand in front of the eyes of your non-converters in an effort to bring them back to your website.
For example, if you are a new fitness club and want to compete within the hyper-competitive local fitness club industry, then geofencing may be an effective strategy. While it is more expensive than traditional display advertising, with Geofencing you can draw digital maps around the locations of your competitor’s businesses. Once a person steps foot within that geofence they will then be served your ads for a predetermined span of time.
Determine your budget
Once you know your audience and the type of campaign you are going to build, it’s time to determine your budget. The most important thing to consider when creating a budget is the value per conversion. If you are selling goods then your conversion value is rarely more than the price of the product itself. If this is the case, then you want to make sure that you are not spending more on media than you are making on your goods.
If you are offering a service and your conversion value is around $1,000/conversion, then you can justify putting more money into your media spend.
There are many things to consider when determining your budget. Some industries have more expensive keywords than others based on competition and other variables. Your reach is also important to think about. If you are only advertising locally then $1,000/month will get you much farther than if you are serving your ads at a national level.
Bring PPC to Your Next Campaign
Every second billions of online ads enter an auction to be seen by people around the world. Depending on your business and the goals you have, pay-per-click advertising or PPC could be a cost-effective digital marketing solution. With a variety of paid ad platforms including Google and Bing, you’ll soon discover each platform has it’s pros and cons. What matters most is how you plan to use these platforms to optimize your PPC strategy. Don’t forget to narrow in on the audience, goals, and budget you’re working with. The more clarity you have up front, the more likely you are to see results from your PPC ads.
Let’s Tailor Your Pay Per Click Strategy
PPC presents a range of opportunities to get what you’re selling in front of the right people. Blue Laser Digital is here to help you determine the best paid advertising options for your product, target audience, and your budget. Get in touch with us today to schedule a one-on-one and put your digital marketing on the right path.