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Pay-Per-Click Advertising:
What Is It And How Does It Work?

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Digital Marketing has significantly evolved over the years. These days, there are plenty of marketing strategies business owners can use to reach a broader audience and increase their sales. One of the best advertising models is Pay-Per-Click (PPC) advertising.

Whether you’ve never heard of PPC advertising or just don’t know where to start, you are in the right place. In this article, we give you everything you need to know about the Pay-Per-Click advertising model, including what it is, how it works, and why it is important for the growth of any business.

What is Pay-Per-Click Advertising?

PPC advertising, also known as Paid Search Marketing, is a model of online marketing in which advertisers pay a certain fee each time their ad is clicked. Essentially, it is a way of buying visits to your site as opposed to earning visits organically.

One of the most popular forms of PPC is search engine advertising, in which advertisers bid for ad placement at the top of a search engine’s webpage, or in its “sponsored” section, when a user searches a related keyword.

How does Pay-Per-Click Advertising work?

While PPC advertising seems straightforward, there are a lot of factors that go into it. A result-oriented PPC campaign requires these steps:

  1. Sign up for an advertising account with the platform

    PPC as an online marketing channel covers several different ad platforms, with the most common of these being Google Ads and Bing Ads. Most businesses usually start their PPC marketing on Google Ads because it gives access to the broadest audience of potential customers and several different ways to set up and run campaigns depending on your goals.

  2. Create an ad and its landing page using keywords

    Whatever your ad looks like, it will need a landing page to take users once it’s clicked on. Optimize this landing page for conversions, and use keywords relevant to your business. You can use tools such as the Keyword Tool to help you research the right keywords that can drive conversions and sales.

  3. Set the maximum cost you are willing to pay for each click

    This will play a role in the bidding process when your ad goes up against other ads. Since you have to pay for each click on your ads, optimize your ad spend by only using keywords that are relevant to your business or the product you are advertising. This will make sure users looking for your information will more likely convert, creating a better ROI.

  4. Your ad goes to auction with other ads from other advertisers

    When an internet user performs a search, an ad auction happens. The auction determines factors such as:

    • An ad account’s eligibility to enter the auction
    • The order in which qualified ads will appear in the ad space on the search pages
    • How much a click will cost
  5. You pay when a user clicks your ad

    Once the auction ranks where your ad will be located, your ad may or may not be clicked. Ideally, it will rank toward the top and be clicked on, which can then create lead generations or customer conversions. Each click, whether a conversion is made or not, will cost you a certain amount of money. If you can create appropriate and brightly targeted pay-per-click campaigns, search engines can reward you by charging you less for ad clicks.

What determines how much you pay for a click?

Ad rank plays a huge role in this. However, it is not the only contributing factor to Cost-Per-Click (CPC). The cost of your PPC advertising depends on factors such as:

  • Geographic Location of Target

    Most PPC platforms allow advertisers to choose where they would like their ads to be shown. Generally, the more you narrow down your audience, the more expensive your CPC will be.

  • Industry & Target Keywords

    The level of competition varies depending on your industry and the keywords that you choose. This can directly affect the potential CPC on your keywords. For instance, certain keywords can cost as low as $0.05 per click, while others can range as high as $50 or more per click. However, most companies have an average CPC of $1 to $2 on Google Ad.

  • Intended Action

    Do you want users to see your ad, click it, or fill out a form? Your intended goals can also affect the overall cost of your PPC campaign. For instance, a click or a visit to a specific landing page will be more expensive, while an ad on social media platforms such as Facebook will be less expensive.

In addition to these factors, the copy, design, and combination of your ads can also affect CPC, as well as how often your ads are displayed.

Why is PPC important?

PPC advertising can yield significant results for a business’s sales and conversions. The strategy behind PPC can drive the success of any business.

  1. You will start getting clicks faster

    Once your ad is live, and if your ad is eligible to appear in the auction and your bid is high enough, you can start receiving clicks very quickly. Compared to other digital marketing strategies like search engine optimization (SEO), Pay-Per-Click allows advertisers to generate leads and revenue much faster.

  2. You can easily measure and track PPC

    One of the top benefits of PPC advertising is that it allows marketers to measure and track the returns from the channel. Google Ads and Bing Ads allow marketers to track conversions, including order or lead values. It also allows you to see the ROI of your account as well as that of specific ad groups and keywords. This means that advertisers can use insights and data to effectively improve the performance of the PPC campaign over time in order to increase the return on investment of the channel.

  3. It is one of the most successful forms of digital marketing

    According to Google, most businesses average earning $2 on every $1 they spend on paid search advertising with Google Ads, making this digital marketing strategy one of the highest ROIs. Most brands agree that PPC plays a huge role in the driving force of their business, as it not only can create lead generation, but also increase brand awareness. This makes PPC a crucial tool to facilitate a business’s growth.

  4. You are in full control of when ads run and how much you pay

    If you want to temporarily pause advertising when your schedule is tight or if you only want to run ads when you need to generate fresh leads, you can achieve that with PPC advertising.

    With PPC, you are in full control of when your ads run – including the time and day of the week. You can also turn ads on and off as you wish. You also have full control over how much you spend each day, month and/or click. Compared to other channels, PPC is the only marketing channel that allows you to manage channel cost as well as the budget so easily.

  5. You can target your specific customers

    Unlike traditional advertising, PPC advertising allows advertisers to target their customers based on their data, allowing them to adjust their bids according to the devices used and location. One of the best things about knowing your customers is that it can help you reduce time and money spent on advertising to the wrong audience.

Final thoughts

Without a doubt, PPC is a profitable marketing channel that can drive the growth of your business. It comes with plenty of benefits that will lead to more leads, more conversions and increased brand awareness. Get started developing your PPC campaign today!

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