From medical and legal services to cars, home décor, clothing and more, every day millions of people search for information online using internet search engines.
Regardless of what industry you’re in or what product or service you offer, you’re likely up against the significant competition, battling it out for attention. Today, we’re sharing a secret that can provide you with that attention — pay-per-click or PPC.
But what is PPC exactly, and how does it work?
Buckle up! We’ll share everything you need to know about PPC below.
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What Is PPC?
Pay-per-click advertising (PPC) is an online advertising strategy that allows your company to appear on search engines and social media platforms when internet users are looking for specific information based on relevant keywords.
How? Keep reading.
How Does PPC Work?
So how does PPC work, exactly? We’ll explain.
When a user searches for specific information on search engines, and there is an ad spot on the search engine results page (SERP), an auction is activated.
To become part of an auction, you can use a PPC platform to define where and when your advertisement should pop up, along with how much you are willing to spend bidding on a specific keyword.
When and if your ad will appear to users is determined by three factors:
- The quality of your ad, denoted by your Quality Score
- Your bid, stating the maximum amount you are willing to pay for a click on your PPC ad
- The expected impact from other ad formats and the extensions used, such as links to various pages and phone numbers
Keep in mind that even if your bid is not the highest, you can win the auction through relevant keywords and extensions.
Speaking of keywords — You select the keywords based on your target audience and search queries that are relevant to your brand, products or services.
Ads show at the top and bottom of a SERP and include a headline, description and a URL leading to a dedicated landing page.
In addition to the main elements, an ad may contain call extensions or links to different pages. This encourages the user to interact with the company.
Regardless of the number of people who see your ad, you pay only when someone clicks on your advertisement.
Unlike showing up in organic search which can take a long time, you “buy” visibility and ad space immediately, through PPC.
Why Use PPC?
PPC has a number of advantages for your business. PPC helps you:
Reach Your Target Audiences
Whether you want to reach people based on demographics such as age, gender or location, pay-per-click ads allow you to reach your target audiences quickly and effectively using specific and relevant ads based on keywords and search intent.
According to a report by Google, search ads can increase your brand awareness by as much as 80%. PPC platforms typically approve your ad within hours, which means your company can begin gaining visibility almost immediately.
Advertise Your Company Locally And Globally
Selecting regions, countries or cities where you want to display your ad allows you to limit its appearance to the locations that make most sense for your brand. For example, you can target audiences that live or work in close proximity to your company’s offices or shops.
Using paid advertising gives you a competitive edge over competitors that are not taking advantage of PPC. Making your target audiences aware of your brand and promoting your products or services helps you reach new potential customers that search for the services you offer before they consider companies of similar expertise.
Keep Full Control Over Your Advertising Budget
Having the ability to schedule your ad’s appearance according to the day or time frame, or even turn it off, allows you to control your daily or monthly spending and manage your budget.
The two most common platforms used for pay-per-click advertising include Google Ads and Microsoft Advertising, which includes Bing, Yahoo and AOL.
Though very similar from a management perspective, the two platforms differ in their market size and potential reach. According to a 2021 Statista survey, Google has a market share of 85.55%, Bing’s market share is 7% and Yahoo’s — 2.85%
Let’s take a look how each of them can fit in your PPC strategy.
Launched in October 2000 and servicing both small companies and Fortune 500 businesses, Google Ads, formerly known as Google AdWords, is the most popular PPC platform, with 4.3 billion users across the globe.
Using it for your PPC, you can run:
- Video ads on YouTube
- Shopping and search ads on Google
- Display ads on the Google Display Network
- Gmail ads
Since Google has unmatched popularity and gets enormous traffic while processing over 63,000 search queries every second, using its platform for your PPC will ensure your ad receives both impressions and clicks.
Microsoft Advertising (Bing Ads)
Microsoft Advertising, also known as Bing Ads, allows you to reach 250 million unique users and 724 million monthly unique searchers on the Microsoft Search Network.
Using Microsoft Advertising, you can run your ad on:
In addition to the two most popular PPC platforms — Microsoft Advertising and Google Ads — you can place your PPC advertisement on other networks, using:
- Facebook Ads
- Twitter Ads
- LinkedIn Ads
- Amazon Ads
PPC Reporting: How To Analyze Your Campaign Metrics
One of the key features of PPC is the fact it can be tracked and measured easily using the reporting and analytics tools of the respective PPC platform.
The main metrics you should monitor and analyze include clicks, cost per click, click-through rate and conversion rate. They will provide information on how many people clicked on your ad and how many converted so that you can evaluate if your campaign was a successful one.
When examined separately, PPC metrics will not give you a full understanding of how your ad is performing. The metrics should be analyzed together to help you:
- Determine the efficacy of your campaign
- Tweak your ads to optimize performance
- Give you ideas about what is working well so that you can implement it in your future campaigns
- Optimize your website
Here are some of the main metrics to consider when evaluating the performance of your PPC ad:
Clicks show how many people clicked on your ad and were navigated to your landing page.
Although clicks as a metric do not provide information about your return on investment, make sure your ad is being clicked on — this means it is engaging and meets the user’s search intent.
Cost Per Click
The cost per click (CPC) shows how much money you’re spending for each click on your ad.
A revenue-to-ad ratio of 5:1 is considered acceptable for most industries. This means you will produce a revenue of $5 for every dollar spent. Another way to express the same ratio is 20% cost-per-acquisition.
The click-through rate shows how many people clicked on your ad out of the total number of people who have seen it.
A high click-through rate demonstrates people are clicking on your ad and your ad is meeting your goal to raise interest and boost your brand visibility
CTR varies by industry and network used.
The average CTR on Google Ad’s paid search where your ad appears at the top and bottom of the search results is approximately 2%. It is 0.35% on display networks where your ad shows as an image-based ad during consumers’ browsing sessions.
4-5% is considered a good CTR on the search network. Make sure you compare yourself to your competitors to evaluate your ad performance objectively. A low click-through rate means you must reconsider your:
- Your ad placement
- Your ad appearance and copy
- Your selected keywords
To improve your CTR rate:
- Add the keywords to your headline
- Use the keywords in your copy
- Focus on the benefits rather than on the features of your product or service
- Use visuals in your ad
- Include CTA buttons
Quality score is not a KPI per se. Measured on a scale from 1 to 10, it is a diagnostic tool that shows how your advertisement quality compares to other ads.
A high-quality score is indicative that your ad and landing page are more useful and relevant to users who search by specific keywords, in comparison to other companies.
The quality score depends on the type of selected keywords:
- For high-intent commercial keywords, a good quality score is between 7 and 9
- For branded keywords, a good quality score is between 8 and 10
- For low-intent keywords, a good quality score is 7
From filling in a contact form or subscribing to a newsletter to making a purchase, conversion is any action you want your consumer to take when engaging with your company.
The conversion rate shows the total number of conversions, divided by the total number of clicks on your ad.
This number is not indicative of the ad quality or the success of your PPC campaign. Rather, your conversion rate gives you insights into the effectiveness of your landing page, and whether it’s designed and optimized to meet users’ needs.
The average conversion rate for a PPC ad is 2.35%, but aim for a target of 5% or higher.
To improve your conversion rate:
- Improve your quality score
- Select the right keyword match type
- Optimize your landing pages
- Optimize your sales funnel
- Conduct A/B testing
Cost Per Conversion
Cost per conversion is one of the most important PPC metrics. It shows how much you paid to generate a conversion. To understand if your PPC campaign was cost-effective, compare it to the amount each conversion brings to your business.
If you spend $1,000 on pay-per-click advertising and you generate 20 sales, your cost per conversion is equal to $50. To sum it up, you’re spending $50 for each sale.
The ideal cost per conversion rate varies based on industry. If you are in the law firm business, for example, $50 is negligible to the cost of your services. On the other hand, if your product price is $35, a cost per conversion of $50 is clearly a loss.
To decrease your cost per conversion:
- Select high-converting keywords
- Implement negative keywords lists to limit your audiences
- Analyze your keyword bids
Note that even if you consider your campaign effective, the results can be improved further. Test various ad versions, schedules and budgets to optimize your campaign.
Analyze your PPC reporting metrics holistically to estimate the success of your campaign and the efficacy of your website page
Which Companies Should Use PPC?
Although PPC can be valuable for any business, its implementation is especially beneficial for:
- Recently launched companies
- Companies that are in the early stages of growth
- Companies that are planning to expand their areas of expertise
- Companies that operate locally
- Companies that operate in a highly competitive environment
- Companies that offer hard-to-find products such as supplies for unusual hobbies
- Companies that offer seasonal or event-based services such as florists or wedding vendors
- Companies offering high lifetime values such as dentists, doctors and universities, along with utility, cable and internet providers
- Companies that offer high-margin services such as legal firms, repair companies, home appliance businesses and luxury brands
If you do not recognize your company among the categories listed above but you are considering a PPC campaign, contact a PPC agency with a proven track record.
Their experts will look into your industry and competitors and create a PPC campaign for your brand.
What Is Pay-Per-Click Advertising? Key Takeaways On PPC Campaigns
What is PPC? PPC means pay-per-click. It is an online advertising strategy that secures intent leads based on keywords that are entered into search engines.
While companies of any size and industry can reap the benefits of PPC, it is especially useful for new companies, companies that plan to expand their services or businesses that wish to reach customers based on geographic location.
The benefits of PPC include:
- Reaching your target audiences
- Gaining exposure for your company
- Advertising your company locally and globally
- Staying competitive
When measuring the performance of your PPC campaign, consider the following metrics:
- Cost per click
- Click-through rate
- Quality score
- Conversion rate
- Cost per conversion
If you’re not sure where to start, contact an agency for help. A professional PPC agency can help you handle your PPC campaign optimization and maximize your results.
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