Pay Per Click Advertising
Ask the Professor.
What is Pay-Per-Click Advertising?
Question: My husband and I run a small online store and would like a quicker way to get traffic to our new website. One of our employees suggested we market our website through pay-per-click advertsing. What does that mean?
Answer: In short, “Pay-Per-Click” (PPC) is an Internet advertising model where advertisers only pay when their ad is actually clicked. Typically, advertisers will bid on keywords or phrases relevant to their target market. PPC can also use the “affiliate” model, where financial incentives (a percentage of revenue) are offered to affiliated partner sites that host the ads. Google Content Network is a good example of this. The system is actually pay-for-performance as far as affiliates are concerned; if they don’t generate clicks or impressions, there’s no cost to the merchant. Sponsored links will show up next to or above organic results on search engines, along with relevant content or search results. Thus, the actual cost per click will vary according to the demand for the keyword and the search engine itself (pricing models differ). PPC is offered by almost every SE on Earth. However, the two most prominent providers of PPC advertising are Google and Yahoo.
Google AdWords
Google AdWords is the world leader in pay-per-click advertising. Currently, Google has more than 150,000 advertisers. The ads show-up not only with Google search results, but also with Google partners such as AOL search, About.com, and thousands of other websites that publish AdWords ads. Google has an interesting ad ranking system. It ranks ads not by the bid (the amount their owners are ready to pay for one click), but by the combination of the bid and the click-through ratio. This way, Google maximizes its revenue stream (since Revenue to Google = Bid x CTR x Views) and gives small advertisers an opportunity to effectively compete with big companies. A small advertiser cannot compete on the cost-per-click basis, but can successfully overcome any big company in terms of the click-through ratio.
AdWords ads can only contain 95 characters: 25 for the headline, then two 35-character-long description lines, and a visible URL field.
AdWords gives advertisers several options to target keywords: broad matching, exact matching, phrase matching, and negative keywords. The matching options define how close the search string entered by a user should be to a keyword selected by an advertiser. If the advertiser has chosen [baseball] as their keyword (square brackets mean exact match), their ad will be shown only if a user enters baseball into the search box. If the advertiser has chosen "baseball" (quotes mean phrase match), the ad shows up if a user searches for baseball player or baseball bat or simply baseball. Finally, if the advertiser has chosen baseball with no brackets or quotes around it (for a broad match), the ad will show up even if a user enters wilson bats. With negative keywords, advertisers can prevent their ad from showing up if a user enters this keyword. For example, a retailer would usually add -free to the keywords list to avoid targeting "free stuff" hunters.
You can learn more and sign up for Google AdWords at http://adwords.google.com.
Yahoo
Yahoo! Search Marketing Solutions (formerly Overture) is the other top player after Google in the field of PPC advertising. Yahoo ranks ad listings exclusively based on the bid amount. Furthermore, if you get a top-3 listing with Yahoo, your ad will be prominently placed with MSN, Altavista, CNN, and other search and news portals.
Yahoo Search Marketing offers Sponsored Search and Content Match. Sponsored search ads show up among search results in Yahoo and its partners. Content Match ads appear on the content partners of Yahoo (this is not search, but conventional websites that are capitalizing on their content by showing third-party ads from Yahoo or Google)
You can learn more and sign-up for Yahoo Search Marketing at http://searchmarketing.yahoo.com.
Other PPC Engines:
A PPC model is an excellent source of income for any search engine. Therefore, almost every search engine offers PPC advertising opportunities. Among the more prominent PPC Engines are:
• LookSmart
• MIVA
• ePilot
• Mamma, etc.
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