Pay Per Click Advertising

An Introduction to Pay Per Click Advertising

Having a website is one thing but actually getting it to work for you means getting the right visitors to it somehow.  So how are you going to go about developing traffic to your site?

Perhaps the easiest and quickest way is to use pay per click advertising such as that from the Google Adwords system, those ‘sponsored links’ down the right side of a Google page (and sometimes also in a coloured box at the top).

You can very accurately target the users you want on your site. So for example if you sell thingumajigs on your website you can have your ads show when people search using keywords like ‘blue thingumajigs’ or ‘green thingumajigs for sale’ and any other likely searches from customers shopping with credit card in hand.

You only pay for those visitors who actually click through to your website to see the thingumajigs you sell and the amount you pay is (at least partially) up to you.

Advertisers listings are ranked from top to bottom based partly on the amount they are willing to pay to get listed. Its actually a little more sophisticated than that but let’s assume for a moment that all the websites looking to get listed for a particular keyword have similar ads and websites.

In such a case the advertiser who bids highest for the keyword gets the top listing and an inbuilt formula means he does not actually pay the full amount of his bid but just a cent more than the next highest bid.

The amounts you need to bid to get good listings vary from industry to industry and they vary also with the level of competition for the same keywords as mentioned above. Naturally enough, those selling higher value products like say fine jewellery or financial services will tend to pay more per click than those advertising lower value products.

Pay per click advertising has been extremely successful for the simple reason that users are getting potential customers to their websites at the moment those customers are searching for their particular product!

Another feature of pay per click advertising is you set an overall budget which both keeps your spending under control and effectively stops you receiving more orders than you can handle.

Now to touch on the more sophisticated part, we have to recognise that not all websites and ads are good ones! Google particularly has done a great job of bringing this into play in the ranks achieved by an ad and the amounts paid for a click.

In essence it means that in order to get best performance and value from Adwords we must present the best possible ad and website, or landing page, for any particular keyword. So ideally when a user searches for ‘blue thingumajigs’ we would have an ad which talks about our blue thingumajigs which leads to a page on our site all about our blue thingumajigs.

This relevance ‘chain’ helps us to get a high ‘Quality Score’ assigned to the keyword in our account. The higher this score the better because our ad’s ranking will be determined by our score multiplied by our bid. The higher both are the higher we get listed and its even possible to get listed higher than a competitor who is paying more per click!

Quality Score x Bid = Ranking Score

Click Cost = (Ranking Score of Next Ad/Our Quality Score) + $0.01

For example:

Ad 1  QS 8 x Bid $2.00 = Ranking Score 16  @ 9/8 + $0.01 = $1.14

Ad 2  QS 6 x Bid $1.50 = Ranking Score 9  @ 7.5/6 + $0.01 = $1.26

Ad 3  QS 6 x Bid $1.25 = Ranking Score 7.5 @ 7.2/6 + $0.01 = $1.21

Ad 4  QS 8 x Bid $0.90 = Ranking Score 7.2 @ price calculated…

Straightaway we see Ad 1 gets top listing but at a lesser price than the two ads beneath!

If there were only 4 ads then Ad 4 would be listed at whatever minimum click price was deemed minimum by Google for that particular niche, otherwise it would be priced based on the same formula taking the ranking score of the ad below it into the calculation.