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What Is Pay-Per-Click Advertising, and Is It Worth It?

By Janeson Keeley, Website Consultant

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What Is Pay-Per-Click Advertising, and Is It Worth It?

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What Is Pay-Per-Click Advertising?

When I wrote my last article about website traffic management ("Increasing Website Traffic") in July, 2002, pay-per-click advertising was in it's infancy. Now, almost a year later, it has become a valuable tool for increasing website traffic.

Pay-per-click (PPC) ads are basically sponsored links. When a user types a keyword in a search engine, the regular search engine results appear, but the sponsored links associated with that keyword also appear above those results, or highlighted in some way near the top of the results page. A true PPC service charges you only when a user clicks on the link to your site.

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Developing Your Pay-Per-Click Ad

A PPC ad consists of four parts:
  1. the keyword you want your link to be associated with,
  2. a title for your listing,
  3. a description of the page you are linking to, and
  4. the URL of the page you are linking to.
Before you develop your ads, it is important to read the editorial guidelines given by the PPC vendor you are dealing with. In most cases, these are fairly clear, but very difficult for marketing people to understand. The most important thing to keep in mind is that your listings must be more informational than promotional. In order to maintain their integrity as information providers, the search engines who utilize PPC services to provide sponsored listings to their users want the listings to provide information, rather than obvious sales pitches, to their users. In order to enforce this, the guidelines and editorial staff of the PPC companies are usually quite strict about the relevancy of the keyword to the title and the description of your listing, and the page in the site that your listing links to. In most cases, you will not be allowed to link to your company's home page; rather, you will have to link to the page that relates most specifically to the keyword you have chosen.

Some companies, such as Overture, require that your listing be reviewed by a human editor (which may take several days) before it is posted. Other programs, such as Google AdWords Select, will post your listing immediately, but may take it down after a human editor has had a chance to review it. Sometimes suggestions for improving a listing that is not accepted may be given; other times they may not. If you are having trouble getting your listings approved, it may be worthwhile to look at similar listings that have been approved, or to hire a PPC administrator.

The keyword.

A keyword (also called a search term) is the word that you expect potential clients to use to search for the product or service that your company provides. Keyword selection is important: too general a term, and you may get clicks from people who really aren't part of your target audience.

Helpful hint: Remember that you're paying for these clicks. You don't want as much traffic as you can get, you want as much traffic from potential customers as you can get.

There are a number of companies that provide lists of keywords ranked by the popularity of their searches. Some of these lists are free; others can be purchased on a subscription basis. My favorite is the one that Overture provides. It's free, and you don't have to participate in the Overture PPC program to use it. Currently located at http://inventory.overture.com/d/searchinventory/suggestion/, this tool allows you to enter keywords and get a list of the number of searches for that keyword, and for related keywords, that were made in the last month.

The title.

Most PPC services recommend that you use the keyword you select in your title. This can be difficult because the number of characters allotted for the title, which varies between PPC companies, is limited. I have generally found that as long as there is a clear connection between the keyword and your title, it isn't necessary to have the keyword included in the title verbatim. Keep in mind, however, that sometimes the only part of the listing that appear on the search results page is the title, so it is important to choose the title carefully.

The description.

In some PPC listings, the description does not appear on the search results page, or appears only as a small pop-up box when the user mouses over the listing title. Nevertheless, the description is important because it can help you draw the targeted traffic that you want to your site. If you have chosen a fairly general search term, but your product or service is fairly specific, it is important to make the details clear in your listing; otherwise, you may have to pay for a lot of click-throughs from people who aren't part of your potential customer group.

The URL.

As mentioned above, it is important to have your listing link directly to the page in your site that is most relevant to your keyword. If you try to link to your home page, your listing is not likely to be approved unless your entire website is related specifically to that keyword. Be sure that the pages you link to:
  • clearly identify your company,
  • provide obvious and clearly labeled links to other pages in your site, and
  • are attractive.
The PPC company may allow to you to develop a "tracking URL" - a URL specific to your PPC listing that will appear in your web logs and allow you to determine exactly how many of the hits you get on a specific page are from your PPC listing.

When you subscribe to a PPC service, you specify these four parts of your ad, and you specify how much you are willing to pay for each click.

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The "Pay" in Pay-Per-Click

The method for determining the amount you pay for each click varies between PPC services. I'll use the two current leaders in PPC advertising, Overture and Google, to illustrate the differences.

With Overture, the amount you bid on a keyword determines your rank among the various bidders for that keyword. They have a minimum bid (currently 0.05 per click), so if there are other competitors (which you can see), you can outbid them in order to increase your rank in the listings. You control the bids directly and manually; therefore, you have control over the rank of your listings among the other listings for that keyword. Rank in the listings is particularly important in Overture, because only the top three listings are shown in all of Overture's partner search engines results. Any listings below the top three are shown only in the less popular search engines.

Helpful hint: Although they won't tell you this, you can put in the same bid as someone else has for a keyword. This is especially helpful if you just want to stay in the top three, because you can bid the same as the #1 or #2 ranked listing without having to outbid them. Overture would love to have everybody engaged in bidding wars and driving up the price for keywords, but there isn't any real need to be #1 as long as you're in the top three.

Another helpful hint: In some cases there may be three or fewer bidders for a particular keyword. In that case, making the minimum bid will keep you in the top three, no matter what the company ranked #1 bids.

In my opinion, Google AdWords Select has a much less straightforward system. You can specify a daily budget amount for each keyword. They will adjust the frequency with which your ad is shown based on your click-through rate. They will also change your bid to what is necessary to maintain the rank or click-through rate you desire; however, the rank of your listing is also affected by its click-through rate, so the more popular listings may be ranked higher even if the company is bidding less for them. Google maintains that this system requires less administration than the direct keyword bidding that Overture uses.

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Administration of Your PPC Account

PPC accounts usually require a set-up fee. Then you develop the listings, and they are posted (either immediately, or after they are approved, depending on the PPC company). PPC accounts have on-line tools that allow you to control your bids, listings, etc., and report generating facilities so you can monitor the click-throughs and money spent. Some companies, such as Overture, require that you deposit money into your account against which the click-throughs are deducted. If you want to continue your listings, you must continue to deposit money as necessary. The Google AdWords Select program charges you as click-throughs are accrued.

Although Google states that their system requires less administrative time than the Overture system as far as monitoring the amount of money you are spending and the ranking of your listings, it is important to monitor the cost and click-through rates of any type of PPC account. Doing so will allow you to determine what your most effective listings are and what pages of your website are receiving the most visitors.

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Is Pay-Per-Click Advertising Worth It?

Pay-per-click advertising campaigns, like everything else, have advantages and disadvantages that make them more or less desirable for different types of company websites. Ask yourself the following questions to help you determine if pay-per-click advertising might be good for your company:

Who are you marketing to?

If you are a local company, marketing primarily to your particular geographical region, pay-per-click advertising may not be for you. For instance, if your company provides roofing services in northern West Virginia, the keyword "roofers" would be too general. You might get a number of clicks, but what are the changes that a number of them would be within your service area? You might consider adding changing your keyword to "West Virginia roofers", but that might still be too broad, and, according to the Overture Search Term Suggestion Tool, it is not a popular search term. Local companies would probably spend their website advertising dollars more effectively by making sure they are included in on-line local directory listings.

On the other hand, companies whose potential customers are nationally, or even internationally, dispersed, might do quite well with PPC.

How does your site rank in the search engines?

If you are marketing your products or services nationally or internationally, the next thing to check on is how your site is currently performing in the search engines with keywords that you would expect your potential customers to use. If it is not doing well, and you have optimized your site for search engines (see (" Increasing Website Traffic" for tips on this), it may be because your keywords are very common. It is difficult to get a site to rank highly in search results s where the search terms are very common or very general because there are so many sites competing for those spots. If this is the case, using a pay-per-click listing to have your link appear at the top of the search results makes a lot of sense. I would always recommend that a site be optmized for search engines before a pay-per-click campaign is put into place because there are so many other benefits to search engine optimization (SEO), but for a quick return on advertising dollars, an argument could be made to use PPC without optimization.

If, however, your site already ranks high in the search results without pay-per-click advertising for search terms that your customer might use, the only argument for using PPC would be to attract visitors to specific pages in your site or to introduce pages that have information about new products or services.

Do you have the time to administer your pay-per-click account?

Despite what the Google AdWords Select promotional materials say, a PPC account must be followed closely. By tracking the success rates with particular keywords, titles, descriptions, or links, the administrator can finetune the performance of the PPC account, keep an eye on expenses, and monitor its effectiveness. In my experience, it is helpful to check in several times a day until your account performance has stabilized at a maintainable level after your initial start-up and after any changes. After that, a quick visit once daily is usually enough.

When possible, return-on-investment (ROI) for PPC expenditures should be calculated. In some cases, such as sites that sell a product or service on-line, ROI is very easy to calculate, particularly when tracking URLs (see The URL above) are used. In cases where the website is only part of the advertising package and cannot be directly correlated with increased sales, then the return on investment may be more difficult to calculate, and may only be reflected, at first, in increased visits to particular web pages.

Websites and web-based advertising are becoming increasingly important to businesses of all sizes. While not the be-all and end-all for everyone, pay-per-click advertising can be an effective tool in your comprehensive marketing strategy.

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