What you need to know about pay per click advertising

Smart businesses are now adopting a two-pronged attack when it comes to generating web site traffic. This effective strategy comprises both search engine optimisation and pay per click advertising (PPC).

All businesses can use PPC advertising to quickly generate traffic to their web sites. The key is ensuring that your PPC advertising is cost effective for your business.

What is pay per click?

PPC advertising allows you to pay for top search engine rankings.

Specifically developed PPC search engines use an auction system that allows you to bid for search words. These engines reward the highest bidders with the highest positions in the search results. You then pay the bid price each time a person clicks on the search link to your web site. Minimum bids for most engines range between 1 to 10 cents per click.

For example, if you sold 4wd accessories you may use PPC to bid $0.25 for every new visitor to your site who searches on the search words “4wd snorkels”.

The popularity of PPC advertising has skyrocketed. It is has proved to be so popular that the number of PPC engines has grown from just 16 in 2000 to over 400 in 2003.
The reason for this dramatic growth is clear. With so many web sites competing for the same customer, some businesses have found it very difficult to be seen at the top of search engines. PPC is their guaranteed way of placing their site above their competitors – but at a price!

The Major PPC engines

Although there are many to choose from, not all PPC engines will produce results for all businesses.

There are three major players in the PPC market. These are Overture Yahoo! Search Marketing (formerly called Overture), Google Adwords Select (adwords.google.com) and Sensis (www.sensis.com.au) (formerly LookSmart Australia).

Within Australia, Sensis has the widest reach providing its PPC results to search engines including ninemsn, GoEureka and OptusNet.

Google Adwords Select allows you to save money by targeting specific country regions with its geo targeting technology.

Overture, the original PPC engine, recently raised its minimum cost per click to US $0.10 (though you generally have to pay much more to achieve a top result).

Where are PPC results used?

Virtually all search engines now display PPC results with PPC advertising becoming the primary source of revenue for most search engines.

The PPC results are presented in different formats in different engines. The results may be presented at the top of the standard results (possibly in a different colored box or marked as ‘sponsored links’), displayed on the side of the page or even integrated with the standard search engine results.

The following tables give examples of where you will see PPC results

When to use PPC?

PPC can give you exposure to thousands of people who are looking for your product at the exact time they are looking for it – but at a cost! The decision to use a PPC campaign should be a business one – crunch the numbers and work out how much money you are willing to spend to acquire a new customer. Initially, you may need to test the market to see what works and what doesn’t in order to make an informed decision.

One thing you must do when selling over the Internet is knowing how your customers are finding your web site. This is the only way that you can accurately determine if your marketing campaigns are working and calculate your return on investment. To get this information you can simply ask a new customer how they found your site or use a sophisticated tracking tool.

The future of PPC

However, it will become increasingly more difficult for small sites to be able to continue to pay for the top listings under this model.

PPC should be a part of an Internet marketing mix but not the only component. You should concentrate on creating quality web site content targeted towards your primary keywords (search engine optimization). Getting top listings through this method will be more cost effective than PPC in the long term. You can then supplement this with targeted PPC advertising campaigns.

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Sharon Wild
Strategy & Marketing Director of e-JAZ, Sharon has been involved in the e-commerce community for several years. She successfully manages Australia's largest online jewellery store, Gillett's Jewellers.

Sharon can be contacted via email on sharon@e-jaz.com.au