Pay Per Click (PPC)
As the name suggests, you only pay when a user clicks on your ad and is taken to your website, whether that person makes a purchase or not. PPC programs are run by many Search Engines like Google (AdWords), Microsoft (AdCentre) , Yahoo (Sponserd Search) and several other Ad Networks.
Google has over 65% search market share. It handles more than 1000 million queries per day - that's lots of search, which means more opportunity for you as a marketer to publish your ads. We will be looking at Google AdWords, the most popular PPC program.
In AdWords you create ads that Google shows alongside regular search results on its page (google.com, google.de, google.fr....), their Search Network (AOL.com, Ask.com) and their Content Network (through AdSense, sites like New York Times, About.com, millions of other sites & blogs). In AdWords, Google charges per impression (image ads) or click, depending on the type of campaign you create.
AdWords is a form of direct marketing - as people know what they are searching for and you are more likely to get qualified visitors. Not only are your ads specific to the keywords/phrases people use in their search, but you can also decide who sees them based on the language people search and their location (region, city or a specific address/location). You also you have complete control over the timing's of your listing, if you want to list your ads between 9am and 5pm, you can do so. With AdWords you are in command.
Saying that AdWords is not as simple as it appears. A lot of research, time and money needs to be invested, in-order to make the most of it. Otherwise it could turn out be one of those loss making marketing campaigns.
Welcome to Adwords!
Google AdWords offers two types of accounts: Starter Edition and Standard Edition.
In Starter Edition you can create only one keyword targeted campaign, where you can advertise a product at a geographic location, in one language.
Standard Edition is a typical account, which includes multiple ad campaigns and ad formats, plus advanced features like ad scheduling, Analytics, and more. This is where the fun part begins.
[NOTE - After graduating to Standard edition, you can't return to Starter edition.]
The important terminologies of AdWords are:
Account - > Campaigns - > AdGroups - > AdText - > Keywords.
Your AdWords Account can have maximum of 25 campaigns with up to 100 Adgroup in each campaign.
Campaign contains many or one adgroup.
Ad Group is a collection of ads taken out by an advertiser that all target the same keywords.
Ad Text An ad appears on a Google search result page as a sponsored link or on an associated Web site via AdSense under - Ads By Google.
Keywords Search Queries (Words/Phrases) that you select that trigger your ad.
Quality Score & Ad Rank.
AdWords is an open bidding system Google lets you bid on the keywords (maximum Cost per Click - max CPC) that you want to trigger your ads, but that doesn't mean that your ads appear at the top if you bid the highest,
Google emphasizes on Quality. Quality Score (Q.S) is the basis for measuring the quality of your keywords and determining your min CPC (minimum amount for your keyword to be active). Q.S. is calculated every time your keyword matches a search query.
Quality score is determined by:
1) Click Through Rate (CTR) on Google.com (not its partner's)
2) Keyword & Ad Text relevance
3) Quality of your landing page.
[NOTE - You can see the Q.S. of your Keyword - at Adgroup level. Customize Columns - > Show Quality Score.
Keyword Analysis Page will give you a detail breakdown of your keywords Q.S. and how it might affect your ad visibility. Click on the magnifying glass next to Keywords.]
Ad Rank
Google ranks your ad every time a search is performed. Ads are positioned on search and content pages based on their Ad Rank.
Ad Rank = Quality Score x Max Bid
[NOTE - Traffic Estimator (Campaign Management - > Tools) tool will give you an estimated ad position for a given keyword.]
So how much you actually pay?
Price you pay = Ad Rank of advertiser below you / your Quality Score.
This might get a little confusing. But have a look at Google's Chief Economist, Hal Varian explaining The Ad Auctioning.
In Short - The higher your Q.S. the lower your minimum CPC and higher your ad position.