You’ve heard all of the buzzwords: PPC this, pay per click that, and so on. But what does it all really mean and how is applicable to your Internet and direct response marketing efforts? That is exactly what this article will clarify for you.
First of all, it should be clear that we live in the Google world. Google is so dominant that the word has literally transformed into a verb in pop culture, just “google it”. So, with that in mind, we will focus more on Google, but with pay per click, it is mostly the same across the other search networks such as MSN, Yahoo and Ask (as well as many other small networks). They each have their own particular peculiarities and quirks, but the basic information is largely the same.
Whenever you perform a search, two types of data are returned. Now many people are not even aware of this, they just see that they are getting back information that they requested. They are, but it is important that you understand this distinction when it comes to the search results. There are organic search results and pay per click search results returned with nearly every search you perform. Organic search results can be found at the center and left of the page. Pay per click results are found on the right hand side of the page and sometimes at the very top with a light yellow background labeled “Sponsored Links”.
Organic search results are provided based on the quality of the websites relevant to the term that you searched for. Now, this seems pretty basic, but if you really think about it, it is extremely complex. How does Google determine what is “relevant” or how does it rank one site as being more relevant than another? These questions, while trivial in concept, are extremely difficult to answer for several reasons. First of all, Google’s formula for its search engine algorithms is proprietary information and is probably the single most valuable corporate secret in existence today. That being said, they have published general information about their approach and many people have done testing to infer some of the basics of their formula. These people are called Search Engine Optimization experts or SEO experts. That’s another term you’ll see thrown around a lot: be careful, a person who calls him or herself an expert doesn’t necessarily have to be one.
Pay per click search results are very, very different. First of all, you searched on a specific phrase, called a search “keyword”. As an example, let’s say your search was on “Internet marketing”. Now, Google will likely show you three pay per click sponsored links with a yellow background at the top, the list of the top ten organic search results in the middle, and another list of eight pay per click advertisements on the right. Pay per click advertising has transformed the Internet, as it allows anyone, even on a shoestring budget, to have access to millions of “eyeballs” and possibly make money in a matter of minutes. So let’s dive into the fundamentals of PPC.
As an advertiser, you can “rent” those PPC sponsored advertising spots. The way you do this is fairly simple, you merely “bid” based on how much you are willing to pay for each click. You are only charged when someone actually clicks, so it doesn’t matter how many times your ad shows, but how many times someone actually clicks on that ad – that is what determines how much you pay. Now, like everything Google is involved with, it is not quite that simple. Once again, Google has a very sophisticated formula that it employs in determining which ad ranks higher than the other. Google has published a lot of information and general guidelines on this algorithm but the specifics are highly guarded secrets.
In general, this is how the formula works: the more relevant your ad text and the content on your site is and the more successful your ad is (having an attention grabbing ad is a huge advantage), the higher it will be ranked. One important note is that the person in position #1 may actually be paying less than the person ranked #3. This is because the first person might have an extremely high click through rate (CTR) and Google rewards relevance.
These are just a few of the basics which should give you a general overview as to how pay per click works. Just like anything else, there is a lot more to it when you really begin to peel back the layers.
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