How Does PPC Work? Your Guide to Pay Per Click Advertising
Curious about pay per click advertising?
Did you know that the average value of Google Ads are worth $2 for each $1 you spend? Did you also know Google rules the PPC community? Out of every dollar spent on online advertising, Google and Facebook receive ninety cents.
In 2018, Google is projected to make $61.25 billion in ad revenue, up from $49.72 billion the year before. Does that mean Google is the only PPC worth pursuing? Not necessarily.
In the sections below, we’ll answer the question, “How does PPC work, exactly?” We’ll give you the information you need to determine whether pay per click ads are for you. And, if so, which types?
To discover more, read on.
What is PPC?
Pay per click (PPC) advertising is a model of digital marketing in which marketers pay a fee every time a consumer clicks their ad. Where, when, and how their ads arrive in front of consumers is part of the marketing strategy. The overall purpose is a paid method used to get consumers to visit a particular webpage.
Who offers PPC? Nowadays, quite a few folks:
- Bing
- Yahoo!
Every major search engine and social media platform now offers some kind of pay per click service. You can run your own PPC campaigns on these platforms, or hire a PPC service. The key to a successful campaign is getting the right information in front of the right people at the right time.
How Does PPC Work?
Advertisers begin by creating visual marketing ideas and turning them into ads. The ads must be built for a specific target audience, the narrower the target, the higher the conversion rate. This requires loads of research and trial and error.
The ad platform is the next major decision. That’s one of the reasons understanding the audience is so important.
Let’s take a look at an example. If you’re targeting blind men between the ages of 29 to 56, Pinterest is probably a poor fit. First, it’s a visual-based platform. Second, 81% of Pinterest users are female. Other platforms would be a better fit.
Next, advertisers bid on a specific search phrase. If a viewer types that specific phrase into their search window, the platform will place your ad in front of that viewer. Each platform works differently, but that’s the gist.
Here’s an example.
Let’s assume you’ve set up your PPC ad account on Pinterest. You’ve done your audience research, designed the perfect ad, and placed a bid on the phrase “ultimate pc setup.”
A Pinterest user searches for the phrase “ultimate pc setup.” Then, your ad is placed on their page alongside the hundreds of user-created (non-paid) pins.
Search engine PPC ads work in a similar fashion. The main difference is where on the page the engine displays the ad.
Do other differences exist? Yes, but the core concept remains the same:
- A user punches in a search term or phrase.
- If the phrase you bid upon matches their phrase, the engine displays your ad.
We’ll explain the other differences in the sections below.
PPC Bids
Once again, every platform is a little different. What we give you in this section is a primer on how the financial component of the PPC system works.
Let’s begin by clarifying that the phrase “pay per click” is an umbrella which covers more than PPC ads. “Paid search results” is a more accurate, though less often used, description. Here’s how the payment portion of each type of paid search results works:
PPC: each time a viewer clicks on your ad, their browser redirects them to your website. They could be redirected to any link you specified when you set up your ad account, but we’ll stick with your website for simplification. After they’re redirected, the search engine charges you a small fee.
Platforms can display your ads in a couple of different ways:
- Search ads (ads appear next to search engine results)
- Display ads (ads appear in banners on web pages and in email)
- Video ads (ads appear in a video window)
- App ads (ads appear in an application)
Over time, platforms realized other call-to-action forms might work better than the “click and head to website” model. Instead of paying each time a customer clicks your ad, you may now pay only when:
- Go to your business
- Phone your business
- Show interest in your website
- Purchase on your website
- Connect with your mobile app
- Install your mobile app
As you may have noticed, most of the above options target potential customers at the bottom of the sales funnel. You may also target customers at the top of the funnel by choosing a no-click option.
The no-click options simply display your ads in front of consumers. You pay only for the number of ads displayed. The system works similar to traditional print ads, like those found in newspapers and magazines.
If you’re working on brand recognition, the no-click option is your best choice.
Budget and Options
One of the last steps to designing your PPC campaign is to create a budget.
Let’s assume you already bid on your Google AdWords’ search term. You won your bid of 60 cents for the search term “Seattle plumbers.” Each time a person uses that search term on Google, your ad pops up. If they click on it, you’re charged 60 cents.
But how many times do you want to click that ad? Thirty? Three thousand? Three million?
It’s your budget that determines how many people click on your ad. Each time the ad is clicked, Google subtracts 60 cents from your account. Google will continue displaying your ad until your ever dwindling account reaches zero.
To complicate matters, you can also set up limits to the amount you spend per day. You may choose to display your ad thirty times a day for a month or one time each day for a year. It’s up to you.
What’s Next?
Now that we’ve answered your question, “how does PPC work?” it’s time to move onto the next phase: audience research. Brainstorm what type of consumers would be most interested in your product or service. Then find out where they hang out online.
Read what they have to say. Ask questions. Discover whatever you can about them before you move on to choosing a PPC platform.
If you found this information helpful, take five minutes to browse our library of other great marketing articles.
