Understanding Pay Per Click (PPC)
When search engines were developed several years ago, their sole purpose was to simply act as a huge encyclopaedia index. Search engines didn’t make money from providing this free service and were keen to turn these huge numbes of visitors using their service into revenue. Pay-Per-Click was born.
If, like many people, you use the Internet regularly or even occasionally and already sell or want to start selling your products or services online – this guide is for you.
Most people have heard of the Internet, and even people not particularly interested in technology are fast realising that bargains and great deals can be found online, making it worth going Internet Shopping.
The other thing that you have probably heard of at some point is the Google search engine at www.google.co.uk or www.google.com (the global version). As a simple analogy, if you imagine the Internet being a vast volume of enclopaedias numbering billions of pages, Google would be it’s index.
Google is a called a “search engine”, and does exactly that – scour it’s index depending on what people type into the search box.
This effective and simple process allows you to type in the thing you are looking for and get a list of websites hopefully containing pages about the item you searched for.
Below is a sample screenshot of what a typical result looks like:
You will notice in the picture that the page is roughly split into 2 columns. On the left are the “Natural” results, and the on the right are the “Sponsored Results”.
The difference between these 2 columns is that those appearing on the right are paying to appear there, and those on the left are not. The paid links on the right are what is called in the industry “Pay-Per-Click Advertisments.”
The beauty of paid ads is that you can within minutes put your products and services in front of people in this column , testing out advertising ideas. You pay Google only when someone clicks the Ad, not just when it is shown on the screen, thus the term “Pay-Per-Click”.
Looking at a Pay-Per-Click Advert in more Detail
Looking at these sponsored results in more detail, you will notice they consist of short four-line adverts. Below is a zoomed-in version of one example seen when searching for “Credit Card” in www.google.co.uk:
Pay-Per-Click – How much does a Click Cost ?
I deliberately chose the financial services sector to illustrate the huge differences in click-costs across industry sectors, whether it be from selling running shoes through to credit cards. The financial services industrry is one of the most competitive and and a result has some of the highest cost-per-clicks. A click-cost of between £10 – £15 + might sound shocking, but consider this; if a bank acquires a customer as a result of that click, and that same customer keeps a balance on their card every month, not paying it off – the bank will easily recoup the initial click-cost investment of acquiring the customer – plus lots more.
As a more general rule-of-thumb, average click costs can be be between 10p ($0.03) – and £50 ($100). Click-costs are relative to the cost of the product being sold. Someone selling £5 products online is not going to pay £20 per click to advertise their running shoes – and neither are their competition if they want to make a profit. For running shoes for example, the click cost would probably be around 40p per click.
Some of the other factors that can drastically affect the cost you pay per click include:
The Google Adwords system appears deceptively simple on the face of it. Anyone can create an account, sign up with their credit or debit card – and then start advertising. Those of you that might have already experimented might feel it looks so easy to add a “keyword”, create a 4-line Ad, and then start your campaign running.
It does appear that easy on the face of it. The reality is, Google wants to squeeze as much revenue out of you as possible (they are a public company with shareholders), and most customers simply do not use this fantastic system to it’s full advantage.
Preparing for Success
If you are already advertising on Google Adwords and can answer “yes” to all of the questions below, you are half-way there to maximising your profits and making it work for you: