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Introduction to Pay-Per-Click (PPC) Advertising

Picture of Ben Spray

Ben Spray

Managing Director of We Are Marketable

Pay-per-click (PPC) advertising refers to a digital marketing model where advertisers pay a fee each time one of their ads is clicked on. It provides advertisers with a way to reach customers as they are actively searching for products and services online.

PPC has become an essential component of digital marketing strategies thanks to its flexibility, precise targeting capabilities, and trackable results. With PPC, marketers can drive qualified website traffic, leads, and sales while only paying when users engage with the ads. In an increasingly competitive digital landscape, mastering PPC can provide businesses a fast-track to growth.

This in-depth guide will explore key topics related to PPC advertising including:

– How PPC and paid search advertising works
– Main PPC platforms and advertising networks
– Key benefits of using PPC campaigns
– Best practices for optimising and managing campaigns
– Calculating return on PPC investment

Understanding the Basics: How Does PPC Advertising Work?

PPC advertising utilises search engines, display advertising networks, and other online platforms to display targeted text and image ads to users. Depending on the platform, these ads may appear in search results, web pages, mobile apps, and more.

The “pay-per-click” aspect means that advertisers pre-define keywords and only pay the platform when a user clicks on one of their ads—enabling precise budget control. Contrast this with other models like display advertising where advertisers pay based on impressions or views.

Once a user clicks a PPC ad, they are directed to the advertiser’s website or landing page to complete a conversion like a purchase or signup. Effective PPC relies on relevant and targeted ads driving qualified traffic that ultimately leads to a return on ad spend through conversions.

Main PPC Platforms and Online Advertising Networks

There is a wide variety of PPC advertising platforms available to marketers, with some of the most popular including:

Google Ads – As the dominant search engine, Google Ads enables advertisers to place text ads next to Google search results and on other sites in the Google Display Network.

Microsoft Advertising – Formerly Bing Ads, Microsoft Advertising allows advertisers to show PPC ads alongside Bing and Yahoo search engine results.

Meta – PPC advertising platforms from Meta include Facebook/Instagram ads which can be highly targeted using detailed audience data.

Amazon DSP – The Amazon Demand-Side Platform places PPC ads on premium sites and apps and can be optimised to drive product sales on Amazon.

Pinterest ads – Visual search ads on Pinterest can engage users actively looking for ideas and images around hobbies, fashion, home décor and more.

Understanding the landscape and testing different PPC platforms is key to determine which networks drive the best results aligned to campaign goals.

The Benefits of Pay-Per-Click Advertising for Businesses

Using PPC advertising provides advertisers with a range of important benefits including:

1. Traffic Control – PPC enables precise control over daily or monthly budgets along with the ability to adjust bids, locations, and schedules instantly based on performance.

2. Measurable ROI – Conversion tracking shows exactly how many clicks on PPC ads turn into measurable goals like purchases. This makes determining return on investment clear-cut.

3. Targeting Capabilities – Detailed audience and keyword targeting means that PPC ads can be hyper-focused to only the most relevant searches and sites. No wasted ad spend reaching cold audiences.

4. Competition Management – PPC positioning is determined by bid price along with other factors like landing page relevance. This means advertisers can maintain visibility even for high competition search terms.

5. Brand Awareness – Well-targeted PPC ads placed around relevant searches can significantly boost brand visibility and awareness among hot prospects actively looking for related products.

These advantages demonstrate why PPC advertising is a top priority for most digital marketing strategies today. It provides perhaps the most direct path for businesses to connect with audiences demonstrating commercial intent.

Optimising Pay-Per-Click Campaigns

Successfully optimising campaigns is imperative to achieve a positive return on PPC investments. This requires an approach focusing on optimising bids, ad copy, landing pages, and keyword selection using performance data.

Key optimisation tips include:

1. A/B Testing Ad Copies – Craft multiple ad copy variations testing different images, offers, headlines, descriptions and calls-to-action to discover what resonates best.

2. Landing Page Relevance – Send traffic to dedicated landing pages that align to each ad group offer and clearly map the path for users to convert.

3. Search Query Analysis – Review search query reports to identify high-performing queries and create tightly aligned ad copy and landing pages.

4. Bid Adjustments – Increase bids for high-performing areas and decrease for underperformers to maximize ROI. Also leverage bid adjustments for location, device, time of day etc.

5. Keyword Gap Analysis – Cross-reference current campaign keywords with related terms searchers use that ads aren’t targeting to uncover new relevant keywords with less competition.

6. Conversion Tracking – Employ conversion tracking pixels on websites to accurately record PPC conversions like email signups, purchases, content downloads, phone calls and more.

These optimisation best practices require analysing campaign data on an ongoing basis and then iteratively improving elements. Well-optimised PPC delivers targeted ads aligned with search intent at optimised bid prices and conversion rates.

Calculating Return on Investment from PPC

Determining the true return on investment (ROI) from PPC campaigns allows advertisers to accurately assess performance and make smart budget decisions. Use these best practices to calculate PPC ROI:

1. Isolate Conversion Rates – Determine the # of conversions and conversion values coming directly from PPC clicks using tracking methods like UTMs and cookies. Exclude organic or direct traffic numbers.

2. Factor in Costs – Tally the entire advertising costs across campaign creation, management fees, ad spend, and any other expenses related specifically to PPC programs.

3. Establish Total Revenue – Add up the total revenue generated from the campaign conversions over the analysis timeframe avoiding estimates or projections.

4. Divide Revenue by Cost – With precise numbers on revenue and costs, divide total revenue by total costs to reveal the returns reaped compared to dollars spent.

5. Consider LTV – For many businesses, the lifetime value of PPC-derived customers extends well beyond a single purchase. Factoring in LTV paints a more accurate ROI picture.

Regularly performing this ROI analysis highlights whether PPC investments are paying off and where to increase budgets or further optimise moving forward.

Conclusion

Implementing PPC advertising has become essential for modern digital marketing with more buyers turning to search engines and online ads to drive purchases.

Its unique pay-per-click model allows unparalleled budget control while still reaching targeted audiences demonstrating commercial intent. Factor in precise targeting controls, conversion tracking capabilities, competition management and brand awareness, and it becomes clear why PPC delivers some of the best ROI across digital tactics.

While launching PPC involves both art and science best left to experts, this overview covers how the model works on major advertising platforms along with tips for optimising and improving performance. Tracking conversions and calculating returns compared to spend also form fundamental PPC measurement practices.

As more marketing dollars shift to digital channels, developing competency in PPC represents a key opportunity for brands to acquire customers ahead of the competition. A strategic approach deploying tools for ongoing optimisation and expansion will ensure PPC success for the long-term.

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