How Does PPC Work?

Clicking is the most frequent movement when doing an online search. It is only natural then that entrepreneurs on the net would want to capitalize on it. When they did, that’s when the notion of pay-per-click was born, and a whole bunch of pay per click companies sprouted on cyberspace.

Pay-per-click, or PPC for short, is a form of online advertising that is flourishing at a remarkable pace. Some people call it different names – we’ve heard “pay for placement”, “paid search” and “pay for ranking.” Web sites, ad networks and search engines use PPC strategies.

How does PPC Work?

It works on the basis of keywords. When an online seller targets a specific customer base for his product or service and wants to advertise to this particular niche group, he bids on keywords – the words that potential customers would type on the search engine. To illustrate, let’s pretend you’re selling gift baskets. In order to spot you immediately, you hope that a potential customer types “gift baskets” on either Google, Yahoo or MSN. The searcher would then see your ad, click on it and is ready to pay for half a dozen gift baskets. The ads that appear for your online business are called “sponsored links”. But you, as the advertiser, only pay when the searcher actually clicks on the ad.

One important issue: when you subscribe to a PPC program, paying for the keywords does not mean you can sit back and watch the flowers blossom. In fact, if you’re not watching closely, no flowers may blossom. You – or the company who sold you the PPC program – will need to monitor the number of clicks received by your ad, and how many of these clicks lead to a sale. If PPC has increased your revenue by 30%, then that means your investment is working. Another indirect benefit is the number of leads that your PPC program is making. While some companies prefer to analyze ROI on the basis of conversion to sales alone, some companies actually see greater potential when it generates leads. You may need to work closely with your PPC program merchant on how to evaluate ROI on different levels. In being able to analyze how PPC is promoting your business, you may be able to incorporate changes that can increase the sales/leads conversion number substantially.

Keywords begin at US$0.01 and can go as high as US$10.00.

Rating Pay Per Click Programs

If you’re paying for PPC, you might as well pick one that has a good rating or is popular with SEO experts. An SEO company came up with the top 10 list of PPC companies that had very good scores on a defined set of criteria.

What are some of these criteria?

Competitive edge – thanks to experience and extensive research, the more experienced PPC companies know just how to knock out the competition. They monitor the market and watch out for trends. Their # 1 goal is to outsmart the competition.

Responsiveness – do they ignore a client once he’s bought from them, or do they hold his hand and guide him on the straight path until he’s sure he can manage on his own? In their hurry to make a coveted sale, they pitch to new clients and dump the old ones, left groping by the wayside.

Bang for the buck – are they minimalist or do they over-deliver on basic requirements? You should feel that not only are you getting a super deal, but you’re receiving support at all levels. In other words, does the sales contract leave you smiling or making you frustrated?

Business knowledge – criteria # 1 above blends in very well with business knowledge. If the PPC expert knows the dynamics of the market, he can make you compete effectively and with confidence.

Sense of entrepreneurship – smart PPC sellers don’t sit on their laurels, they’re continually on innovation mode. They design, test, launch, go back to the drawing board and start all over again.

High marks for usability and performance – a good number of online business people who are marketing their goods and services do not have the time to learn the ropes of PPC. The price must not only pay for the goods, but also for the amount of user-friendliness that is packaged with the program.

Types of PPC

Lest you’re feeling a bit of euphoria and get carried away, bear in mind that PPC programs do not necessarily generate revenues exclusively from traffic that originate from ad displays. Actual revenues are earned only when a user clicks on the ad. So no click, no mullah, okay?

PPC engine categories fall under keywords, products or services. Some online commerce sites may combine one or two categories. Innovation continues in this field so there may be new trends coming out frequently.

Keywords can include terms that describe a particular product. If you’re looking for chef’s aprons, for example, you type “chef aprons” and the advertisers’ links appear in the order of the amount they paid for these keywords. Since keywords – or search terms – lie at the core of pay-per-click advertising, advertisers consider their keywords as trade secrets.

Product PPCs – some product engines allow advertisers to create “feeds” of their product catalogs and when a visitor is looking for their product, different advertising links for that product appear. The ones who paid the most receive a higher place. Another name for product PPCs are price comparison engines – examples includes, and

Service PPCs – these work the same way as product PPCs. Engines let advertisers provide feeds of their service databases. A few examples are NexTag, SideStep and TripAdvisor.

Before investing in a PPC program, you may want to do a bit of homework so that you’re not coming in from the cold. Being armed with some information is better than NO information at all. A little knowledge is a dangerous thing, the proverb goes, but in this case, it will help you ask the right questions…only because…

…your business needs the right advertising.


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