How Pay Per Click Works
An advertiser selects keywords and creates pay per click (PPC) ads, which directly correspond to and describe the product/service they are selling or wish to advertise. When an internet user conducts a search using one of the pre-selected keywords the pay per click ad may appear next to general search results in an area specifically set aside for sponsored advertisements and links. Exactly where and when the pay per click ad is placed in sponsored search results depends on the daily budget set by the advertiser, the amount the advertiser is willing to spend on a click for the individual keyword, and the ad’s effectiveness. For some pay per click ad services, effectiveness is the combination of the ad’s click thru rate (CTR) and the quality of the landing page. The higher the maximum allowed cost per click is, the higher ranking your pay per click ad will have. In order to secure the top ad position the pay per click ad must not only have a high bid, but must also be rated as relevant and have a history of generating clicks. Ad quality is important and may even help lower pay per click costs.
Keywords with a frequent search rate tend to be more competitive and incur a higher cost-per-click than keywords that are not frequently searched on. CPC is related to advertiser competition, as well as the overall quality and relevancy of the ad itself. An advertiser may adjust their maximum CPC and other factors to increase their position and ideally maintain an average position as one of the top three listings in the search.
The first goal of a pay per click ad is to lead people to your website. The second, but primary goal is to get those same people to do the advertiser’s desired action.
The first goal of a pay per click ad is to lead people to your website. The second, but primary goal is to get those same people to complete the advertiser’s desired action. This action is called a conversion and can be a purchase, registration, comment, page view, etc. For example, if an advertiser is selling blue widgets they would run pay per click ads in an effort to drive customers to their website where they can buy a blue widget. In this case, a pay per click conversion would be an order that includes a blue widget.
In addition to keyword campaigns, advertisers may opt to choose specific websites on which to place their pay per click ads. Most search engines have a network of sites that display their ads. For example, you may want to target sites that provide information about blue widgets, widgets in general, activities that widgets can be used for, etc. Your pay per click ad will appear in a similar format and ranking system as on search results, but have different restraints based on the ad formats. For site placement PPC you also have the option of running image ads instead of a text ad, an image depicting or describing your product will appear, when a user clicks on the image they will be brought to your site just like in the text ads. There are various editorial standards and formatting procedures for placing image ads. Not all pay per click ad services offer site placement and different formats for your ads.
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