Is Pay-Per-Click Advertising a Good Idea for your Business?

If you have all the right elements to get on to the top of the SERPs (search engine results page) but just can’t seem to get there; pay-per-click advertising could supplement your digital marketing strategy just enough to get you ranking.

What is Pay-Per-Click Advertising?

PPC is a prevalent form of paid Search Engine advertising that is based on an auction system. As the business owner, you bid on specific ad positions, keywords and phrases which are relevant to your business. Your ad is rated according to a specific system and placed accordingly. Pay-per-click advertising includes the following vital elements, among others:

• Identifying and targeting demographics;
• Keyword research and selection;
• Ad writing;
• Configuring group Ad settings;
• SEO copywriting to create content for landing pages;
• Creating call-to-actions (CTAs) and
• Measuring conversions.

If your advert wins first place on the bid; it will be located at the top of the SERP, above even the highest ranking SEO pages. Pay-per-click is a form of supplementary advertising; it cannot be used as a replacement of other marketing tools such as SEO (search engine optimization), but is rather as support for other digital marketing tools.

What is cost-per-click (CPC)?

CPC (cost per click) is used to refer to the actual price one would pay for each click in a pay-per-click (PPC) marketing campaigns.

How is cost-per-click calculated?

The cost-per-click is an average of bids against a series of competitors over a period of time. Therefore, the cost-per-click will always be equal-to or less than your maximum bid. As a result of Google AdWords’ functioning, your actual cost-per-click is heavily influenced by you and your closest competitor’s ad rank, maximum bid and quality score.

The AdWords cost-per-click formula

Competitor Ad Rank + .01 = Actual CPC (cost-per-click) Your Quality Score

What is the average cost per click?

The levels of CPC vary depending on the type of business and industry; however, the average CPC across industries is around $2. Google AdWords has some remarkable data concerning the average cost-per-click across 20 common industries. It’s always a great idea to cross-reference this average with your average cost-per-click. If your cost-per-click is much higher than these set-out benchmarks, it is likely that you are paying too much.

Why is CPC important in Search Engine Advertising?

CPC is the value that determines the financial success of your paid search campaigns (as well as how much AdWords will cost you). CPC is determined by several factors which include:

• Your maximum bid;
• Your Quality Score; and
• The Ad rank of the other advertisers who are in competition (bidding) for the same keyword.

Your ROI (return on investment), whether over- or under-paid for each click is determined by how much you pay for each click; and by the kind of quality traffic you receive for such an investment. It’s important to think of cost-per-click in terms of cost and value; as the overall ROI (return on investment) of the campaign is determined by the amount paid for clicks and the quality of traffic they attract. The goal is to identify, target and attract clicks that are both inexpensive and valuable.

Pay-per-click Keyword Research

A PPC campaign is built around keyword research. The most successful PPC campaigns have continuously evolving PPC keyword lists which are frequently redefined. Keyword research must be performed many times so that your business doesn’t miss out on hundreds, even thousands of low-cost, long-tail, highly valuable and relevant keywords and phrases that could drive traffic to your website.

A successful PPC keywords list should be:

Relevant The keywords you bid on should be closely related to the services and products you offer. You want to find keywords that will lead to a higher PPC click-through rate (CTR), low cost per click and increased profits. Expansive Pay-per-click is repetitive, the campaign must constantly be refined and expanded to create an environment that your keyword list can constantly grow with and adapt to. Exhaustive Keyword research for PPC should include both the most popular and frequently searched terms in a niche category as well as the long-tailed keywords, better known as phrases. Long-tailed keywords are less common; less expensive due to being less competitive and more specific keywords, which account for the majority of search driven traffic.

How Does Pay-per-click Advertising Work?

In order to explain this, let’s take a look at the most popular PPC platform: Google AdWords.

What is Google AdWords?

All search engines have their own PPC models in order to assist businesses in advertising and, in turn, generate profits of their own. Google AdWords is the number one PPC advertising system on Earth. It works on the PPC model, where users bid on Ad placement and keywords. Every time a search is activated, Google checks if there are numerous bids on the same keyword and determines whether there will be an auction. If there are a few, Google triggers an auction. An Ad auction is an automated process used to determine the validity and relevance of Ads that appear in SERPs.  Google determines the winners of the bid by observing two key factors:

1. Your Maximum CPC (cost-per-click) bid : the maximum bid you are willing to pay per click and
2. Your Quality Score: This metric is used to determine how useful and relevant your Ad will be to users.

AdWords advertisers are placed into pools created from parties competing for the same keywords. Then Google chooses a set of winners that will appear in the prime Ad space at the top of the SERP. The higher your quality score, the better your chances of placing. The ideal would be a combination of highest cost-per-click (CPC) bid and quality score; this type of Ad would achieve the best position.

Types of pay-per-click advertising

There are numerous ways to create PPC advertisements, including:

• Banner Ads
• Text Ads
• Mobile Ads
• Video and YouTube marketing

The goal of all types of PPC campaigns would be to increase click-through rate (CTR) – the number of times your Ad is clicked on vs. the number of times your Ad was displayed – by optimizing your campaign.

Measuring and managing PPC campaigns

PPC advertising offers immense control over the volume of leads you generate. Campaigns require attention on a daily basis to monitor performance and make necessary adjustments according to statistical results. This ultimately leads to Conversion Rate Management (CRM) and adds benefit as regular activity is one of the best predictors of account success. These continuous adjustments in management should include:

• Adding PPC Keywords– Expand your reach by adding relevant keywords to your PPC campaigns.
• Adding Negative Keywords – Reduce wasted spending and improve campaign relevancy by adding non-converting terms as negative keywords.
• Splitting Ad Groups – Improve quality score and click-through rate (CTR) by splitting Ad groups into smaller, more relevant and easy to manage groups. This in turn helps you to create more targeted Ad text and landing pages.
• Review and Discard irrelevant and costly PPC keywords – review under-performing and expensive keywords, and then disable them if necessary.

Improving your pay-per-click campaign

Lower your CPC while maintaining value

How does one lower the price you pay for each click while sustaining or improving the value of visits?  There are two parts to this plan-of-action:

• Raise your quality score

An automated system was created by Google that offers discounts to well-managed PPC campaigns with high quality scores. The average score being 5, if your quality score is over 6 then your PPC campaign could be granted a discount between 16% and 50% in CPC. Conversely, a quality score of 4 or lower results in a 25% to 400% increase in CPC. Tips to boost your Ads Quality Score:

• Create compelling, relevant Ads to increase click-through rates (CTR).
• Build out Ad groups that are closely related.
• Optimize all Ad text and landing pages that refer to individual search intent.
•  Expand your reach

Improve the distribution of your budget considerably by discovering new, relevant and valuable keywords. In order to do this, one must constantly go though the process of finding new PPC keywords and searching for advertising opportunities, while simultaneously eliminating irrelevant and overpriced keywords from your campaign.

• Refine your search

It may sound strange, but designating negative keywords in your AdWords account can help control your average CPC. How? By filtering out traffic from searchers which are likely to convert. Also, once you start to add new keywords to your account, remember to eliminate the losers (ineffective and expensive keywords). When you only target keywords which are relevant to your business and perform well, it confirms that:

• Your spending is protected – it’s no use lowering your CPC if you still end up paying (albeit low prices) for irrelevant clicks. Negative keywords tell your PPC campaigns which terms they are NOT to target, therefore only allowing your budget to be spent on relevant terms.
• Your Quality Score is improved – when your keywords are clearly related to your Ad text, offering and landing pages; your click-through rate (CTR) and other quality score factors are positively affected. This results in you acquiring more cost-efficient clicks on search terms which are more likely to convert.

A low cost-per-click (CPC) is the key to a successful pay-per-click PPC campaign as it ultimately translates into cost per conversion.

The benefits of pay-per-click advertising

Pay-per-Click is a very effective form of paid digital advertising that allows you to:

• Pay only when you see results- such as when your Ads are clicked.
• Pay-per-click is the only short-term solution to getting to the top of the SERP (search engine results page) with a low page ranking.
• It allows your business to market products and services to the very people who are searching for them.
• It provides a platform for businesses of all types and sizes to compete semi-equally.

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The world of digital and social media marketing is complex and diverse. Furthermore, if you are not using email marketing as a tool to market your business then it is guaranteed that you are missing out on incredible benefits. Digital Marketing South Africa offers you the opportunity to take your business to the next level. We have a team of digital and social media marketing wizards equipped with all the tools necessary to help you grow your business. We handle all aspects of online marketing, including:

• Pay Per Click
• Content Creation,
• Content Strategy,
• Search Engine Optimisation (SEO)
• Social Media Marketing (managing and sharing across all social networks)
• Email Marketing
• Marketing Automation

Feel free to contact us for more information about our online marketing services.

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