In today’s digital world one of the most common and useful ways to attract traffic to your site is by using Pay Per Click (PPC) advertising (also known as ‘paid search’).
It is a fundamental digital marketing channel that is key to most online marketing strategies.
Paid search marketing allows you to advertise within the sponsored listings of a search engine or a partner site by paying each time that your ad is clicked.
Less commonly, you pay when your ad is displayed only (cost-per-impression — CPM).
To use PPC advertising effectively you need to:
- Understand how PPC campaigns work. There are several things that determine the position of your ad, including your Ad Rank.
- Plan your budget and structure your account carefully.
- Measure and report on some core PPC metrics.
- Use best strategies and recommendations to run your campaigns.
The PPC Online Market
You can view PPC as an online market in words that you and your competition are participating in. This market follows almost all other digital marketing channels by following a pattern of ‘Content, Click, Convert’. The ad has content, you want to maximize the click, then maximize the conversion.
PPC works by bidding on keywords on search engines (often in Western countries through Google and Bing). This drives users to click on your ad, go to your site and hopefully become a customer.
To create a PPC campaign, accumulate a list of relevant keywords that are related to your brand and products that you are selling. Then bid on these by auction in order for your ad content to appear.
Keywords are words or phrases that your potential customer will type into a search engine. The rationale behind the auction of keywords is that the more you are willing to pay for the word, the higher your ad will appear. So, if you pay more than your competitors, your ad may appear higher.
The following screen capture shows how a search engine will display paid ads above organic links when searching for the keyword ‘Pandora Animal Charm’. On Google, these have a small ad logo beside them and nowadays they blend in well with organic listings.
As Argento is appearing highest, they will most likely be bidding higher than their competitors.
However, be aware that the position of your ad is not based solely on your bid. Your Ad Rank determines your ad position.
The main components of your Ad Rank are your bids and the quality of your ads, keywords and website, as measured by your quality score awarded by search engines.
If your competitors have higher bids than yours, you can still win a higher position at a lower price by using highly–relevant keywords, ads and extensions. Your Ad Rank is recalculated each time that your ad is eligible to appear, so your ad position can fluctuate each time, depending on your competition at that moment.
All of the traffic and activity related to PPC is monitored through a third–party script from the provider that you paste into your website. For example, Google provide you with an AdWord tracking code so that you can measure the results of clicks.
Budgeting for PPC
Rather than having a fixed budget, it is best practice to work on a Cost Per Acquisition (CPA%) basis. Therefore the more you are willing to invest, the more you should see in return.
If you require a low CPA, or if you need to reduce your CPA, be careful as this may result in fewer clicks and ultimately fewer conversions and sales for your site.
To reduce CPAs you must eliminate underperforming elements of your account, including underperforming keywords. Add negative keywords regularly whilst trying to maximize profitability.
It is also good practice to have high budgets in place in case there is an influx of search queries related to your site, for example if a television advertisement was on at the time, or there has been a lot of PR activity for your products.
PPC Account Structure
You can set up a paid search account in Google AdWords or Bing Ads. Structure the PPC account in a tight way with similar themes:
- Within the account you will have a number of campaigns. These are top-level departments and different campaigns could be different countries. Here you can set the budget and various other settings.
- Within each campaign you will have a number of ad groups such as different brands or categories where you can set individual bids.
- Within each ad group you will have your keywords and text ads. You can have multiple variations of keywords: broad, broad plus, phrase and exact.
The following hierarchy diagram shows a basic account.
The IRP has a PPC and SEO section that you can use to upload pre-built campaigns, ad groups, keywords and text adverts in a format suitable for the Google AdWords Editor or Bing Ads Editor.
You can structure campaigns in several ways using the IRP but be sure to align your website or inventory with your PPC accounts. For example, use brand-focused campaigns that include brands at an ad group level. Don’t let your search term bidding become out of sync with your inventory.
Core Statistics to Follow in PPC Advertising
Google provides many statistics for the PPC channel. Interestingly, the CPA% is an overall core metric but Google do not provide it. The following are the core metrics that Google do provide. You should follow these closely and report on them:
- Impressions: Impressions indicate how often your ad has appeared on a search results page.
- Clicks: This is the number of times that a user clicks on your ad to go to your site.
- Click Through Rate (CTR): This is used to measure how often people click your ad after it’s shown to them and is often used to help determine the effectiveness of an ad. CTR is measured as the number of clicks that your ad receives divided by the number of times that your ad is shown.
- Average Cost-Per-Click (CPC): This is the average amount that you’ve been charged for a click on your ad.
- Average Position: This helps explain where your ad ranks compared with other ads.
- Conversions: This is the total conversion that you received from your ads.
- Cost / Conversion: This is your total cost divided by your total conversions.
- Total Conversion Value: This is the sum of conversion values for all conversions.
Basic Strategies and Recommendations for PPC
There are several best strategies and recommendations for effective paid search accounts. This is not an exhaustive list by any means.
- Structure: Align your PPC accounts with your website structure and inventory (brands and categories).
- Keywords: Cover as many variations as possible and use as many keyword types as are appropriate.
- Negatives: Add negative keywords to your account regularly.
- Bidding: Measure Average Position, Quality Score and CPA. Make adjustments when necessary.
- Ads: Ensure that your ads are relevant and targeted. Include USPs and calls to action. Have multiple ads and test which ones perform better.
- Landing Pages: Ensure that the destination is relevant to the keyword. Try variations such as brand pages and custom content pages.
- Extensions: Use ad extensions and site links.
- Review Regularly: Regularly review your keywords and account performance. Up and lower bids if necessary. Pause if they are not performing.
Strategy and the End Point of PPC
The PPC strategy is to acquire the maximum amount of traffic, for the minimum amount of cost, and to deliver the maximum amount of sales.
The theoretical end point of PPC is that you have bid on every word that is relevant to your product set that is profitable. As there are so many languages, countries, words and word combinations, it is never possible to reach this end point.
This is why PPC involves continual work and management. The best your company can do in PPC is to continually increase sales and reduce CPA%. Make sure that you do this in the most time-efficient way as the time that you spend on this complex channel is an additional labour cost.
- PPC is an important and constantly-evolving digital marketing channel.
- You need to manage it effectively in order to maximize your profitability.
- Continually review and test keywords and structure. Apply best practices to your account.
- While PPC is a core channel (perhaps the core channel), it can be viewed as an overly-complex way to simply connect your supply with demand through bidding on words.