Pay-Per-Click Advertising

The Internet boom and bust have both come and gone, and this is really let's-get-down-to-business time. An Arbitron study tracks the story. In January, 2000 (height of the boom) one out of three Web users had clicked on a banner ad. By Jan., 2002 it had dropped to 14%. By Jan., 2003 it was up to 15%. Pay-per-click is not a banner ad, but this does serve to indicate the market. The medium appears to have "found its level."

Search engines are migrating to paid servicing

For as long as you and I have been using the Internet, we've been indoctrinated in the get-it-for-free lifestyle. When we built that first Web site, it was submitted to the search engines and we raked in all that great advertising for free. Now some search engines say to pay $40 and get listed in a couple of days. Or request a free listing, and eventually they'll consider the request.

Yahoo! takes an even firmer stand. No longer may anyone get a new listing for free in most of Yahoo's commercial categories. Businesses must pay a nonrefundable, recurring annual fee of $299 just to be considered for inclusion. Then, in their own words, "Payment does not guarantee inclusion in the Directory, site placement, or site commentary. It only guarantees that Yahoo! will respond to your submission within seven business days."

Meanwhile, there are several excellent search engines for free listings. The usual favorite in this regard is still Google. And, Google has standards. Yet the challenge is the same one that exists on any search engine, even the paid ones... Every site has gazillions of competitors. Even with all the search engine optimization in the world, the competition is still tough. How does anyone complete?

Lewis Carroll wrote that as an exhausted Alice looked up to see the very same tree where she had started, the Queen of Hearts said, "Here, if you want to stay in the same place, you have to run very fast. And if you want to make your way through the forest, you have to run even faster."
(Through the Looking Glass)

Pay-per-click advertising offers a work-around

More and more of your strongest competitors are biting the bullet. They realize that advertising on the Web has become similar to advertising in your local newspaper. It takes money to run a business, and Web advertising is now one of those realities. Actually, we are all getting off cheap. How much did it cost for just us to buy or rent our brick-and-mortar store? Economical...? In comparison a Web store / branch office is an absolute bargain!

Pay-per-click is not the same as a banner ad. (Banners are usually sold on a cost per thousand (CPM) impressions basis.) If banners are akin to space advertising in a newspaper, then pay-per-click is like the classified section. These are the "listings" you see at the top, side and/or bottom of search engine pages. Pay-per-click owes its popularity to the fact that people tend to stop looking for answers once they've found one. (Duh!) And, that answer usually shows up within the first 5 or 10 sites which they actually explore.

How pay-per-click works

In operation, you specify what keywords (or phrases) interest you. When a search engine visitor makes that entry, your ad will appear in those pages. Just where it will appear in the list, though, depends upon what you pay.

You tell the pay-per-click company how much you are willing to bid for your keyword. The higher the bid, the higher the position. When someone clicks through to your site, you pay the money (actually, you've already paid the money... the amount is deducted from your balance).

You start a pay-per-click campaign by having your site properly optimized. This is because the tactical selection and implementation of keywords is crucial to your success.

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Pay-per-click (PPC) a.k.a. cost-per-click (CPC) programs

Depending upon the service, your ad will be ranked based on its CPC, its click-through rate (CTR), or both. PPC companies often provide tools to help you to design a campaign, estimate its cost, control pricing, and monitor performance. One thing you need to study with any PPC is how bids are made. The "typical" program charges what you bid -- you may end up with a gap between yourself and your competition unless you are on top of it. Google, on the other hand, automatically lowers our bid to one cent more than your closest competitor.

This list is a sampler, and is not by any means all-inclusive:

Overture (originally GoTo.com) is a PPC firm which places your ad in Yahoo!, MSN, AltaVista (which they own), Netscape, etc. They claim over 600 million click-throughs in a fiscal quarter, with over 2.2 billion last year (2002). Note that Yahoo! has purchased Overture.

Google operates an AdWords PPC program within their own search engine. Their network also includes AOL, HowStuffWorks, Blogger, etc. Note that the ads at the top of a Google results page are typically not AdWords ads, but are sponsorship which are sold separately. However, a high cost-per-click and clickthrough rate may qualify an AdWords campaign for this position.

Looksmart offers a network of portals, search engines and ISPs including MSN, About.com, Road Runner, InfoSpace, CNET, services such as Inktomi, etc. Looksmart also offers a large directory of its own.

Your basic approach

If you wish to start a campaign, your best starting point is a pad and pencil

Which countries (when selectable) do you wish to target?
Which languages (when selectable) should be used?
How much can you afford for the campaign?
How many different ads do you want to run during the campaign?
Which Web pages do you wish to highlight?
Design your ad copy
Select keywords
Determine the maximum cost-per-click that you can afford

With that in hand, you are ready to create an account with the service, and begin placing your ads.

Be sure to review their terms and conditions. Google, for example, requires a minimum CTR. After every 1,000 ad impressions (page views in which your ad appears), your campaign is reviewed. For an ad that appears at the top of the list on Google's site, at least 0.5% of the people who see the ad must click through to you. Otherwise, the system's monitor "may slow or stop delivery of your ads so you can improve your campaigns if it detects problems with your account or keywords." This threshold may change with different ad positions. In short, your ad should not be so arcane that no one will respond -- which would be a useless reason for advertising.

You will want to watch this, anyway. Not just for the lack of sales. If your campaign is halted on you, there may be a fee to get it reactivated. So, watch to see what key words are working, and replace the ones which are not.

Next: Make PPC work for you.

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