Chapter One
Introducing Pay Per Click Advertising
In This Chapter
* Understanding what sets Pay Per Click (PPC) advertising apart
* Understanding how PPC ads work
* Learning the ins and outs of PPC ads
* Avoiding PPC tunnel vision
If you're reading this book, you've heard the hype about PPC. Pay Per Click advertising is many things to many people. To some, it's a tremendously effective way to push people to a Web site and sell products to them; to others, it's a great way to lose money. To some, it's a tool into which to pour millions of dollars for brand advertising; to others, it's a huge disappointment.
Which side of the line you sit on - the side of success or the side of failure - and how close to the line you sit, depends on a number of factors. Some of those factors are under your control, and some are not, but the intention of this book is to give you a good understanding of those factors and the best chance of landing on the money-making side of the line.
Let's begin at the beginning. In this chapter, you find out what PPC is all about and why some people swear by it, while others swear at it!
The Days before PPC
Not so long ago, Internet advertising came in a couple of basic flavors. The first was very similar to print advertising. You paid someone to put some kind of advertisement on a Web site - typically what's known as a banner ad (you can see an example in Figure 1-1). The ad sat on the site for the specified period - a week, a month, a year - and if you were lucky, people clicked the ad and came to your Web site. You were paying for an ad placement.
Soon, a slight refinement to this model appeared. The main problem with the ad-placement model was that you didn't really know what you were getting for your money. Sure, the ad would sit on the site for, say, a year, but what did that mean? Would a million people see it? Or a thousand? In many cases, all you had to go by was a vague promise from the site owner - "we get a million visitors a year," for instance. Does that mean the page on which the ad sat would be seen a million times? Probably not. Worse, the promise might have been something like "we get a million hits a year." What's a hit? Ah, you think you know, but you probably don't.
The term hit has come to mean just about nothing. People say hit when they mean visit, and sometimes say hit when they mean hit but hope you'll think they mean visit. Want to know what a hit actually is?
A hit is a Web server request. When someone clicks a link leading to a page, the browser requests the page from the Web server; that's the first hit. If the page has five images in it, those images have to be sent to the browser, too. That's five more hits. If the visitor clicks a link and requests another page, that's another hit, plus the images or other components inside the page. A hit might even be an error message, when a browser requests a page that no longer exists.
So, the next time someone tells you that his site gets, say, 100,000 hits a month, ask him what that means. Is that 100,000 visitors? Almost certainly not, unless he is misusing the term hits and really meant to say visitors. Does it mean 50,000 visitors? 10,000? Who knows?
Anyway, back to the story. If you put an ad on a site and pay for a month or year, what do you get? That's right, no one knows what you get. So a second mechanism was developed - ads were sold by the ad impression. You would pay for the ad to be displayed a particular number of times. Ads were typically sold in blocks of 1,000 impressions; they were priced by CPM.
CPM means cost per thousand (no, not per million; M is the Roman numeral for 1,000). If you pay, say, a CPM of $35, that means your $35 buys you 1,000 ad "impressions" - the ad will be loaded into Web pages 1,000 times. Each time an ad appears, it costs you 3.5 cents.
Hmm, still a few problems here. Just because your ad is loaded into a browser 1,000 times doesn't mean the people viewing the pages actually saw the ad. What if the ad was "below the fold," so far down the page that it wasn't visible without scrolling down? Sure, it was loaded into the page, and if the visitor scrolled down he would see it. But if he didn't scroll down, he wouldn't.
And so what if the ad was actually seen 1,000 times; will someone actually click it? And if people do click, how often will they click? In general, not very often, somewhere near 1percent of the time (and often way below that level). And that's where PPC comes in.
Understanding PPC: What It Is and Why You Should Care
With PPC, you're not paying for a promise, and you're not paying to load an ad onto a page. You're paying for an actual result, a click. With PPC, you don't pay if nobody sees your ad, and you don't even pay if someone does see it but doesn't click. You pay only when someone clicks your ad. In the business, people talk about buying clicks because that's just what they (and you) are doing. You're paying a PPC company each time someone clicks a link pointing to your Web site.
Now, I wouldn't go so far as to say you're paying for a lead ... you're not. Some PPC companies have taken to referring to each click as a lead, but that's just hype. (A lead in sales-talk is someone who has expressed an interest in your product or service. No sales professional would regard the visitor, at this click stage, as having expressed enough interest to have risen to the level of being a sales lead.) Nonetheless, you are paying for a particular action. Someone sees your ad, clicks the ad, and (in general) views your site. Certainly, now and then, people won't arrive at your site - they may click and then cancel before your page fully loads - but generally speaking, a click is the same as a visit. It could be a very short visit, true, but it's something a bit more tangible than a placement or an impression.
TIP
Why isn't a click the same as a lead? Compare Internet advertising with direct mail. Imagine, for a moment, a direct-mail campaign that is intended to get someone to call your company. You mail a letter, someone opens the letter, reads the letter and, you hope, picks up the phone and calls you. When the person calls, the person becomes a sales lead. Most people who open the letter won't call, though. So you can't call the letter a lead, and you can't call someone opening the letter a lead. Displaying a PPC ad is the equivalent of sending the letter; and a click on the PPC ad is the equivalent of having someone open your letter. It's a step in the right direction, but it's most certainly not a lead.
PPC, 1-2-3
To make quite sure I'm explaining the concept of PPC adequately, let me just take you through the process of how PPC works, step by step:
1. The advertiser joins a search engine's PPC program and "loads" the account with some money - say, $50 (though some companies' PPC budgets are in the hundreds of thousands, even millions, of dollars a month).
2. The advertiser creates a small text ad (in some cases, PPC can include images, but I describe the most common form here).
3. The advertiser specifies with which keywords the ad should be associated.
4. The advertiser specifies how much he's willing to pay each time someone clicks on the ad.
5. Later, someone arrives at the search engine, enters one of the keywords or keyword phrases specified, and clicks the Search button.
6. The search engine finds the matching ads and places them on the results page. 7. If the searcher clicks the ad, he is taken to the advertiser's Web site, and the advertiser is charged for the click.
PPC pulls the banner down
By the end of 2000, when the Internet bubble burst, banner advertising had acquired a really bad reputation. Billions of dollars had been spent on banner advertising, and most of it was wasted. Click-through rates - the proportion of ads that are clicked upon - for banner ads were very low, and many advertisers, perhaps most, spent more on the ads than they made on any sales derived from them.
Banner ads had several problems:
They were expensive. Although CPMs were typically $35-$50, because only one ad impression in 200 resulted in a click, that often translated into a price of $7-$10 per click.
They had low click-through rates (the ratio of ad impression to actual clicks on the ad), which made them expensive. People were sick of seeing them, so they learned to just ignore them.
Conversion rates were low. That is, only a small percentage of the people who clicked a banner and arrived at a site actually bought anything.
They were in the wrong places. Ads were often placed in front of people who simply wouldn't be interested in the offer, which meant people didn't click them much.
Which brings me to another critically important characteristic of PPC ads as opposed to the majority of banner ads - PPC ads are, often, placed in the right place, while most banner ads were in the wrong place. As you discover in this book, there are lots of different types of pay per click advertising, but the concept really took off when it was incorporated into search engines, and search engines' results pages are the right place to put your ads.
The first big move in PPC search advertising was made by GoTo.com, a company founded by Bill Gross' IdeaLab. (IdeaLab has had a huge effect on the Internet, from eToys to CitySearch, NetZero to PETsMART.) In the summer of 1998 the company began selling ad "bids" on the GoTo search engine; you'll learn more about bidding in a moment. The company changed its name to Overture, went public, began a partnership with Yahoo! and late in 2003 was purchased by Yahoo!. (Yahoo! is now in the process of re-branding Overture, calling it Yahoo! Search Marketing.) By the way, in the early days this form of advertising was often known as CPC - Cost Per Click (but I'll be sticking to the form that's more common these days, PPC, in this book).
Here's the basic concept of PPC advertising: Rather than placing banner ads on various destination and content Web sites, when you buy PPC ads, most are placed in search results. If you've searched on the major search engines - Google and Yahoo!, and MSN - and most smaller search systems, too, you've seen them: small ads that appear above and alongside the search results. In fact, the search results page contains two types of search result, as you can see in Figure 1-2.
As you can see in Figure 1-2, I searched on the term diving gear on Google; the words I'm searching on - diving gear - are known as the search term, search query, or search keywords.
Figure 1-2 shows what's known as the search-results page; Google takes my search term and returns information that it feels matches my search term most closely. You see two types of results in this page. The main area of the results contains organic search results. These are not ads; they are simply pages that Google found in its vast index of the Web (over 8 billion pages at the time of writing), pages that it thinks are the best matches for the search keywords I entered. At the top, and along the side, are sponsored links. These are the PPC ads.
TIP
How do you get your pages to sit at the top of the organic search results? This book is about PPC advertising; however you might want to read the "partner" book to this volume, Search Engine Optimization For Dummies for all the details on ranking well in the non-paid search results. (See www.Get SEOBook.com.)
TECHNICAL STUFF
One major search engine sometimes mixes organic and sponsored results - Yahoo!. At the time of writing, Yahoo! is the only major search engine that has a trusted-feed program, which you find out about in Chapter 14. In some cases, what appear to be organic search results are actually trusted-feed PPC ads, with no indication to the searcher that this is the case!
The power of search advertising
PPC ads on search engines are likely to be much more effective than banner ads. Why?
People are searching for something when they see your ad. Banner ads are often placed onto what may be termed content sites, as opposed to search sites. On content sites, people are looking at information, rather than for information. In most cases, banner ads lead people away from the task at hand; PPC ads are designed to help people with the task at hand - looking for information.
Ads are delivered based on what people search for, so there's a very good chance that if someone clicks your ad, he or she is interested in what you're selling or promoting.
The ads are unobtrusive and not gimmicky. The major PPC systems have guidelines to stop the use of tricks and gimmicks. Again, if someone clicks, he or she is probably interested.
All in all, PPC ads on search sites are generally more effective than banner ads on non-search sites, in the same way that Yellow Pages ads are often more effective than newspaper ads. When people see your ad for, say, a shoe store in the Yellow Pages, chances are they're looking for a shoe store. When they see your shoe-store ad in a newspaper, they may just be reading the news.
Having said all that, it's important to understand that sometimes PPC ads are not placed in search results - they are sometimes placed on content sites (that's a choice made by the advertiser). You can see an example of a PPC ad on a content site in Figure 1-3. (I'm going to use the term content match for this type of ad, which is actually the term used by Yahoo! - other PPC systems use different terms. One common term you'll hear is contextual advertising, though that term is a little ambiguous in some ways.) Right now, Google is the big player in the content-match game, but other PPC systems also do it. Google's big in the content-match business because, through its AdSense program, it makes it very easy for almost any site owner to run PPC ads on his or her Web sites.
It's also important to understand that these types of ads are likely to be less effective (and, therefore, more expensive from a results standpoint) than the ads in search results. I recommend that when you start your PPC advertising, you turn off content-match ads (you'll see how in the chapters on Google and Yahoo!) to increase your chances of success, or at the very least, track them separately so you'll know the true picture (I cover tracking in Chapter 15); if your PPC campaign is a total failure, you may find the content-match ads pulling down the average while the regular search-match ads work okay. I cover this in more detail later, in Chapter 13.
WARNING
Oh, and there's another reason to avoid content-match advertising; click fraud, a subject you find out about in Chapter 17. Content-match ads are prime targets for fraudulent clicking, so avoiding that form of advertising may reduce your exposure.
TECHNICAL STUFF
By the way, there's no reason that a PPC ad can't be a "banner" ad. They can, and sometimes are. But at present, most PPC ads are the small text ads I've shown you here.
You pick your placement
Here's another important PPC concept - you get to pick where your ads are placed by associating your ads with various keywords.
In the past, with banner ads, you would place ads on a specific Web site or work with an ad network to place ads on a particular type of Web site. If you sold sports paraphernalia, for instance, you would place your ads on sports-related sites.
(Continues...)
Excerpted from Pay Per Click Search Engine Marketing For Dummiesby Peter Kent Copyright © 2006 by John Wiley & Sons, Ltd. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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