Introduction to Pay Per Click (PPC) Advertising

There are many ways to advertise online, but one of the most popular strategies is pay-per-click advertising. Why is it popular? Well, they always say "you get what you pay for", but when it comes to pay-per-click advertising, you only pay for what you get, and thus it saves you from spending too much on unfruitful advertisements.

Pay per click advertisements are usually text ads (usually consisting of a title, which usually is your website's name or perhaps a short heading and a short description of your service or some promotional wording) placed near search results shown on major search engines. When a site visitor clicks on your advertisement, you get charged an amount of money which varies according to the ad placement and ranking.

What's more, you can set the maximum price you are willing to pay per one click received. Actually, this is the first step in putting together a PPC campaign – to decide your budget, and with whom you are going to advertise. Most major search engines offer PPC advertising services (Google AdWords, Microsoft adCenter and Yahoo! Search Marketing, for example) but keep in mind that since they have excellent market coverage and tend to offer a lot of assisting tools and options to their users, they also are costly in terms of the amount of expenses to acquire a top ranking based on a specific keyword or group of keywords.

Once you have selected your preferred search engine(s), you should create your ads and do not forget to put in the keywords you wish to have your ad appear under. After that, register for the service with the search engine you have chosen in order to open an account.

Now comes the interesting process – the bidding. When you first register your keywords with the search engine you have selected, you have to also specify the maximum amount you are willing to bid for those keywords. The price of a keyword can range anywhere from 1 cent to more than $10. There is sometimes fierce competition for specific keywords depending upon its popularity as a search term and the search engine itself.

The highest bidder for a specific keyword will be ranked first in the pay-per-click results, the second-highest bidder will be ranked second, and so on. PPC search engines usually restrict the number of pay-per-click ads on a results page to less than 10 because if there are more than that, some ads might not get noticed at all.

You wouldn't want to invest on non-performing keywords, so a very important point to keep in mind is you must test, test, and test some more until you are certain that your keywords work. Once you have a list of keywords you want, start small to be on the safe side. Take off with the minimum and monitor the performance in terms of the traffic it delivers and how well that traffic converts into paying customers. That is another advantage of this type of advertisement – you can monitor the performance of your ads by using the tracking tools offered by search engines.

Another highlight is, you can target your customers based on their geographic locations. Geographic targetting of pay per click advertisements has been improving rapidly, and for local businesses this could be a very cost effective marketing strategy.

One problem with this type of advertisement is click fraud. Wikipedia explains that click fraud occurs when a person, automated script, or computer program poses as a legitimate user of a web browser clicking on an ad, for the purpose of generating an improper charge per click. Each time a valid web user clicks on an ad, the advertiser pays the advertising network, who in turn pays the publisher (search engine) a share of this money. This revenue sharing system is seen as an incentive for click fraud. The pay-per-click industry is lobbying for tighter laws on the issue.