Pay-per-click, PPC, paid search, search engine marketing, cost-per-click and CPC. PPC is an advertising strategy of many names and more possibilities.
In this blog, I’m going to dig a little deeper into what PPC actually is, how it works and briefly discuss the types of business that’ll get the most out of it.
Let’s crack on.
How does PPC work?
All PPC systems work in slightly different ways but most will follow a generally similar structure.
First, you tell the ad platform what search terms you want to bid on and how much you’re willing to bid. For example, you might want your adverts to show every time someone makes a search with the word dentist in it and pay no more than 50 pence per click.
Second, every time a user makes a search that fits your criteria, the advertising platform will compare your bid to everyone else’s. The highest bidder takes the top advert spot, the next highest bidder takes the second advert spot and so on and so on until all the advertising space is filled.
In reality, it’s a lot more complicated than this and advert spots are rarely determined solely on price. Usually, the platform will combine the value of your bid with the quality of your advert and website to create an overall advert score. Those advert scores are then compared and the advert positions dished out.
Third, and probably most importantly, you’re only charged if a user clicks your ad.
Is PPC expensive?
As an advertiser, you set your an upper limit to your bids and a cap on your campaign budgets. If you set your campaign budget to £200, you’ll never spend more than that. So, in a way, PPC is as expensive as you make it.
However, that’s only half the story. You also have to think about what you get for your money and that will vary enormously.
If an industry is super competitive, companies will try and outbid each other to get the top advert spot. That drives up the price of transactional keywords, making certain keywords incredibly expensive.
Based on an interesting study from WordStream, the most expensive five keywords are:
- Insurance: £43.18
- Mortgage: £37.05
- Attorney: £37.01
- Loans: £34.82
- Credit: £28.35
If you’re working in one of those industries, your PPC campaign is going to be pretty expensive. Sorry but that’s the way it is. Also, it’s probably expensive because the margins can support it. An expensive campaign isn’t necessarily an unprofitable one.
In other industries, transactional keywords will be substantially cheaper.
For a general idea of which industries are cheaper than others, check out this study from WordStream.
View the full AdWords industry study here.
What PPC platforms are available?
When I say PPC, you probably think of Google AdWords. And considering Google’s complete and utter domination of the search industry, that isn’t too surprising.
However, there are other paid search platforms out there and they can often deliver better results than Google’s AdWords.
I’ve summarised the major players below.
Google is still the head honcho of search, powering 78 percent of all searches and 64 percent of all search adverts. While Google gives you access to a huge audience, you also have to deal with significantly higher competition compared to other networks.
Since it launched in 2009, Microsoft’s Bing has been quietly going about its business, steadily eating away at Google’s market share. Bing powers just 7.8 percent of all searches but generates 21.4 percent of all search ad revenue. In the past few years, slews of digital marketers have jumped ship to Bing.
Back in the late-90s and early-2000s, Yahoo was the search engine. Then Google shot to prominence, replacing Yahoo’s cluttered homepage with its iconic clean design. Yahoo’s market share has been in freefall for decades and now hovers around 5 percent.
All other search engines power around about 2.6 percent of searches. Some have search ad networks and others don’t. Low search volumes and underdeveloped advertising platforms make these networks relatively uncompetitive.
What businesses should use PPC?
PPC is a fantastic tool for businesses, allowing you to turn on a magic traffic tap with just a few clicks. However, it’s more suited to some businesses over others.
Here’s a handful of businesses that we see running exceptional PPC campaigns:
- High LTV Customers: If your customers have a high lifetime value (LTV), you can afford to splash cash on paid search campaigns. Even if you’re making a loss in the short-term, you’ll be able to make your money back over the customer’s lifetime.
- High Margin Industries: Single purchase businesses can still run highly profitable PPC campaigns. We’ve helped lawyers, builders and vehicle leasing companies run super successful campaigns.
- Seasonal or Event-based Businesses: Businesses with seasonal ups and downs or annual events don’t need traffic all the time. PPC lets these businesses instantly ramp up interest in their business whenever they need to. For example, florists tend to run large PPC campaigns in the weeks running up to Mother’s Day.
- Huge Catalogues: Companies with huge catalogues can advertise hundreds of thousands of individual items with very small bids. While they might only shift one or two of each item a month, it adds up quickly.
Don’t worry if you don’t fit one of those four categories because it’s not an exhaustive list. If you’re inventive enough, you can create a profitable PPC campaign for virtually all businesses.
Want to talk paid search?
The world of paid search can be pretty daunting and it can take some time before you really understand your clicks from your conversions and your ROIs from your ROASs.
To keep you on the right track, we’re happy to talk through your long-term objectives and make some recommendations about how to get there. Ping us a quick email to get started.