Friday 22 February 2008

Pay per Click - my understanding till date!

PPC Campaigns and their Utility:

Pay Per Click (PPC) is a promotional tool, a form of advertising that is different in its approach, in its promise and the way it delivers that promise.

In regular media advertising one can ensure where their ads appear (page / position on a page or channel / serial on a channel). Also frequency of inserts or spots can be pre-decided. This kind of specification comes at a cost. The good part is if you pay the cost then you can be assured of both, where your ad appears and how many times it appears. Things are more specific in this scenario. But, there is another view to all of it – which brings in huge amount of uncertainty and just near-accurate assumptions. And the element that brings in uncertainty is – what is the true OTS (opportunity to see) and the response generated for any campaign?

As compared to regular media advertising, PPC is a new media promotional tool. Search Engines, like Google, Yahoo and MSN – all have started this as revenue generation feature. These advertisements appear along with search results. Search Engines allow geographic targeting as well and this lets you be specific in showing your ad to those localities / towns / countries that your target audience comes from. With these features PPC has become popular with various online merchants because it allows them to ensure a link to their web shop and that too at a preferred position – for people searching on particular keywords. This is not just a link into the web shop, but a link to a preferred part of it.

There are some fundamental differences that PPC comes with – biggest of them all is that this form of advertising charges for the response generated and gives an account of each and every click (along with more reliable OTS data). Now, operationally, it is a bidding-based position game. Highest bidder on any particular keyword, for per-click charge, is the highest ranked advertisement. But this rank can change in a matter of seconds, when a competitor decides to out-bid the previous highest bid. Bids start as low as 15pence per click and then can go up to anything, as long as there are bidders ready to spend. Advertising through this is more dynamic and can be redefined as we can change our ads, the bids, the keywords – all this while the ad is live.

There are a few important statistics to follow for analysing PPC campaigns (all are over a period of time chosen by you):

Clicks: this is the number of people who have clicked on your advertisement. This number of visitors came into your web shop through the PPC route.
Impressions: this is the number of times keywords selected are searched on and your ad has appeared. The rank or placement is irrespective for impressions. Whether browsers see your ad or not is also irrelevant here. In other words, this is OTS.
Click through Rate (CTR): this is a percentage of clicks to impressions, i.e. how many people clicked on your ad versus how many had the chance to see your ad. Higher the CTR better is your conversion at getting people to enter your web shop.
Avg. Position: This shows what is the average rank or position that your ad has had. Again, the higher your ad’s Avg. Position the better as this can significantly improve CTR for your ad.
Cost per Click (CPC): this is the average cost of each click that you are being charged.

These statistics have to be combined with data that you can get from one of the analytics, some of the important ones are:

Visits: this number tells you how many people came to your shop (should ideally be more than or equal to Clicks on your ad)
Bounce Rate: this is a percentage of people who did come in but for what ever reason just went away, without clicking anywhere else. They just saw one page, the landing page. The lower is this percentage the better is stickiness on your site.
Pages per Visit: this is the number of pages that are being viewed by a visitor as an average. The higher this number more the chances that those many of your products are being viewed.
% New Visits: this is the number that tells you how many new visitors have come into your shop. Conversely – you can find out how many repeat visitors have come, a figure important to check visitor loyalty (also whether your site has what it takes to get someone to come back).
Some must do’s for a PPC campaign:

It is very important to create a budget for this exercise. Budget can be at three levels – the overall campaign’s time span, a daily budget and bid on keywords. Campaign level budget is to ensure you don’t over spend than what you would want to, daily budget can help you space out total campaign budget over a period of time. Bid for keywords have a dual purpose, one – to get your ad a preferred rank / position and second – it also ensures your daily budget does not get eaten up by fewer visitors than what you could have got.

Get your target audience well defined. This helps you in not only geo-targeting but also in selecting the right keywords. If you want to sell a Chronograph watch and your target audience is “men, 25-40 with interest in sports” then apart from bidding on Chronograph Watch, you could select Sports Watch as a keyword. But if you were to select ‘Watch’ as a keyword – you would begin to get a lot of clicks, but most of it would have little significance for you. Thus, wasting your effort and money.

Much like any campaign, this too needs to have a purpose / a target. Whether that be getting sales or getting traffic into the shop or making an announcement. The purpose shall help you in choosing the right keywords, the right slot to advertise in and most importantly will help you decide the budgets.
Once the campaign has started, close monitoring is a must. This is important to check how your bid against that of your competitors is, for your chosen / preferred position (it is not always important to be ranked number one). Also, regular monitoring shall raise an alarm immediately if there are changes to be made, whether in your bid or text of the ad or even the landing page.

Landing page plays a crucial role in the success of your campaign. If it is the text of your ad that will get traffic in, then it the landing page that ensures people who came in are now interested and browse through your shop / products. If you observe that Bounce Rate is very high, check the relationship between keyword chosen and the landing page. If the keyword is candles and you are making people come to door-handles then be rest assured that traffic coming in = traffic bouncing off. To sum it up, it is important to plan which page is to be made the landing page for which campaign / ad / keyword, as this page decides the eventual success (or lack of it)!
Well, this is what I have undestood this far. I am sure that all of written is not a complete to demystify PPC. It is just what I have gethered in last few months and wanted to share it in open. I would appreciate if you can contribute to it and / or correct me. Thanks!


Unknown said...


This, surely is a useful read for my kind of person who is soon gonna have his website..

i reckon that adding few more examples in this kind of write-up will stimulate a little more interest, as the topic might not be relevant to many...

i was wondering if u permit me to share this one with one of my mates,,,who is new to this concept but believes that this is eventually gonna be a tool to be used for his business growth. We were talking about this as a marketing tool, the other day. I am sure that this will help him to understand the detailed reports of search engine facilitating companies.

Following is his web address and he is currently using PPC as a business function:

Mudit Aggarwal said...

@ jasbir,

Thanks for your comment and feedback!

I understand that reading such a long post can be boring and someone who has no interest in this field would not read it - but then, I haven't written this for all to read, enjoy and understand!

I am sure this post has enough in it for someone who wants to truly know more about PPC - shall find it useful.

As far as sharing it with your friends, please do that. I write so that I can problem at all.

Take care...