Pay Per Click

What is PPC?

PPC stands for pay-per-click, a model of internet marketing in which advertisers pay a fee each time one of their ads is clicked. Essentially, it’s a way of buying visits to your site, rather than attempting to “earn” those visits organically.

Search engine advertising is one of the most popular forms of PPC. It allows advertisers to bid for ad placement in a search engine's sponsored links when someone searches on a keyword that is related to their business offering. For example, if we bid on the keyword “best IT Institute in New Delhi,” our ad might show up in the very top spot on the Google results page.

Every time our ad is clicked, sending a visitor to our website, we have to pay the search engine a small fee. When PPC is working correctly, the fee is trivial, because the visit is worth more than what you pay for it. In other words, if we pay $3 for a click, but the click results in a $300 sale, then we’ve made a hefty profit.

A lot goes into building a winning PPC campaign: from researching and selecting the right keywords, to organizing those keywords into well-organized campaigns and ad groups, to setting up PPC landing pages that are optimized for conversions. Search engines reward advertisers who can create relevant, intelligently targeted pay-per-click campaigns by charging them less for ad clicks. If your ads and landing pages are useful and satisfying to users, Google charges you less per click, leading to higher profits for your business. So if you want to start using PPC, it’s important to learn how to do it right.

What are Google Ads?

Google Ads (formerly known as Google AdWords) is the single most popular PPC advertising system in the world. The Ads platform enables businesses to create ads that appear on Google’s search engine and other Google properties.

Google Ads operates on a pay-per-click model, in which users bid on keywords and pay for each click on their advertisements. Every time a search is initiated, Google digs into the pool of Ads advertisers and chooses a set of winners to appear in the valuable ad space on its search results page. The “winners” are chosen based on a combination of factors, including the quality and relevance of their keywords and ad campaigns, as well as the size of their keyword bids.

More specifically, who gets to appear on the page is based on and advertiser’s Ad Rank, a metric calculated by multiplying two key factors – CPC Bid (the highest amount an advertiser is willing to spend) and Quality Score (a value that takes into account your click-through rate, relevance, and landing page quality). This system allows winning advertisers to reach potential customers at a cost that fits their budget. It’s essentially a kind of auction. The below infographic illustrates how this auction system works.

Conducting PPC marketing through Google Ads is particularly valuable because, as the most popular search engine, Google gets massive amounts of traffic and therefore delivers the most impressions and clicks to your ads. How often your PPC ads appear depends on which keywords and match types you select. While a number of factors determine how successful your PPC advertising campaign will be, you can achieve a lot by focusing on:

Keyword Relevance – Crafting relevant PPC keyword lists, tight keyword groups, and proper ad text.
Landing Page Quality – Creating optimized landing pages with persuasive, relevant content and a clear call-to-action, tailored to specific search queries.
Quality Score – Quality Score is Google's rating of the quality and relevance of your keywords, landing pages, and PPC campaigns. Advertisers with better Quality Scores get more ad clicks at lower costs.
Creative – Enticing ad copy is vital; and if you're advertising on the display network, you can use a tool like our free Smart Ads Creator to create designer-quality ads that will demand clicks.

PPC Keyword Research

Keyword research for PPC can be incredibly time-consuming, but it is also incredibly important. Your entire PPC campaign is built around keywords, and the most successful Google Ads advertisers continuously grow and refine their PPC keyword list. If you only do keyword research once, when you create your first campaign, you are probably missing out on hundreds of thousands of valuable, long-tail, low-cost and highly relevant keywords that could be driving traffic to your site.

An effective PPC keyword list should be:

Relevant – Of course, you don't want to be paying for Web traffic that has nothing to do with your business. You want to find targeted keywords that will lead to a higher PPC click-through rate, effective cost per click, and increased profits. That means the keywords you bid on should be closely related to the offerings you sell.
Exhaustive – Your keyword research should include not only the most popular and frequently searched terms in your niche, but also to the long tail of search. Long-tail keywords are more specific and less common, but they add up to account for the majority of search-driven traffic. In addition, they are less competitive, and therefore less expensive.
Expansive - PPC is iterative. You want to constantly refine and expand your campaigns, and create an environment in which your keyword list is constantly growing and adapting.

If you want to find high-volume, industry-specific keywords to use in your PPC campaigns, be sure to check out our popular keywords.

Managing Your PPC Campaigns

Once you've created your new campaigns, you’ll need to manage them regularly to make sure they continue to be effective. In fact, regular account activity is one of the best predictors of account success. You should be continuously analyzing the performance of your account and making the following adjustments to optimize your campaigns:

Add PPC Keywords: Expand the reach of your PPC campaigns by adding keywords that are relevant to your business.
Add Negative Keywords: Add non-converting terms as negative keywords to improve campaign relevancy and reduce wasted spend.
Split Ad Groups: Improve click-through rate (CTR) and Quality Score by splitting up your ad groups into smaller, more relevant ad groups, which help you create more targeted ad text and landing pages.
Review Costly PPC Keywords: Review expensive, under-performing keywords and shut them off if necessary.
Refine Landing Pages: Modify the content and calls-to-action (CTAs) of your landing pages to align with individual search queries in order to boost conversion rates. Don’t send all your traffic to the same page.

CPM, CPC, and CPA are the three main ways that digital media companies charge advertisers for online advertising.

Cost per mille

CPM stands for cost-per-mille, mille being Latin for one thousand. In the land of online media, media companies charge advertisers for impressions, which are counted in 1000s.

Let’s say you want to charge $10 per 1000 impressions on your blog, that means that you will charge $10 for every 1000 people who see an advertisement. The way that online advertisers count impressions is by page views, so 1000 pageviews equals 1000 impressions for each ad on the page. If you have 10 ads on the page—voila! You’ve got 10,000 impressions. At $10 per 1000 impressions, that’s $100!

How do advertisers determine how much they will pay for each impression? Black magic! Seriously, there are standard ranges, but as any good sales person knows, it’s all about how you pitch it.

CPM rates can vary from $0.25 to $200, or more. Media companies tend to be able to charge higher rates if a) the advertiser is selling a higher cost good (like fancy watches or electronics) and b) the advertiser believes that the audience is a particularly good fit for their product and particularly prone to open their wallets.

Cost per Click

CPC stands for cost-per-click. This is the rate that websites charge advertisers every time someone clicks on an ad. If the CPC for a site is $50, and an ad gets clicked 1000 times over the course of the month, the advertiser pays the publisher $50,000.

Google is famous for their cost-per-click ad selling strategy—all of those Google Ads you see on your search results or next to your email? Google only charges those advertisers if you actually click on the ad. If no one clicks, Google makes no money.

Cost per Action

Looking to only pay for ads that drive action? Then you want to check out CPA or cost-per-action (also known as pay-per-performance (PPM) or cost-per-acquisition (CPA)). When a media company charges an advertiser using a CPA model, the advertiser only pays out if a user clicks AND does a specific ACTION.

What does that action have to be? Depends on the advertiser! If Skillcrush ran ads we might pay only for users who signed up for our newsletter. Amazon, on the other hand, might pay only for users who actually bought a book.

One of the best and worst things about online advertising is that it’s really easy to track. Want to know how many people saw your ad? Look at the page views! Want to know how many people clicked? Look at the click rate.

On the surface this looks like a good thing, but that depends on who you ask! Advertisers like it, but media companies don’t because it has dramatically brought down the amount that advertisers are willing to pay for ads because now, they know exactly what they are getting.

CPC, CPM and CPA are acronyms and stand for Cost Per Click, Cost Per Mille and Cost Per Action, respectively. These are key concepts in paid online advertising and affiliate marketing.

How does CPM work?

This model calculates the cost every one thousand impressions –the cost paid by an advertiser for every one thousand views or clicks of an advertisement. For instance, if the CPM of a Facebook campaign is $20, then 5,000 impressions will cost $100.

The advantage of CPM is that at first sight it’s cheaper. The disadvantage is that an “impression” is not the same as a visit or action. Lots of people can actually view the ads but this doesn’t mean the campaign will bring about tangible results.

The better the segmentation (specs of the target audience) and the more attractive the ad, the more effective the CPM campaigns.

How does CPC work?

In this model, the company pays for every click of a user on their advertisement. For instance, if the cost per click of a campaign is $2, and in one day 200 users click on the ad, then the advertiser will have to pay $400. It is possible to set a maximum budget in CPC campaigns so that when that agreed number of clicks is reached, the advertisement is no longer displayed.

The advantage of CPC campaigns is the fact that you only pay for impressions that have generated interest enough so as to follow the link. Its disadvantage is basically the same as before –a click does not translate into a specific action. The user might simply get into the site and leave immediately afterwards, making no purchase or sharing no personal data at all.

How does CPA work?

Cost per action, on the other hand, is a model where the advertiser only pays when a user views the advertisement, clicks on it and performs an action on the site. This action is usually a purchase, but sometimes registrations are also taken into account, as they help increase the database of leads or potential clients.

Affiliate marketing works very similarly to CPA; the sites recommending products or services keep a commission for each referred sale through outbound links. The links can be displayed as direct advertisement or as a subtle recommendation.

The advantage of CPA is that you pay only if you get some profit. The disadvantage is that the cost per action on this type of campaigns may be higher than the cost of well-designed CPM or CPC campaigns.

For example, a very effective CPM campaign could cost $400 and get 1000 finished actions, with a cost per action of $0.4. In the meantime, a CPA campaign could cost us that same $400 with only half the finished actions.

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