What is Pay-Per-Click Advertising?

by bkosko
What is Pay Per Click Advertising

What is Pay-Per-Click Advertising?

What is Pay-Per-Click Marketing?

PPC marketing is an effective way to grab more traffic from search engines. The main purpose of this campaign is to boost sales, promote brand awareness, and generate leads. In this model, advertisers run ads on different platforms such as Google and Bing and pay a fee when the audience clicks on them.

Pay-per-click is a great way to reach new potential customers, however, it can be confusing a bit for newbies. In this guide, we will teach you what PPC marketing is, how it works, and more. Let’s get started…

What is PPC?

PPC is an internet marketing model that allows advertisers to bid for placing ads in the sponsored links of search engines. When someone searches for any query on the internet, search engines show relevant ads depending on their keyword. Advertisers have to pay some amount when a user clicks on the ad. As a result, they get potential customers.

The best way to answer “what is pay-per-click advertising,” is that it is a way to buy traffic instead of earning those visits organically. If you come up with an effective PPC marketing strategy, each visit can be worth more than what you will be paying for. For example, if you pay $5 for one click and it generates a $300 sale, you will make a huge profit.

How Does PPC Advertising Work?

PPC is a robust marketing channel that covers plenty of different ad platforms like Google Ads. Before we dive deeper into its working mechanism, let’s talk about different types of ad formats.

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Types of Ads Format

There are different types of ad formats within each platform, including:

Search Ads

Videos Ads

Display Ads

Shopping Ads

Gmail Ads, etc.

Google Ads has the largest market share of PPC due to its massive audience. Besides, it offers multiple ways to run your campaigns depending on your specified target and need.

Who will earn the top spot among all ads depends on two factors i.e. bid and quality score? Your ad ranks higher if you pay more. Similarly, click-through rate, landing page quality, and relevance increase the quality score that boosts ad rank.

Different Pay-Per-Click Model

Below are two common ways to determine the PPC advertising rates:

1. Flat-Rate Model

In a flat-rate PPC model, advertisers pay a fixed amount to a publisher for each click. Publishers maintain a list of fixed pay-per-click rates for their websites. However, the price is quite negotiable. You can get a good discount if you offer a high-value or long-term contract.

2. Bid-Based Model

In this model, advertisers make a bid for winning an advertising spot. Publishers use different automated tools to undertake an auction. An auction is started when the ad spot is triggered by a visitor.

The winner is decided based on the bidding amount and the quality of the ads’ content. Note, that content relevancy is as important as the bidding amount. Therefore, you can’t win the top spot, no matter how much amount you are paying for.

For example, three ads appear on SERP against a specific keyword or search query. If the third ad is getting more clicks, search engines will start ranking that ad at the top position.

How does PPC Ads Auction Work?

Let’s dive deeper into the auction mechanism…

  • First and foremost, advertisers find high-volume keywords related to their business. Search engines will show ads against these keywords.
  • If no other business is using those keywords for showing ads, you will be the only contender in this situation. SE will sell that ad space to you.
  • Contrary to this, what if some other businesses also want to show their ads against those specific keywords? In this situation, the auction will decide the winner among all advertisers.
  • Search engines will enter all relevant keywords and the ads that are associated with them into the auction. How do search engines choose the winner among thousands of advertisers?
  • First and foremost, SEs will determine whether an ad account is eligible for auction or not. If yes, in which orders eligible ads will appear in the space in SERP?
  • Two factors decide the winner: First, the total amount an advertiser will pay for showing ads. Second, search engines give a quality score to each ad from 1 to 10 depending on the user experience, expected CTR, and relevance to a keyword. If Higher quality score, a higher ranking of the ad.

For example, two advertisers John and Mary enter into an auction. The quality score of John and Mary is 10 and 4 and they pay $3 and $6 respectively. In this situation, their Ad Rank score will be 30 and 24. As a result, John will be the winner, no matter how much amount he is paying.

Below is the formula to calculate PPC:

Pay-Per-Click = Ad Rank / Quality Score + $0.1

How much amount John will have to pay for PPC? Calculate that by yourself!

How to Improve Quality Score? Pay special attention to keyword Relevancy. For this purpose, you should craft highly relevant keywords for your business for improving quality scores.

What are the Benefits of PPC?

If you are intending to invest in PPC marketing, you should know exactly what is pay-per-click advertising and its benefits of it. Below are some important reasons that show why this marketing strategy is the right option for you:

You can start grabbing traffic very quickly.

It helps you to target your potential customers perfectly.

Multiple ad formats are available for your ease.

You can easily measure and track your PPC advertising campaign.

You have full control of how much you pay and when to run ads.

What is Pay-Per-Click Advertising – Conclusion

There are plenty of different ad networks available to run your ad campaign. Some of them include Google Ads, Microsoft Ads, LinkedIn Ads, Twitter Ads, Facebook Ads, Amazon Ads, etc. All these platforms have billions of users. You can pick any platform to run your ads.

PPC marketing has huge potential to boost your business in no time. You can earn a huge profit by spending a little bit amount. All you need to come up with an effective strategy to increase your quality score. With a good quality score, you can easily win the top spot. The topmost links get more clicks and bring more traffic to your site. Therefore, getting top ad space should be your first priority.

Learn more about digital marketing – What is Digital Marketing?

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