How Pay-Per-Click (PPC)
text ads Work

Pay-Per-Click (PPC) advertising refers to the small text ads that appear on a Search Engine Results Page (SERP).

When you advertise on search service such as Google, Bing (Microsoft) or Yahoo, you specify a list of search terms (keywords) that you would like to bid on, and a maximum bid for each one. When the user types one or several words into the search box, they are then compared to the keywords that you have specified. If there is a match, your ad is eligible to be displayed.

Ads are displayed in an order that is determined by multiplying your bid by a ‘Quality score’, determined by the search service. If your quality score is lower, you pay more for the same position.

PPC vs. traditional advertising

Traditional advertising attempts to place you in front of the largest possible number of prospects, with a one-size-fits all message. Both the strength and the challenge of PPC is that it works best when you do exactly the opposite. The massive computing power of PPC vendors allow you to slice your products and services into tiny slivers, and precisely match them to the needs of each customer at the moment he or she is searching for a solution to a particular problem. In other words, instead of mass targeting, you are micro targeting, and that provides you with an opportunity to find small, profitable niches where you can beat the competition by being smarter, rather than outspending them.

PPC campaign strategy

The secret to PPC success is to ensure that the complete user experience, from start to finish, aligns perfectly with her search intent, inferred from the search terms she enters. You only have a few short words for ad copy, and the better it satisfies the user’s intent, the higher your click-through rate will be.

When the user clicks on your ad, she will be transferred to a web page that you specify (the ‘landing page’). From there, you hope that she will take some further action, typically to contact you or make a purchase. This is referred to as a ‘conversion’, and the more relevant the content on the landing page to the user’s search term and your ad, the higher the conversion rate is likely to be. Since you are paying for each click, your conversion rate is directly related to the cost effectiveness of your campaign.

Campaigns and adgroups

Since your customers’ intent can vary widely, search services allow you to slice your campaign into many parts. For example, Google and Microsoft (Bing & Yahoo search) allow you to create multiple ‘campaigns’ that further divide into ‘adgroups’. Each adgroup can have its own keywords, ads, landing pages and bid amounts.

Each adgroup should be focused on a narrow theme, so you can create an experience closely aligned with the intent of each user’s search. This will result in more qualified prospects clicking on your ad, and more converting into meaningful leads.

Keyword selection

There are a number of challenges in constructing a set of keywords to match the queries of users you want, while rejecting ones you don’t. For example, a roofer probably doesn’t want someone looking to buy supplies rather than hiring a contractor. And he certainly doesn’t want someone looking to repair an auto sunroof. If your search terms aren’t set up to anticipate these cases, (for example, if you simply specify ‘roofing’ or ‘roof repair’), you can generate expensive clicks that are totally wasted.

Users often enter vague search terms, misspell words and abbreviate, and they enter long phrases that you might never anticipate. In order to help you more accurately match your keywords to the user’s search terms, search vendors provide a variety of matching options such ‘Broad match’, ‘Extended broad match’, ‘Phrase match’, ‘Exact match’ and ‘Negative match’. Proper use of these can help you to minimize ad views to the wrong users, and display your ad to more of the right ones.

The pay-per-click ad

Ads that closely match the user’s search intent will increase your click through rate (CTR), so your best prospects convert more frequently into leads.

But an ad has to serve another, equally important goal. It should prevent the wrong prospects from clicking on your ad. Clicks are expensive, and you certainly don’t want to pay for prospects that are looking for something else. So a good ad acts as a magnet for the right clicks, and a filter for the wrong ones.

When your ad displays, the user will have to decide whether to click on it on the basis of 95 or fewer characters of text on 4 lines. This may not leave a lot of room for creativity, but creativity isn’t always what you want. Relevance is.

The more specific your ad to the user’s intent, the more qualified clicks you are likely to get. So, if the user is looking for ‘boiler factory insurance’, an ad that offers ‘insurance for businesses’ may not cut it. You may want to have separate ads for each product you sell (pizzeria insurance, hair salon insurance), as well as ads for users that enter more general search terms such as ‘business insurance’ or simply ‘insurance’. Generally, each concept should be in a separate adgroup with keywords, ad copy and a landing page specifically tailored to a single idea.

Matching customer priorities

Customers also look for things in different ways, and your campaign should reflect this. Sometimes, a customer wants someone local (‘Bronx auto insurance’) and other times she prefers someone with a particular business focus (‘sports car insurance’). If you develop ads and adgroups that reflect different customer priorities, you will seem like the right solution to a larger number of prospects, and enjoy a higher conversion rate. It’s like getting extra leads for free.