Pay-per-click marketing: The balance of costs and benefits



Google adwords: the minefield of keyphrase click value and the pitfalls

Overview

Pay-per-click (PPC) advertising offers a cost-effective way to drive traffic instantly towards your website. By placing targeted, well-constructed advertisements with the major PPC providers, you could benefit from performance advertising that only costs as much as the number of visitors you receive.

Advantages

Results will be quick and you will only pay if people click on that advert. The cost doesn't relate to the number of times your advert is shown. The advertisements can be tailored by you to be delivered only in certain geographical locations and only on sites with related content and even certain hours of the day. This results in targeted, high-quality traffic to your site, leading to a high conversion of browsers into buyers. PPC can if delivered effectively be a good way of selling goods and services. If you're aiming to build brand awareness or launch a new product, pay-per-impression advertising may be perfect for you. PPC providers allow you to set upper limits on your cost-per-click and total daily spend, meaning you only spend as much as your budget. This ability to set and adhere to strict campaign budgets, combined with PPC's instant results, means that you can monitor the results of your campaign in real time.

Drawbacks

Major PPC providers show advertisements on web pages where content is related to chosen trigger key words. This 'contextual advertising' sets PPC apart from conventional banner advertising and is a major attraction of the service. However, while semantic considerations are used to determine the theme of web sites, anomalous results are still produced when advertisers accept the default 'broad match' option. Broad matching can result in ads that are irrelevant to the intended search. The technology is not perfect even with the 'narrow match' option, but it is improving all the time.

The cost per click of a given keyphrases is not determined by the providers, but the market. The advertising revenues of PPC providers have risen by over 20% per annum in recent years. This growth is down to an increase both in the number of advertisers and their level of advertising spend. An increasing number of advertisers means an increase in both the bid price for individual key phrases and the actual click-through-cost (CTC). In order to ensure that your advert is placed above your competitors', you may need to regularly increase your bid price. You may therefore be paying extra without receiving any additional benefit, and a successful PPC campaign can quickly find itself priced out of the market as bid inflation takes holds.

Google AdWords and other PPC providers display advertisements on third party 'content network' sites through their PPC programs. While this means that your ad will be shown on relevant web pages, it also means that you're vulnerable to 'click-through fraud' perpetrated by dishonest website owners. Because websites receive money for the amount of clicks that ads they host receive, there's a possibility that some owners may maliciously click the adverts in an attempt to generate revenue. Google has taken measures to prevent this, but upto a point. It is up to us to monitor the campaigns to see if this fraud is a minor or a major element.

Steps to take

Not all goods and services are appropriate for a PPC campaign, I will help you make that assesment on costs, budgets and market conditions. Text advertisements have only a limited amount of characters and it is important that the product or service being promoted is clearly identified. Every exploratory click on a PPC advert costs money, so each advertisement should be individually written to target a particular product. Selecting the right keyphrases is vital, and monitoring the performance over time of individual keyphrases is the guide to decide if these need amending and tailoring. With Google AdWords, a higher click through rate will equate to a lower cost-per-click, as a result of Google's own 'bid discount' formula.