How Does Pay Per Click Work You Ask?

Pay per click advertising is a form of advertising based upon a competitive bidding model. Several factors are taken into consideration to determine the placement of your ad and the cost you must pay each time someone clicks on said ad. Pay per click (PPC) advertising has been around since the mid-90s and has evolved into one of the leading forms of online marketing in use today. Prior to 2000, pay per click marketing was actually priced per 1,000 displays, not actual clicks. Thanks to advancements in PPC, you now have the option to pay per click or displays on various platforms and the cost per click take several factors into consideration, rewarding the best campaigns with reduced costs. Now that you know the basics, let’s answer your question.

In order to answer “How does pay per click work” we are going to take you through the basic steps of setting up your very own PPC campaign. For the sake of this article we are going to be talking about Google Adwords although you can also use Bing/Yahoo’s Adcenter and several niche PPC programs as well. Without further ado, let’s take a look at how to setup an Adwords campaign.

Setting Up Your Own PPC Campaign

1. Sign up for your Adwords Account – This part is pretty self-explanatory, just Google Adwords and follow the directions to setup and fund your campaign. If you wait about a day or two after your create your campaign to fund it, Google will give you a $100 free credit most of the time. Either way, sign up, sign in, and fund your account.
2. Selecting Keywords – Technically you will not be asked for keywords until after you complete step four. I am going to tell you now though that you need to select keywords or at least the seed keywords before you setup your campaign. This will allow you to see what your potential traffic will be, and how much you may need to allocate for your budget is step 3. If your daily budget is limited, you still need to do thorough keyword research so that you can find the most relevant and cost effective keywords for your account.
3. Select Your Target Area and Daily Budget – In order to create your first ad, you have to setup your campaign. The campaign setup will outline the basic set of rules you wish to use for the ads created with that campaign. This includes selecting geographic locations to target, display networks to use, ad extensions you want to include, and your daily spending limit.
4. Create Your Ad (s) – Once you have setup the rules for your campaign, you are brought to the screen where you can create an ad. Remember, in step 2 you selected a few keywords to get your started. Select the keyword from your list that is most relevant to the landing page you are going to point it to. You will want to include your keyword in the ad whenever possible as this have been shown to increase the click through rate.
5. Select Keywords to Trigger Ads – After you have created your ad you will need to input your desired keywords into the box. Once you do that, you will also see keyword suggestions. Remember when choosing the keywords, they need to be relevant to your ad and landing page to yield the best results and ad quality score. Just as you chose keywords to trigger ad displays, you may also need to add certain negative keywords to limit when ads are displayed. Let’s say for example you want to sell a sci-fi book online, your keyword may be something like “sci-fi book”. In this case, if someone searched for “free sci-fi books”, you would not want your add to display. In order to accomplish this, add the negative keyword “free”. Remember, that is only one example of a negative keyword though.
6. Monitor the Results – Once you have setup your campaign and created stellar ads, you may think that your job is done. The truth of the matter is, you have just begun. After letting your ads run for a few weeks you need to monitor the results; do you know what you should be looking for? If not, don’t worry, I am going to tell you. When you are looking at the dashboard you will be able to see some information for your campaign as a whole and by navigating to the ads tab, you can see individual stats. When you are looking on the ad level, you will see information such as the ad score, click through rate, average position, and average cost per click.  This data holds the clues to boosting your conversions, clicks, and ad placements. It also serves as a good indication of the quality of your keywords and the traffic potential that exists.
7. Adjust Your Budget – As you monitor the several key pieces of data given to you from Adwords, you should also be aware of daily budget optimization. Do you have ad groups that never reach their daily budget? If so, you should consider adding new/more keywords or allocated the extra funds to an ad the reaches its daily limit. Even without increasing your overall daily budget, moving your funds around can result in more clicks, traffic, and conversions to your website.

Making Sense of the PPC Ad Data

As mentioned, you are given access to several pieces of data under that ads tab on your Adwords dashboard. Taking the time to understand each piece of that data is by far the most challenging part of the paid advertising process. In order to dissect the data you must be willing to commit the time and effort to master PPC. If you do not have the time or interest, we offer a 15 day free trial that will show you exactly what we can do for your company, contact us to learn more about it today. If you decide to go it alone, take the time to learn as much as possible before you start advertising. Failing to understand the Adwords structure will result in wasted ad spend and higher cost per clicks, so take as much time as you can to optimize your campaign.