PAY-PER-CLICK ADVERTISING

Pay-per-click (PPC) advertising, also called pay-for-placement, involves paying a search engine or directory to display your ad (i.e. listing) in a desirable location when people search for something related to your business. Typically this is accomplished by bidding on keywords.

Many searchers don't realize that much of what they see on a search results page is actually paid advertising. On most sites, these ads look like the natural ranked results but are identified by a label such as "Sponsored Listing".

As the name implies, you only pay when someone clicks on your ad and visits your site. Most PPC programs utilize a real-time competitive bidding system. Advertisers determine what they are willing to pay for a visitor, clicking on each specific keyword, at any given time. In general, the higher you bid, the higher your ad position on the results page.

Pay-per-click advertising has become very popular in recent years. As more advertisers enter the market, keyword bids are increasing. This increase has been dramatic, especially for the most popular words and phrases in highly competitive markets. As prices rise, the game becomes much tougher. Advertisers must now actively manage campaigns to beat their competition. This means bidding on the right keywords, creating the best ad copy, linking to the right pages, and maximizing website conversions (i.e. getting people to take the desired actions online). Most importantly, advertisers must make sure that they are not bidding more than they can afford based on actual conversion rates and ROI.

The two largest providers in the pay-per-click arena are Yahoo! (Sponsored Search) and Google (AdWords). Yahoo determines ad position based solely on bid price. Google determines position based on bid price combined with the click-through-rate for your ad. This means that more popular ads have a significant advantage over less popular ads. Today, the average cost-per-click for these ad networks is about $0.45.

Other PPC providers include MSN, Ask Jeeves, Miva, Business.com, LookSmart, Enhance, Kanoodle, ePilot, Search123, 7Search, BlowSearch, and Mamma.com. Some of these providers charge a fixed click rate (based on industry or category), versus using a competitive bidding system.

While PPC accounts for the vast majority of search engine advertising, there are other options on several sites such as keyword buys based on a CPM rate. Also, some sites allow you to add a graphic or logo to your ad. Finally, directories offer sponsorships and ad buys across specific categories.