DIGITAL MARKETING 101 : PPC
PAY PER CLICK
PPC has two main players currently but Online Classifieds and Directories are slowly making their move on sites like Craigslist and eBay billing 3 billion usd a year or 6% of sector. Let's focus on the 20-30 billion usd that will be spent yearly in Display and Search ads during the next decade.
The Display Networks have been around since the onset of the web with companies like DoubleClick ( now Google ) while consumers spend less and less time on vertical websites when researching purchases ( as little as 5% versus 95% on search engines ) it is interesting to note that both Display and Search share almost the same % from the total digital spend at ~40% . The Display ecosystem holds many players between Advertiser and Publisher/Audience including advertising agencies like WPP Omnicom, IPG and Publicis; Ad networks like Google, Yahoo and InterClick; Ad Exchanges like DoubleClick and AdBrite and Search Engine platforms like Bing, Ask and Baidu.
There are of-course many others in the supply chain like Demand Aggregators, Yield Optimizers, Shopping Feeds and DSPs. These players have either Licensing business models or a % of media spend. They use CPM or Cost Per Mile to determine pricing as is the case with Demand Side Platforms that aggregate demand and increase performance allowing advertisers to bid on a per single impression basis rather than per 1K, similar to SEM below.
The Search Marketing model takes the lion's share of attention since it is much more easily accessible to small business owners and does not have a strict requirement in equipment, process or even knowledge. It is sold on an auction basis to the highest bidder and has been very popular with small to medium sized companies looking to sell online as it does not even require a shopping cart. Google for example uses a simple formula to determine the ads rank based on the following variables :
CPC x CTR x QS = SERP
Let's translate the formula Cost Per Click refers to the highest bidder getting the highest rank on the results page. Click Through Rate is the success rate of your ads and how often it is clicked because of compelling text relevance to the searched query. Last but not least is the Quality Score which compares your ad text with your landing page to ensure that they are relevant to each other. So... If you play by the rules you will be placed as close to the top of the Search Result Page in relation to what other bidders for that search query are willing to pay.
So research your customer personas, buying funnel actions, test your ad copy and landing pages understand your lines of business, ads, ad groups and keywords, key phrases and negative keywords. Manage your bids ( implicit, explicit, manual or auto ramp to maintain your page rank with broad or exact match types to phrase. Exact matches increase relevance in crucial bidding wars but remember that search engines like Google, Yahoo and Bing have their own management dashboards, search algorithms and developer APIs so get ready for some fun. ;-)
Google accounts for 2/3 of all ads with Yahoo, Bing and the other display networks taking the remaining 33% but Pay Per Click advertising is not exclusive to the Search Engines although they do take a large portion of the total spent on ads you can certainly purchase advertising directly on high traffic verticals like AOL, CNN and others or even contract with an Ad agency that can handle all of the complexities for you.
Last but not least is of-course the mobile advertising and social media worlds are emerging platforms that promise contextual Geographic, Demographic and Psychographic real-time segmentation of your target audience with Biometrics just around the corner it is no wonder that the internet of everything also means everyone.
Because of the many constant changes and innovations in the consumer electronics spectrum and digital marketing advertising models it is recommended that you review your strategy 4-6 times per 18 month period to avoid critical inflection points.
Remember that PPC is not everything. You still need a product or service in demand, a price that is competitive and a value proposition that is compelling.
