How does Pay-per-click work

By jreynerio | July 22, 2021 |

Pay-per-click advertising is an online advertising model provided by search engines (Google, Bing, and Yahoo) and social networks (Facebook and Twitter).

What is PPC?

PPC is also called the cost-per-click model.
It follows the concept where marketers like you pay for ads only if an online user clicks the ad. After creating ads and bidding at online auctions for specific search phrases, you can display your ads on the search engine’s sponsored results section.

You are charged a small fee only an ad is clicked, and when the visitor is sent to a landing page or website. So it’s more targeted advertising with a higher chance of conversions like sign-up or sale.
PPC types like search ads, display ads, and remarketing appear on web pages, mobile apps, and social media platforms similar to the content or post. They follow the same format as organic posts but are marked ‘sponsored’ or ‘promoted.’

Benefits of PPC Model

PPC advertising works based on keywords which appear when someone searches using keywords related to the advertised product or service. Companies using PPC advertising thus have to research, analyze, and bid on the most applicable keywords to their products or services.

You can expect and receive more clicks and eventually higher profits after investing in relevant keywords.

It’s this working arrangement makes the PPC model a win-win marketing option for both advertisers and publishers.

In the case of advertisers, you can market your product or service to only targeted and specific audiences searching for relevant content.
Besides, you save a lot through PPC advertising. It’s because each visit or click value from prospective customers costs more than clicks paid to a publisher.

In the case of a publisher, the PPC model provides them with a primary revenue stream. For example, Google and Facebook providing customers free services like social networking and web search. Thanks to the PPC model, online companies can use them to monetize their free products.

How PPC model works

Here’s how the PPC advertising system works:

  • Ads are subjected to an automatic bidding system known as Ad Auction. Major search engines follow it to determine the relevance of ads appearing in their seraph engine results pages.
  • You bid at this auction on relevant keywords you want to trigger or display in your ads. For example, you will bid on keywords like ‘Leather belts’ if you sell belts.
  • Using the help of keyword tools, you find relevant keywords with the ideal volume and cost per click.
  • You then create relevant ads with the keywords and set them up in the search engine platform.
  • You decide on the best ad for the highest position based on bid price, quality score, and ad extensions. Keyword bids are set based on how high in the search results section the ad appears. The ad quality score depends on ad relevance, click-through rate, and landing page experience.
  • The search engine conducts a complex algorithmic calculation based on the Ad Auction whenever users submit search queries using these keywords,. It’s these results that determine the displayed ads, order, and the advertiser.

Different PPC models

PPC advertising rates are based on one of two models:

Flat-rate model

As the name implies, you pay the publishers a fixed rate for each click in this model. Publishers usually rate lists that appear in different parts of the website.

The good news is that most publishers are ready to negotiate rates, offering lower prices for long-term and high-value contract advertisers.

Bid-based model

Each advertiser here places bids for the maximum amount of money they are ready to pay for an advertising spot. The publisher then conducts an auction using automated tools that automatically conducts auctions when visitors trigger the ad spot.

The auction winner, however, is determined by the rank and not the total bid amount offered.
And the rank depends on the bid and the advertiser’s content quality. In other words, your relevant content has an integral effect on the bid.

Reasons to use Pay-Per-Click.

There are multiple reasons for you to use PPC advertising:

  • PPC is measurable and trackable. So you know how your campaigns perform for your budget based on impressions, clicks, conversions, traffic received, and results.
  • PPC provides a better understanding of customer search patterns and behavior
  • PPC lets you quickly set up campaigns and create ads to find new prospects.
  • PPC offers budget flexibility where you can decide how much you want to spend as your ad budget.
  • PPC offers multiple targeting options for targeting keywords like search ads or specific display network demographics
  • PPC ads work on multiple platforms, including mobile and desktop devices

In short, PPC advertising is a wise marketing option for any business. There’s minimal risk involved, and you can start small and always scale up if your ads get a positive response.

Posted in Digital Marketing, PPC

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