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An Introduction to PPC Advertising and PPC Terms

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Pay-per-click (PPC) advertising is a form of search engine marketing whereby website owners or marketing companies pay for traffic that is sent to their websites via a search engine such as Google. Marketers pay for every click or impression garnered by their ads, hence the name “PPC ads”. With pay-per-click advertising, users can driver highly targeted traffic to their websites almost instantly. It is targeted and effective as it is because search engines will only display your ads to web surfers searching for your product or service in the areas you service – provided you indicate that while setting up the ad.

There are three main PPC players, namely: Google Adwords, Yahoo Search Marketing and Bing Adcenter. Google Adwords has long been the market leader and looks to remain so for many years to come. Yahoo and Bing recently joined forces to provide a single PPC platform; meaning you do a search on Bing and Yahoo, you will get the same set of results on both platforms. In this article, we will focus more on Google Adwords PPC advertising.

In PPC advertising, bidding for keywords is similar to how it’s done in an auction. The more you bid (or agree to pay) per click for a specific keyword or keyphrase the higher up in the results your ads will be. And the higher up your ads are on the results, the more effective they will be and the less you will pay per click.

PPC Advertising Terms:

Ad Group:
An ad group is a specific set of keywords and ad texts that are closely related to each other. It is possible to have multiple ad groups in a campaign.

Campaign:
A campaign is a set of ad groups. An ad group in a campaign may contain different keywords and ads, but in most cases one ad group is a variation of a related keyword or keyphrase to the other. The campaign is a bit like a control hub where advertisers can set the daily budget, geographic targeting, etc and the settings will be effective for all the ads in the campaign. All the ads in a campaign will stop showing up in the search engine the moment the campaign’s daily budget is exhausted.

Click Fraud:
Click fraud refers to a fraudulent activity whereby ads are clicked repeatedly in an effort to inflate its numbers. In some cases, click fraud occurs when competitors intentionally click on other advertisers’ ads in an effort to knock them out of contention. Other fraudulent activities may involve using automated tools to collect commissions for clicks (via channels like Google Adsense) or to exhaust your daily budget.

Click-through Rate (CTR):
The click through rate of a PPC campaign is the rate at which users click on an ad with respect to how many impressions it gets (i.e. how many times it shows in the search engine result). CTR are shown in percentage. For example, say you place an ad that gets 1000 impressions and 1 of those who saw it clicked it, then your click through rate is 0.1%. If 10 people click after the same impression, then your click through rate is 1%.

Conversion:
In PPC advertising, a conversion is any action that a PPC advertiser deems more valuable than a web searcher merely clicking an ad and visiting his/ her website. It could be signing up for a newsletter, clicking on a link, viewing a video or making a purchase upon reaching the advertiser’s website. A good way to describe conversions is to see them as the main goal, the purpose for which the PPC ad was set up in the first place. Hence, if the purpose of your PPC campaign was to get people to buy upon reaching your website, then each person who visits and buys from you is a conversation. In order to track your conversion, search giants such as Google Adwords provide you with a set of unique conversion codes that can be added on your landing pages. Conversion can also be tracked using tools such as Google Analytics.

Conversion Rate:
The conversion rate in pay per click marketing is the rate at which those who click your ads on the search result complete a particular action; again it could be signing up for a newsletter, clicking on a link, viewing a video or making a purchase upon reaching the your website. For example, if after every 100 visitors to your website via a PPC campaign 1 person makes a purchase, then your conversion rate is 1%. If 2 of the 100 visitors buy from your then your conversion rate is 2%, etc.

Cost Per Conversion:
The cost per conversion is simply how much it costs an advertiser to convert his/ her website visitors into sales. For example, if you had 100 clicks for a dollar each, and had a 5% conversion rate (5 sales of 5 newsletter signups), then your cost per conversion is $20. The formula is essentially the cost of the clicks on the ad divided by the number of conversions or expected actions taken.

Quality Score:
The Quality Score is Google’s way of ensuring that visitors they send to advertisers’ websites are of the best quality possible. It is a measure taken to make sure that they reward good quality, relevant ads while penalising poor ones. It works such that it rewards the PPC advertiser that: bids on relevant terms, creates ads closely related to their keywords and creates targeted landing pages (a page tailored specifically for the PPC ad. On the other hand, Quality Score punishes PPC advertisers that bid on terms that are not related to their business and/or those advertisers who cannot be bothered creating landing pages that are highly targeted to their ads and chosen keywords.

Landing Page:
The landing page is the page visitors will be taken to once they click on the search results on the search provider’s website. The landing page is decided by the advertiser during the PPC ad setup. However, the landing page is determined by the “default URL” in the ad if there is not a specific page assigned to an individual keyword.

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