Pay per click advertising uses sponsored search engine listings to drive traffic to a web site. The advertiser bids for search terms KEYWORDS, and the search engine ranks ads based on a competitive auction as well as other factors. We have to pay to the search engine when someone clicks on our advertisement.
Example - If you search for any keyword on Google- say 'SEO', you will see thousands of results and on the first page there would be list of some website as part of generic search results and on the right hand side and sometimes on the top (with blue background) you will see some listings which are marked as SPONSORED LISTING - these ads are shown through the PPC program. Whenever someone clicks on a particular ad, the advertiser has to pay the amount to the search engine.
The two most important PPC programs are offered by Google - 'Adwords' and Yahoo - 'Overture'.
Some terms to know about PPC
Keywords – People use different phrases to search for a concept, or a product, or a service. Since you cannot have top organic rankings for all these keywords the way to divert this traffic is using all your keywords in PPC.
Ad Text for PPC
AD text is one very important thing that impacts how many people actually click on your ad.
What is AD text - Well it your advertisement in 2-3 lines, were you have to highlight your offering, core strengths, offers etc. When some visitor on search engine is searching for some service/product they will use a keyword and your ads might appear along with ads from other competitors - at this stage our aim is that more and more people click on our ads - why will they click on our ads
1. Because we are offering the service that he is looking for
2. Because we are offering something that our competitor are not
3. Because our pricing is attractive or turn around time is better
These are just some reasons to give you example, so basically a person will click the ad which shows that our offering is the most suitable for him in all aspects.
Things to note:
Search Engines have limitation on the size of such ads, say for google the ad is divided into two parts, one is the title and two lines of body - the title can have max of 25 characters(English) for title and 35 characters per line in the body. Please note that the character limit for Chinese, Korean, Japanese is half that of English. This things might change you need to check the same on Google or Yahoo PPC.
Bidding
For every service or product there are relative keywords which are very important, a prospective customer would be using this keyword to search for his requirement. Every seller wants to show his service the first (in this context it means rank first) and its not possible for everyone to be on the top - hence there is a concept of bidding - whoever bids more comes on the top (of course CTR & quality score are also accounted).
Impression
You will come across this term Impression quite often - Impression is nothing but the number of times your advertisement was shown, if someone clicked or not is not important here. So if someone is search for SEO and your ad is shown it accounts for 1 impression and when it is shown second time that means total 2 impressions.
CTR - Click Through Rate
CTR is the % clicks you get on an ad compared to the impressions.
Click-through rate or CTR is a way of measuring the success of PPC campaign. A CTR is obtained by dividing the number of users who clicked on an ad on a web page by the number of times the ad was delivered (impressions). For example, if your ad was delivered 100 times (impressions delivered) and 1 person clicked on it (clicks recorded), then the resulting CTR would be 1%.
Why CTR is very important for us?
CTR is very important in gaining better rankings and control the cost/spending. Higher the CTR means that more people are clicking on a particular ad which means that ad is very relevant for the visitors. And every search engine wants to give the most relevant information to its visitors, so it rewards the ads/keywords with high CTR. While calculating the rankings along with the amount bidded the search engine also calculates the CTR - the formula is same thing.
Quality Score = (keyword's CTR, ad text relevance, keyword relevance, landing page relevance)
The better your quality score you will come at top position paying lesser amounts. Example if we calculate the quality score keeping in mind on CTR then say two advertiser are bidding on keyword 'SEO'
Company A - CTR 10% --> bidding $1 = 10% x 1 = 10
Company B - CTR 5% --> bidding $2 = 5% x 1 = 5
Although both companies’ are bidding same still ads for company A will rank higher then that of company B, if company B has to come on top they will have to bid double say $2. And company A if they are able to increase the CTR to 20% then they can reach the top position even by paying $0.5.
(Please note that this is not the exact formula how Google or Yahoo work - just an example to explain)
CTR are calculated separately for keywords, for advertisements, for campaigns.
