Originally written Oct. 6, 2010 and updated frequently, as needed.
Pay-per-click advertising is the most effective online advertising method available today and will be for a long time to come. However, it can be expensive even when done properly and extremely expensive when done improperly. With this article we will provide to you the basic knowledge and techniques that we use with our own PPC ad campaigns and hopefully you'll be able to benefit from our experience.
PPC advertising gets your site listed right in front of people who are actively searching for whatever you have to offer. That is what makes it so effective. Your ads get placed in the search engines under search terms that you choose. You bid on the placement of your ads and you only pay the bid price when a visitor clicks on your ad and visits your site. The higher you bid, the higher your ad gets placed* in the search results for the search term you want to be listed for.
(*Note - What you bid is no longer the sole deciding factor in where your ad is placed. Consider your bid amount to be the highest amount you're willing to pay. Other factors will ultimately determine your ad placement, such as how relevant the ad is to the user's search and how relevant the linked page is to the ad. Higher relevancy can easily result in higher placement at a significantly lower cost per click than what you bid.)
There are lots of PPC advertising services out there, but only 2 really matter. *Yahoo Search Marketing (formerly Overture.com) will get your ads shown on Yahoo and some other secondary locations. Adwords.com (operated by Google) will get your ads shown on Google, AOL, and other sites. Between those 2 services you'll get all the exposure you'll ever need. Microsoft also now has their own PPC advertising system that runs ads on their various search engines too. However, we tried it and found their system difficult to use*. We also found that their typical search market wasn't as targeted as we liked. You might find better results though.
(*Note - Yahoo currently no longer offers their own in-house search marketing service. Instead, they outsource it to Microsoft, which operates under the Bing brand name. The Bing Ads system is much improved. However, it is still second bananna to Adwords.)
Start an account with Adwords.com first because their system will most likely be the most cost effective for you in the long run and there's an *ad credit coupon in your website account with us that will get you a good start without costing you any money. Plus they provide all the tools needed to help you find the search phrases to bid on that people have actually searched for. Then you can use the same search phrase list when you setup your account at any other services. The tool will tell you exactly how many searches were done for each search phrase. Bid on all relevant phrases, not just the ones with big numbers. Highly searched for phrases will cost more and the less often searched for phrases will cost less. They balance each other out because you won't always be able to afford a top listing for a highly searched phrase. You get less visitors from less searched for phrases, but those visitors will almost always cost you a lot less.
(*Note - Adwords ad credit vouchers are not as prevalent as they used to be. Google only offers them sporadically now or to select outlets.)
The next step is writing your ads. This is the most important part because if it is done wrong and you bid for a top listing then you'll get a lot of visitors and spend a lot of money, but you won't make very many sales. Your ads should be specific and they should pre-qualify the visitor BEFORE they even click on the ad. Here's an example of a poorly written ad for any search phrase related to kitchenware, pots and pans, kitchen utensils, etc..
Low Prices for Kitchenware
That is a bad ad because it is too vague, too general. Every person who searches for anything related to kitchen stuff will see that ad an click on it. You might think that is a good thing, but it's not. Every time someone clicks the ad it costs you money. What if the person wants something specific that you don't offer? What if the person is only willing to pay $20 for whatever they are looking for and you only sell it for $60? You don't want every searcher to click on your ad because you'll burn through your budget so fast that it will make your head spin. You only want people to click on your ad who are ready to buy, are ready to pay your price, and who understand that they get what they pay for. The words free, cheap, and low cost in your ads will bring you lots of complainers who are looking for something for nothing.
Write specific ads for specific search phrases and include the price of the product or service in the ad. Here's an example of a good ad for the same search phrases as the above poor ad:
Large Selection of Copper Pots and Pans
That ad is clear, concise, and without mystery. The searcher knows exactly what they are going to see on the site if they click on that ad and they know what they are going to pay at a minimum if they shop there. You are much more likely to sell something to the person who clicks on that ad then to someone who clicks on the first one and that is what doing business online is all about. 1000 visitors a day that costs you $100 doesn't do you any good if none of them buys anything. Writing targeted ads that pre-qualify the visitor before they click on it also allows you to place higher bids and get higher placed listings.*
(*Note - Writing highly targeted, relevant ads and grouping them only with relevant keywords and relevant landing pages that match those ads is now necessary to get the best placement in the SERPs and to pay the lowest cost per click.)
Now it is time to discuss how to manage your ad bids. The object is to set a monthly budget and bid just enough on each search phrase that your ads stay online for the full month. If you bid too high then your account deposit will run out before the end of the month. If you bid too low then your ads won't be seen, nobody will click on them, and you won't make any sales. It will take you some time, possibly a month or two, to figure out where your bids should be to do you the most good.
Here's a list of things to remember when *bidding on search phrases and funding your account:
(*Note - Bidding per keyword is not what it used to be and doesn't acquire a specified placement for your ad anymore. Consider your bid to be the highest amount you're willing to pay for a click. The ad position will be determined by other factors.)
(1) When you first start out, do not use the auto-replenish option that both services offer. You are going to blow through your initial deposit faster than you think and you don't want them to recharge your credit card automatically. You'll need time to learn, examine, and adjust your bids so that you can stay within your budget. By the way, plan on spending at least $100 - $300 per month to start. If you can't afford that much then don't even bother trying.
(2) Never bid on the number #1 position.* #3 is the most effective spot followed by #2, #4, #5, and so on.
(3) Never get into a bidding war with another advertiser for a position. They will either have a much larger budget than you and eventually win the war once your funds are exhausted. Or 80% of the time they will eventually fail to make enough sales because their ads are poorly written and you will get the spot without having to increase your bid at all.
(4) Don't overly analyze your placements or try to micromanage them constantly. Your positions will tend to go up and down by several positions through the course of every day. You'll easily drive yourself crazy if you try to keep them in one spot all the time.
(5) Once you find the balance point in your bidding to keep your ads online for a full month within your budget, set them and forget them for a while. Check your positions* every 1 - 2 weeks or so and adjust them as needed.
(6) Utilize the conversion tracking options that most services offer. They will help you understand better which ads are performing well and which ones need more attention. A conversion rate of between 3% and 10% is about average.
The last thing we need to address is what your ads are linked to. It makes no sense to spend money on advertising if your website is not made to make the sale. Your site should look professional. It should not have any spelling errors on it or broken images. It should be easy to navigate and understand. Your ads should be linked directly to the page or category of your site for the product or service that was promoted in the ad. A shopper does not want to have to click through 3 other pages before they can see the product they are looking for. Finally, do not use Flash or other animation functions on your site. Click here for reasons why. Be sure to read the other design recommendations in the Design Tips section of our site.
If you have any questions or comments related to this article, please send them to firstname.lastname@example.org