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Pay-Per-Click Advertising

How it fits into your Internet marketing strategy

Ian Lurie, Portent Interactive, Seattle, WA
December 29, 2003

Pay-per-click marketing is a great way to get visitors when you need traffic and you need it now. But it's risky: You can spend a fortune, generate many visits, and end up with nothing to show for it. This article will provide you with a high-level view of pay per click marketing, provide some general strategies and provide an example of what to do, and what not to do.

What is Pay-Per-Click Advertising?

On its face, pay-per-click marketing, or PPC, is pretty simple: Search engines and services, such as Google or Overture, provide listings on a per-bid basis. This is in addition to their 'natural' search results, which are still powered by a combination of keywords found on your site, link popularity and other formulae.

If you place the highest bid for a specific keyword or set of keywords, then you rank number one in these paid listings. On Google, , PPC listings show up in the Adwords column on the right-hand side of the screen. Other engines, such as MSNSearch or Yahoo, display P P C listings as 'sponsored listings' in the same column as the natural search results.

If someone clicks on your PPC listing, they arrive at your web site. And you are charged the amount you bid. So, if you bid $.15 per click on 'widgets', and that's the highest bid, you'll show up first in line. If 100 people click on your P P C listing, then the search engine or PPC service will charge you $15.00.

Why PPC Advertising is Bad

But PPC advertising can cost a fortune. It's easy to get caught up in a bidding war over a particular keyphrase and end up spending far more than your potential return. Some PPC engines, such as Overture, offer convenience features such as 'autobid' that will automatically increase your bid amount to maintain a particular rank. That sounds great on its face, but it can get expensive in a big hurry.

Also, ROI can be very hard to measure. Some PPC engines (Adwords and Overture, specifically) provide conversion measurement tools, so that you can track whether your pay-per-click campaigns are generating the desired result. But these tracking tools aren't 100% accurate, and at the time of this writing the smaller PPC providers don't deliver any conversion tracking.

And watch out for junk traffic. Most pay-per-click services distribute a segment of their results to several search engines. While you certainly want your listing displayed on Yahoo, AOLSearch and MSN, you may not want your listings showing up and generating clicks from some of the deeper, darker corners of the Internet. The resulting traffic may look good in statistics reports but is very unlikely to generate a return.

Finally, pay-per-click advertising does not scale. If you get more traffic, you pay more money in direct proportion to that traffic - your cost per click stays constant, and your overall cost increases. Compare that to natural search engine optimization, where you invest a fixed amount of time and/or money to achieve a better rank, and your cost per click goes down as you draw more traffic.

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