This is our guide to pay-per-click advertising for local businesses. We hope it gives you a foundation for why using this form of digital advertising can be useful for your company. You’ll find a number of sections, so you can break up reading the guide and come back to parts of it when you have extra time or need to reference something again.
What is Pay-Per-Click Advertising?
Pay Per Click describes a type of advertising where you only pay when somebody clicks on your ad. Google may be the most well known company in pay per click advertising, but there are many others.
Who Invented Pay Per Click?
Bill Gross is generally credited with inventing Pay Per Click (PPC) advertising for his early search engine named Go To. When Gross started Go To in 1998, search engines that relied upon something other than human listings were just starting to take off. Gross started charging companies to advertise on his search listings and charged for each click, rather than by the impression, a revolutionary idea. Go To eventually became Overture and became an ad selling network for portal or search engine partners. It eventually was bought by Yahoo!
How Pay Per Click Works
There are only a few main parts to pay per click advertising. The following applies mostly to search engine advertising, but parts are true for all pay per click advertising.
- Website Page
- Auction to determine who’s ad shows up
Bidding on Keywords
In the search engines, you select keywords that represent words people searching for your products or services would type into the search bar. You have to enter a maximum bid, which is the most you are willing to pay for one click from a potential customer. This is how you target your customers.
Traditional PPC ads are text ads. Search engines wanted to keep things fast, and photos used to take a long time to load in the days before high speed connections. On some platforms, a photo can accompany the text ad. Just like any other advertising, your ad is designed to attack attention and make potential customers interested in what you are selling.
Website Landing Pages
When someone clicks on your ad they are directed to a page on your website. This is called the landing page. It can be the home page of your site, but it is better if it is more specific to what your ad is trying to sell.
The Modified Auction
In the early days, pay per click was not nearly as sophisticated as it is today. It was actually pretty simple. The company that was willing to pay the most for a click would always be in the top spot of the search result ads. This left deep-pocketed advertisers an opportunity to purchase the top spot for just about any keyword they wanted. But to make money as a search engine, people actually have to click on the ads. It is the only time the advertiser pays. They quickly realized that ads that were not related to the person’s search didn’t get clicked on nearly as often as related ads. This is where complexity entered pay per click and the reason it is important to do a very good job of matching up keywords, ads and landing pages when advertising on Google or Microsoft Ads today. Pay per click, on most platforms, no longer works as a straight auction, where the top bidding advertiser gets to have the top spot. A concept called Quality Score is used by both Google and Microsoft in determining which advertiser gets the top position and all additional positions. The factors involved in determining which location your ad will land include:
- How well the keywords match your website landing page
- How well your ad text matches your keywords and landing page
- What kind of historic click-through-rate (percentage of times the ad gets clicked) your ad has
- Your maximum bid per click
Quality Score and your bid are factored together and the search engine ranks the ads that could be shown in order. If you have a good quality score (relevance rating) and a high enough bid, your ad will be in the top position. Too low of a Quality Score or bid and your ad won’t show up at all.
The top three reasons to use Pay Per Click advertising for your business.
- Drives Traffic and leads to Your Website
- Generates Phone Calls for Your Business
- Better Value Than Traditional Advertising
Why Use Pay-Per-Click Advertising?
Pay Per Click Advertising is a great way to drive traffic to your website. Large companies understand this. Some of America’s largest retailers have reportedly spend $50 million per year on Google Ads alone. Most companies don’t have those kinds of resources, but that doesn’t mean you have to miss out on traffic and the customers it brings with it.
Top Small Business Website Traffic Sources
Small business websites vary a lot in where they get traffic from, but here are the most common traffic sources. If you’d like to see a more detailed breakout, read about where your website traffic comes from.
- Organic Traffic – Getting Found through major search engines
- Pay Per Click Advertising – Paid Traffic primarily through search engine ads
- Direct Traffic/Other – People typing in your site or traffic with missing referral data
- Referral Traffic
- Social Traffic
Our average Pay Per Click Management client receives up to 25% of all website traffic through advertising on Google, Bing and others. Generally, the percentage decreases to a smaller number for clients who are also actively pursuing SEO strategies for their sites. The percentage increases significantly for websites that have existed only a short time because they are not getting much in terms of organic traffic. If you are not using pay-per-click advertising for your site, you are missing out on significant traffic gains you wouldn’t get otherwise.
PPC is Great for Young Companies
Pay Per Click can make a big difference for startups and companies that don’t rank well in the search results. It is also great for companies that are trying to grow quickly. A 2014 study of Inc Magazines 5,000 fastest growing companies revealed that they spent an average of over $20,000 per year on pay per click because it helped drive traffic and customers. You don’t have to spend that much. Average local businesses can spend $300/month to $1,000/month and still do very well with lead generation.
Pay-Per-Click Reaches More Customers, Even If Your SEO is Great
According to Google studies, 89% of AdWords traffic is in addition to what you would get if you relied on your organic listing alone. That means that very few of the people clicking on your ad would have clicked on your website listing in the organic search rankings even if your ad wasn’t there. Why is this true? Studies of the way people look at browsers show that they spend more time looking at the top left side of the page. Google AdWords positions its ads at the top of the page taking up 80% or more of the search results page before scrolling and those ads get the most attention from people viewing the screen. A few years back, a study showed that 65% clicks went to ads when people used keywords showing they were looking to purchase a product or service. That means customers are more likely to click on your ad than your organic listing.
Pay Per Click Can Make Your Phone Ring
According to the media and advertising consulting firm BIA/Kelsey, phone calls edge out website forms as providing the best quality leads. Their survey of business owners show website leads provide many good quality leads, but phone calls provide more excellent quality leads. While pay per click is known for driving website traffic, it is also a great tool for driving phone calls. That is especially true now that mobile searches play such an important role in driving leads. For businesses where there is a sense of urgency from the consumer, phone calls are often better than website leads (which take longer to respond to). When you need a tow truck or your air conditioner is broken, you are more likely to call to get help faster. Using Call Only campaigns, optimizing all campaigns with phone call extensions and other tactics, pay per click can be turned into a phone call generation tool, rather than a web visit generation tool.
Pay Per Click is a Better Value than Traditional Advertising
The old model in advertising was based on how many people could potentially see your advertisement. When buying advertising space in a newspaper, you would talk with the sales representative about circulation and cost per thousand impressions (CPM). There was no focus on results and very little opportunity to target just those people interested in your products or services. Pay per click has changed all of that.
In traditional print, radio or television advertising, you could do a little targeting using demographics. You could select the sports section of the newspaper or choose the country music station at a certain time of day, but you could never choose only to advertise to people who were showing an interest in your product or service. That could only happen in the phone book…which made it a successful option for many years. Search Engine Marketing takes the best of the phone book targeting and makes it even better. With pay per click, you can target by country, state, city, zip code, or even a radius around your business. On top of location, you can target by time of day, day of the week and more. So if you own a restaurant and want to showcase your lunch specials from 10am until 1pm, Monday through Friday, to people looking up restaurants, you can do that.
More recent improvements in targeting include demographics and “audiences.” These are lists built by the search engine that provide additional targeting options. You can target only those the search engine has identified as male or female, by age bracket and by income level. Audience targeting allows you to show ads to certain groups, like homeowners, people who recently moved, those “in the market” for a specific product or service, etc.
Being able to be super targeted increases the chance that you are hitting the right person with the right message at the right time. It means there is much less waste. So by not paying for advertising that is reaching the wrong audience, you save a lot of money.
One of the challenges of traditional advertising has always been that it has been hard to track where your results are coming from. Pay per click and other digital advertising haven’t completely solved that problem, but they have made it a lot easier. For example, we can track many details about website visits generated by AdWords campaigns, including who has filled out a form. Add in some call tracking and it is possible to gather some basic data on how many phone call leads are coming in because of seeing your ads, even if they don’t end up clicking on them. Better data gives you more decision making power when it comes to deciding whether to invest more or less in a particular type of advertising.
Using pay per click or other digital advertising is usually a lot more flexible than traditional advertising methods. If you put an ad in the phone book, you are committing to a year of advertising at a set monthly rate. With pay per click, you can set monthly budgets, but unless you sign a contract stating otherwise, you don’t have to stick to the same budget or even advertise all the time. If you have a seasonal business and want to increase advertising at certain times of the year, it is usually possible to drive more leads pretty quickly. If your staff is overwhelmed and you need a little time to hire and expand, you can temporarily reduce your advertising spend. And if something isn’t working, you can always give up on it and try something else because once the clicks stop, you stop paying.
Let’s start out by taking a small step backward. You have to understand Pay Per Click before you can understand what Pay Per Click Management is.
PPC Management to Improve Results
Google changed the advertising model a lot by making it self-serve. No representatives to sell you on a plan or the expensive of an advertising agency. So small business owners can manage their ads themselves or have an in-house marketing person take care of it. This has opened the digital marketing world up to a lot of small business advertising. However, it also puts the burden of understanding something that is pretty complex on small business owners or marketing generalists within the company.
Pay Per Click Management Services can be the difference between success and failure in a Pay Per Click account. There are hundreds of decisions that have to be made with every pay per click account. Professional management services take all the guesswork out of setting up and optimizing your PPC accounts.
PPC Management is a fairly specialized service. There are some specialized agencies that handle very large clients (large companies spend millions each year on PPC advertising), but fewer that are both interested in and qualified to handle management for small and medium companies.
Is PPC Management Affordable?
Fees vary by management company, customer budgets and if the PPC campaigns are spread out over a number of services (like having AdWords, Bing Ads and Facebook accounts). For small accounts, we charge as little as $95/month for management. There are other costs, like account setup involved as well.
We’d argue that hiring the right PPC manager will save you much more than their services will cost. Mistakes clients make trying to manage their own PPC accounts can waste hundreds, if not thousands of dollars.
Pay Per Click is a Complex World
There is no doubt about it, pay per click is pretty complex. It is much more difficult to understand and manage than traditional forms of advertising like the phone book or local newspaper. However, the results when it is done well are excellent. Fortunately, even small business owners don’t have to know much about pay per click to have success with it. Rather than trying to learn a very complex skill, the best solution is to turn to professional management.
We plan to offer more information on Pay Per Click advertising in the future, so you can check this page from time to time for updates to this guide.
Need help with managing your small company’s Google advertising, Microsoft Advertising or other PPC platform? We can help.