It occurred to me that a lot of the content on our blog assumes a lot about our readers. I’ve decided to skim the surface of Pay Per Click, or PPC, for those that are new to the concept. Whether an interested individual, PPC professional, or a potential client, the following is something we all should know. These are not the official definitions, necessarily, but rather a brief overview of the terms are commonly used in the world of Pay Per Click.
- Pay Per Click– A service provided by a number of search engines, but most predominantly by Google, Yahoo, MSN and many more, and even social media sites like Myspace and Facebook offer PPC services. Pay Per Click services are a more controlled environment than natural searches, which focus on page content and external linking structure, in which one can reach potential customers or clients using keywords and key phrases relavant to their business or service. These keywords are setup to display various ads based on search queries and are intended to connect users with results that match their searches.
- Return on Investment – This sums up the overall effectiveness of a given PPC campaign. The return on the investment put into PPC can depend on many factors, but a properly orchestrated campaign, as the sum of the elements of a well optimized campaign, is the best use of that investment.
- Cost Per Conversion – Conversions are commonly measured by sales on product oriented sites, leads on sites which provide services, and can be measured by a number of other “goals”, many of which can be assigned to a single account. With the use of tracking codes attached to various pages, links, etc., a given PPC campaign can track numerous values, which are then measured against spend.
- Spend – This is generally gauged monthly, and very simply put, it is how much money you spend on the sum of all ad clicks.
- Cost Per Click – This is how much you pay when a user clicks on one of your ads. This also sums up the basic concept behind PPC, where by you only pay when a user actually visits your site via an ad you design to appear for the user’s search query, and therefore giving you a lot of control over your spend. Cost per click, or CPC, will be different for every keyword in your campaign, and the price you pay depends on many things, but is highly dependant on the competition for that keyword. The more specific the keyword, the less competition there will be, and the less you will pay when users click your ad. For example, a click on your ad for the search “personal injury lawyers in Philadelphia” will cost much less than a click on an ad for the search “lawyers”.
- Clicks and Impressions – These numbers will more than likely be very far apart, as the number of people that actually click on your ads is bound to be far less than the number of people whos searched display your ad.
- Click-Through Rate – This number is simply the percentage of people who click on your ads, based on how many see your ads. This number will generally be quite low for keywords that are far too specific or not commonly searched for, and high for more common keywords for which your ads show up closer to the first position. Average click-through rates change often and are different for every niche, and depend greatly on the ads you choose to display for certain keywords. Ads that are more relavant to your keywords will generally have a higher click-through rate.
- Conversion Rate – This number sums up the success of your ads and their ability to attract customers that will buy your product or use your service. For a given number of people, this percentage converts – and remember that a conversion is predetermined to be a return on your investment. A higher conversion rate usually means that you are spending less on each conversion, but this is not always the case. Over-bidding can lead to unnecessary spend.
When it comes down to it, no one statistic will tell you how well your campaign is doing. It is the sum of all these values and the careful orchestration of your PPC campaign that will give yo the upper-hand on your competition. A lot of people make the mistake of thinking that they can run a PPC campaign themself, and end up wasting a whole lot of money doing so. Others find what they think is a great deal, but end up handing their online success over to amateurs that know little to nothing about PPC and have very little experience.
It is important to know your Internet marketing firm before you trust them with your business – ask questions, and get answers. At Reciprocal Consulting, we like to get our clients involved in their own campaigns, because you know your business and we know how to get results.