6.11. Pay Per Click Marketing

For many emerchants, the days when they could get decent sales from 'free' listings on Yahoo, MSN or Google are distant memory. Unless the site has lots of useful and possibly unique content — time-consuming to create and maintain — paying for click-throughs may be the only hope of getting sales from the search engines. And these are not free of headaches. There are scores of pay-for-click search-engines to choose from. Successful campaigns tend to be expensive, the larger companies employing experts and shelling out tens or hundreds of thousands of dollars in click fees every month. Special software or services have to be employed to optimize the strategies, and to monitor results. The keywords themselves are often overpriced, perhaps kept purposely so by the big companies wanting to close down the competition. Some hostile 'customers' may generate clicks automatically with robots, and traffic logs need to be monitored to obtain a refund from the search engine(s) concerned. And, if that weren't enough, the accompanying site descriptions can be rewritten by the pay-for-click search engines, requiring emerchants to adjust their budget upwards or their traffic downwards.

To succeed against these odds, companies generally:

1. Research customer needs and strategies.
2. Write a compelling advert to bring them to their site.
3. Place that ad with one or more of the pay per click search engines, ensuring that the bid price they pay
   a. generates sufficient traffic and
   b. gives an acceptable customer acquisition cost.
4. Reinforce interest with an attractive landing page.
5. Lead customers naturally through the checkout process.

Signing Up

Submission is usually straightforward. Companies first open an account and deposit money, usually through a credit card. Next they fill out the Signup form, bidding on the keyword phrases where they want their site to appear. They also specify a title (max 40 characters) and a description (max 190 characters). The title and description can vary for each keyword, even if linked to the same page, but keywords must relate to the linked page. Since results depend upon the title and short ad description, many companies employ a copywriter at this point.

Campaigns need to be planned, usually with these overlapping objectives:

1. Search for optimal keywords with professional software.
Understand what visitors are looking for under various keywords (their own website traffic statistics help).
Find out which keyword gives the best ROI (rate of return on investment: not necessarily the most click-throughs).
Experiment further to see how ranking affects ROI (traffic may be four times higher at the #1 ranking than at the #5 listing, but the bid price may be more than four times higher).
Compare bid prices across search engines with services like CompareYourClicks.

2. Organize the keywords by the buying cycle: research words (e.g. widget review) are usually less expensive than sale closers.

3. Add filters to keywords (e.g. bulk supplies) to eliminate unwanted traffic.

4. Get sufficient results to test their campaign by bidding high for the first few days, lowering the bid later in line with their marketing budget.

5. Use 3-4 different keywords (changing title and description accordingly) and monitor results. Keep experimenting.

6. Vary the ad copy to distinguish their product, make it memorable, and filter out more unwanted visitors.

7. Create special pages (landing pages) for visitors that meet their expectations and drive them to the sale. Keep experimenting with landing pages, adding a client-side tracking program/service to monitor results.

Pay-per-click services have these advantages: they:

1. Bring visitors to their site almost immediately, and
2. Can test the market for the product or service prior to actually developing them.

The disadvantages are:

1. Mistakes can be very expensive,
2. Money is often lost while experience is gained, and
3. Companies are in direct competition with experienced professionals who have fine-tuned their copy and products for years. Some also have trust factors built in, which puts the newcomer at a further disadvantage.

There are two main services (Google and Yahoo/Bing), a few second-tier ppc search engines, and a host of smaller fry. Google is by far the largest and most effective, but its details take some mastering. To stand any chance with ppc search engines, companies must know the following:

1. What conversion rates they can expect (and so the customer acquisition cost).
2. What keywords will help and what will not.
3. How to target the ads.
4. How to write ad copy.
5. How to bid.
6. Where to rank.
7. What keywords are overpriced for their purposes.

To get that information, companies have to research the market, investigate competitors, and keep testing and refining their strategy. A few hundred dollars on a 'quick look see' will be a few hundred dollars thrown away.

Typical Conversion Rates

Conversion rates affect not only the customer acquisition cost, but the price companies pay for their ads (click cost), as the conversion rate commonly enters into the 'effective bid price' (more below). The conversion rate achieved on their website will normally (i.e. without using the ppc engines) be a guide to what to expect, as may be experience with similar products. Failing these, if companies are starting cold, then: lead generation sites commonly report conversion rates around 10-12%, but can go as high as 30%. Sites selling products commonly report conversion rates in the 0.3 to 5% range, the higher range being more usual for one-off, low-price items.

Testing the Market

It takes considerable time and effort to get decent ranking on the natural (i.e. free) search engines nowadays, and that is opportunity time lost. Prospective customers have sharply focused but changing requirements, moreover, which a site promoted by the free search engines will not easily cater for. Even if a company uses natural search engines, it may pay them to tweak pages for keywords located with the pay-per-click services. In short, these services allow a company to: prototype their selling idea quickly, often with only a couple of webpages, to:

1. Get feedback on market conditions, and
2. Solicit feedback and split-test to refine their ad or product further.

All they need to provide is a white paper on their product or service. If there's no appreciable interest, then it's not worth developing, or not for the present. If companies do get a reasonable click-through rate (say at least 1%) then they can solicit suggestions from would-be customers, enabling development for a better-defined market.

Which PPC Service?

It's generally thought wise to start advertising with one of the big three because:

1. They'll quickly give sufficient data for proper testing.
2. Visitors are more likely to be serious purchasers.
3. They offer online, easy-to-see tracking and targeting services.
4. Some of the smaller services don't have real traffic: companies waste their time with unreliable data that can't be scaled up properly.

The customer's desire to purchase is enhanced by having the ad take them directly to a special landing page that builds on their expectations. If a company is advertising an automatic garden sprinkler system, for example, the ad is repeated with copy and pictures. 'The Acme Sprinkler System. Low cost. Quick to install. Easy to maintain.' Then come the features with detailed photos and testimonials. If companies are split-testing, the landing page will be one of a series of adverts testing such things as layout, length of copy, key selling points, etc. Generally, ads are kept direct and simple, as people are fazed by details. 'Cheapest and most reliable on the market' will probably be more effective than a point by point comparison with competing systems. The focus is on the key selling points, and pages pointing elsewhere are removed.

Google AdWords

Google AdWords are more complicated and feature-rich than other ppc systems as Google has striven to be the number one Internet advertising platform, buying up complementary businesses in the process. Its direct competitor was Yahoo Search Marketing, now part of Microsoft.

Google scores in these ways:

1. Signup is only $5, and that sum is converted into bid credits.
2. Ads appear quickly across the whole spread of Google's network.
3. Setup is relatively quick and simple.
4. Google AdWords syndication allows companies to reach AOL and other systems.
5. Geotargeting lets companies target country, state, metro area, zip code, or geographic radius of their choice.
6. Local ads can be previewed with a local ad preview tool.
7. Multiple ads can be run for the same words and tested against each other, or sent to different pages for split testing of ad copy.
8. A free multivariate testing software program called Google Website Optimizer is available to check landing page conversions.

Bid and Click Cost

You pick a maximum bid price, which your click cost will never exceed. Like its competitors, the Google system has a built-in bid discounter, so that your average bid cost will be less than your bid prices.

By factoring in click-through rates into effective bid price, the Google system is not transparent to competitors, but you do need to target AdWords effectively so that good click-through rates bring down the effective bid rate.

Effective Bid Rate

Effective bid rate for Google AdWords is a function of click cost times the click-through rate (and, in some cases, other variables). Google appears to use the average click-through rate from the 1,000 most recent ads in this calculation, though for some markets with low search volumes they may use other quality indicators. Increase your click-through rates by making your more ads relevant and you can end up paying less than competitors. The table below indicates what may happen.

Ad Number

Max Bid

CTR

Effective

Bid

Ad Position

Actual

Click Cost

1

0.40

5%

$2.00

4

$0.40

2

0.30

10%

$3.00

3

$0.30

3

1.00

2.53%

$2.53

2

$0.81

4

1.50

2%

$3.00

1

$1.31

Not all is transparent, as Google may also include landing-page quality and trustworthiness of advertisers in their relevancy score. If the relevancy falls too low (generally if click through rates consistently fall below 0.5%) your ad may become inactive, or even disappear altogether.

Google tends to suggest a somewhat high bid price, which you may want to cut by 20-50% when starting, though you'll need to overbid in the first few days as you'll be in competition with more experienced traders.

Broad Match, Phrase Match, and Exact Match

Google AdWords (and YSM) have different levels of word matching:

Using [keyword1 keyword2] will only return searches ads for the query keyword1 keyword2, which is called exact match. Yahoo's exact match is a bit fuzzy, matching plurals and some common misspellings. Google's exact match is more precise, only matching the exact search.

Using the keyword "keyword1 keyword2" will show your ads for any search that has 'keyword1 keyword2' in the query (in the same order), which is called phrase match.

Using the keyword1 keyword2 (no quotations or brackets) will show your ads on any search that has 'keyword1' and 'keyword2' in it. This broad matching may also allow synonyms of your keywords term may also display your ad, which you can inspect to ensure that they are necessary and not misleading.

Google offers all three levels of ad control. Yahoo! offers exact match, and groups phrase match and broad match in a category called advanced match. Automatic matching was introduced in May 2008, which makes your ads show for additional relevant search queries based on the keywords, ad text, and landing pages in your ad groups. You'll need to track conversions to see if automatic matching helps you: in many cases you'll want to turn it off to have better control on your ad spend.

Examples

Match Type

Will Show

Results For:

Will Not Show

Results For:

[golf clubs]

Exact

golf clubs

any other search

"golf clubs"

Phrase

best golf clubs

golfing clubs


golf etc. clubs

golf clubs

Broad

golf clubs


golfing clubs


golf etc. clubs

-

Reviewing your AdWords

1. If something is not clear you can ask at an SEO forum or ask your ad representative. Google AdWords has a blog (which does not want direct AdWords feedback), an online support center, and you can contact Google advertising by phone.
2. If the automated review rejects your ad copy for trademark reasons, you can ask for a human review.
3. Google usually runs ads before the editorial review, but they are reviewed before appearing on partner sites, a process that can take several days.
4. Ads on Google have two states: active or inactive. If an ad is inactive you can make it active by bidding higher. Google also has an ad diagnostic tool which states what needs to be done to make each word active.

Google Keyword Suggestion Tool

The Google Keyword Tool estimates search volume, trends, and advertising competition. You can enter keywords to analyze or they can extract relevant keywords from a given web page.

The Google Traffic Estimator Tool roughly estimates the price required to rank #1 on AdWords 85% of the time and the traffic you could expect to get from Google AdWords for a given bid.

The Google Suggest tool auto-completes partial search queries. It does not show search volumes, but search volume plays a heavy role in its output order. The tool is currently only available in some languages. Many Google Toolbars have this feature enabled.

There is a negative keyword option in both Yahoo! and Google AdWords. Any word that you do not want your ad to appear for can simply be blocked by placing "-badword" beneath your keywords. Words like crack, free, wallpapers, pic, and mp3 often figure in searches from visitors not intending to spend money, and should be added to your negative keyword list.

Improving Performance

Google is geared towards the serious advertiser, and provides most of the tools needed to assess and improve performance. For that reason, so that you can benefit from feedback, you will need to spend at a decent rate, which means planning carefully. Google JumpStart will set up an account for you, perhaps not the best, but getting you started. The $299 fee is not lost but converted to bid clicks, which you spend in modified strategies later on.

The Google Advertising Professional program allows marketers to be certified as a Google AdWords expert. The requirements are that you spend at least $1,000 in a 90 day period after signing up, comply with their rules, and pass an online test. After the 90 day period, you can place a logo on your site which suggests Google endorses your services. The same program also allows you to link together up to 500 AdWords accounts so that you can access and manage them from a single login. Google also offers many free online tutorials which can help prepare you for the test and help you learn more about AdWords, even if you do not want to take the test. To these, Google also offers a free web based conversion tracking tool, making the AdWords system a direct marketer's dream. Everything is targetable, tangible, and measurable right down to the cent.

The top ad position is sometimes wildly overpriced, and the serious shopper is often one prepared to work down the list carefully. To find out what the top position costs on Google AdWords you can use their Traffic Estimator tool without entering a bid price. This price will roughly equate to the bid necessary to rank #1 for 85% of search queries. Bear in mind that above average CTRs will reduce the click cost. Experiment is needed, and if you find, for example, that positions 4 to 7 work well, then you can bid to rank better but use Google's bid position feature to limit your exposure.

Markets may shift quickly. If you notice certain other company ads appearing again and again over time, they are probably generating profits. Use the Google Keyword Tool to see the bid structure of a market, and follow this up by keeping a record of the top ten ads over or month or two — supposing they are not from a large corporation to whom effectiveness is not a key consideration.

Remember that while the lower ad positions may be more effective they may also lack the traffic to give significant profits. Google AdWords may only list the top 1 to 3 ads above the regular search results (versus off to the right side like most other AdWords ads), and this position is only awarded after a human inspection that takes into account the CTR. If you modify such an ad, therefore, it may take a few days to return to a top position.

You can research the products of your main competitors, visiting their websites and going through the motions of buying something to note their copy and selling strategies. You can see if they are using broad match by typing keyword1 xyz keyword2, when their ad will still show up. If they are using phrase then xyz keyword1 keyword2 will still show up. If neither is the case they'll be using exact match, which is often more effective.

Where Ads are Shown

You can chose to deliver content ads in conjunction with search ads by setting up separate content bids, or deliver some ads just to the content network.

Syndication: ads are shown on:

1. Google.com
2. Google.com + AOL + earthlink, etc.
3. Content contextual AdSense partner sites
4. Site-targeted branded content.

If you set up ad syndication you can bid separately on content ads (see Yahoo's model, next section, for more). Bid whatever you think is a fair market value for the Google AdWords distribution and then bid a separate lower value for content ads.

You may want to use different campaigns or ad groups for content and search ads to make ROI tracking easier. Some terms convert far better on search than content, and if these stats are blended it may be harder to notice the trends at a quick glance.

On some occasions it may make sense to make content only ads if you are trying to increase branding without spending a significant amount of money. Content ads are generally clicked on at a much lower rate than search ads.

In some rare cases content ads are worth more than search ads, but there is less buying demand implied when a person simply reads an article about a subject.

With your content ads you may also want to try using image ads to lock out competition from being able to advertise against you. Some ads disabled from search distribution due to low click price and low relevancy may still appear in the content network, however.

In November 2006 Google started allowing advertisers to bid not only on specific sites, but also on specific AdSense channels. If publishers are using different channels for different parts of a page, you may want to bid on the ad unit which most closely fits your goals.

Syndicated ads do not appear on partner sites until they are approved by an editor, but normal ads may. Also taken into account in matching ads to pages are:

1. The entire keyword list associated with an ad group,
2. How the keywords of your ad fit into the general theme,
3. Textual Adgroup creatives (to help understand what ads to display),
4. Maximum bid price and CTRs, and
5. Negative keywords.

Strategies for Google

1. AdSense ads often have a low CTR, and to make them more appealing to large traditional media buyers, Google also sells AdSense ads on a CPM basis.

2. Advertisers can buy ads on off-topic sites for branding, but these have a 25 cent CPM minimum, and compete with the revenue earned by other advertisements, which could drive the price higher as publishers bid up ads appearing on the more significant AdSense partners. Publishers who do not want to compete with Google selling direct ads can optionally turn off the CPM feature.

3. CPM ads can also be targeted to a specific page or section if an advertiser does not want to buy ads across an entire site.

4. You can get your ads syndicated to content sites without paying CPM rates by:
      a. bidding on common page text or names of sites you want to be on, and
      b. enabling only that ad to be displayed across the content network.

5. Contextual ads are also a cheap way of increasing brand awareness if you watch the bid price carefully.

6. Google also allows you to target AdSense site targeted ads via demographics data. Add &gl=country code to the search string (CA for Canada, US for United States, UK for United Kingdom, etc.). Geotargeting may allow you to afford words broader in scope than your globally effective keywords, since geotargeting only delivers ads to locations you are interested in.

7. You can also filter out sites that you do not want to advertise on. Sites that send significant traffic that does not convert can be blocked with this tool: also those which you suspect of click fraud. You may want to extend this to regions with notoriously high click fraud ( India and much of Asia).

8. If you have a group of similar keywords that could still use the same body text you can enable this feature by writing out your normal body text, and placing {KeyWord: default keyword} in the title of the ad.

9. Google will not now let you to post a display URL in your Google ad that is not your own website's real domain name.

10. When the keyword matching the search is longer than 25 characters, the default ad title will show. Otherwise the ad will show the search term as the ad title.

11. Google now also allows you to pass the referring keyword trigger as a variable in the actual destination URL. To pass the trigger keyword as a variable use &kw= {keyword}. You can also track whether the clicks came from Google content ads or Google search ads by adding the following to your URL referrer= {ifsearch:GoogleAdWordsSearch} {ifcontentGoogleAdWordsContent}. Remember that URL is an important part of the ad, and be prepared to buy new URLs as the need arises.

12. Unlike Yahoo!, Google allows US and Canadian advertisers to bid on trademark names of their competitors. The competitors trademark names may not appear in the ad, but they can be used as the ad trigger word. The practice may not be legal in Europe, however, and even in north America you should group the trademark in an ad not using dynamic keyword insertion or your ad title will put you in trademark violation. Be prepared to respond to complaints immediately and amend your ways if threatened with legal action.

13. Google also offers a free AdWords Local Ad Preview tool to show what ads will appear on search results in different areas.

14. You'll probably want to make expensive keywords, or those drawing high traffic, into specific ad campaigns. Similarly, if a particular word is causing problems in an ad group, then consider setting it out on its own.

15. Google only allows one affiliate or merchant ad per keyword per URL, ensuring the affiliate with the highest effective price (CTR times max bid) gets their ad displayed. Affiliates can still have their ads show up if they create white label affiliate sites with information about the products.

16. Also consider:
      a. Experimenting with usual keywords.
      b. Redirecting ads to intermediate pages that give further information before the landing page proper: these can be split tested.
      c. Cloaking pages the ad editors see (be careful here).
      d. Go more for profitable traffic than is given by the budget function.
      e. Place ads on Friday evening, as they won't be reviewed until Monday or Tuesday (although there may be fewer B2B buyers over the weekend), and generate leads more than direct sales for higher ticket items.

Competitor Analysis Software

To supplement the sparse information Google supplies, consider additional software that pings Google and determines the ad display rate and average ad position for your ads and competing ads. AdGooroo allows you to see which competitors are the most sophisticated, and what positions have the most competition and perhaps profits.

Remember that SpyFu and KeyCompete both allow you to glimpse a list of keywords some competitors bid on.

Ad Groups

You may want to create an adgroup not only for your most expensive and best selling ads, but for these as well:

1. Misspelled terms
2. Misstyped domain names
3. A grouping about a personality type
4. Seasonal products or special promotions.

Pay Per Call

Google is testing pay per call, which will change the high end of local businesses (legal, loans, real estate, etc.)

Google Checkout

Google is becoming a leading payment processor, helping to make their ad market more efficient, gain more market research data, and create another revenue source.

AdWords advertisers who accept payment via Google Checkout have their AdWords ads highlighted, which may earn them a higher CTR and so better ROI.

Other PPC Engines

An enormous number of pay-for click search engines exist, but Google AdWords, Yahoo and Microsoft AdCenter are the most popular, followed by Looksmart, Ask and Excite.

Getting Sales

There are three phases in any successful ppc campaign:

1. Finding out what purchasers are looking for, and what search phrases (keywords) they employ,
2. Creating an attractive ad that will generate a click from a potential customer, and
3. Writing copy on the landing page that will take customers to the checkout page on your website.

Keyword Research

Keyword research is important. The ppc engines naturally want you to spend money by bidding on a wide range of keywords in the hope that a few will prove profitable, and that 'try and see' approach is often the only way forward. You may have some prior experience in a particular market sector, and analyzing copy of apparently successful competitors will provide some guide, but ultimately you will have to experiment yourself, monitoring results and refining the copy accordingly. Some ppc services allow you to write several ads, which are then rotated across the advertising network, but make sure that you can monitor each variant, if necessary sending visitors to separate landing pages. Google AdWords allow dynamic keyword insertion, which allows greater flexibility. Below is a chart taken (with the words slightly modified) from a reported AdWords account. Note how the cost per conversion drops off when modifiers are added to the root term.

Keyword

Phrase

Cost

Per Click

Click Through

Rate

Conversion

Rate

Cost Per

Conversion

abc tires

$0.77

7.8%

1.86%

$41.37

ABC car tires

$0.64

10.9%

1.92%

$32.96

[ABC tires]

$0.75

10.18%

2.32%

$32.01

ABC sports tires

$0.74

12.4%

2.91%

$25.29

ABC tire co

$0.59

15.1%

2.70%

$21.73

[ABC tire company]

$0.56

38.2%

11.11%

$5.03

ABC tire products

$0.74

17.3%

22.22%

$3.03

misspellings

$0.21

3.6%

1.82%

$11.37

Keyword Research

You can go some way with free services, but most companies use commercial keyword search software.

Writing the Ad

Ad copy writing is a skilled trade, and companies often employ professionals.

Monitoring Results

Small differences in copy or page layout can make large differences to sales. You'll need to follow the advertising industry and continually experiment, monitoring the results carefully. Needless to say, your site should work flawlessly, with all questions and customer options anticipated and funneled towards the checkout page. The shorter the selling route, the better is the conversion rate generally.

You'll want to experiment with ad copy in two places:

1. Search engine ad, the more so as click through rates here will markedly affect what you pay for each click.
2. Landing page, which directly affects the cost of acquiring a customer.

Click Fraud

Click fraud occurs when ads are clicked by no intention of buying anything, either competitors to drive up the merchant's costs, or friends to increase an ad publisher's revenues. Fraud is accentuated with 'click bots' — programs that automate the clicking process from hundreds of different IP addresses. Other programs can call up competitors' pages but not click on ads, causing a fall in their apparent popularity and hence ad ranking.

The numbers of AdSense publishers regularly banned suggests that Google and other company fraud measures are at least partially successful, but Click Forensics put the rate of overall US click fraud rate at 22.3% in the third quarter of 2010, up from 18.6 percent in the previous quarter. Botnets, malware and collusion fraud were the main culprits. Top-tier search engines and ad networks did have defenses in place, but companies were advised to compare reports provided by search engines and other PPC advertising venues with their own logs. {9}

Questions

1. How does pay-per-click marketing work?
2. What are the advantages and disadvantages of pay-per-click marketing?
3. Compare search engine optimization and pay-per-click marketing. Which is appropriate in what circumstances?
4. What alternatives to Google Ads exist. When would you use them?
5. Explain why keyword research is important.
6. What is click fraud, and what defense measures can be adopted?

Sources and Further Reading

Need the references and resources for further study? Consider our affordable (US $ 4.95)  pdf ebook. It includes extensive (3,000) references, plus text, tables and illustrations you can copy, and is formatted to provide comfortable sequential reading on screens as small as 7 inches.


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