Pay-Per-Click Advertising Explained
by Chad Lane, Co-Founder and Chief Strategy Officer
I have a confession to make: I buy things online all the time. Almost daily. It’s not uncommon for a Facebook ad to reel me in, and there I am buying something (awesome) right from the ad!
But how did they know it would work? That I would buy?
I’d like to explain the secret behind online ads and help every business owner I can in the process. First, I’ll explain how these ads work, and then I’ll give you the secret to making them profitable.
The last time you were doing an online search for a product or service, did you click on a search result with the word “Ad” next to it? If you did, you were participating in pay-per-click advertising.
Each time you click on one of these ads in your search results, the advertiser pays a fee. Which is why this advertising is called pay-per-click, usually referred to as PPC.
In Google searches, these ads appear at the top and bottom of each page of search results. On Facebook and Instagram, PPC ads are mixed in with posts from individuals.
When a person clicks on one of these ads, they arrive at a page intended to get them to take further action. That’s the whole point: the prospect clicks on an ad then takes the next step such as asking for more information, requesting an appointment or, best of all, purchasing.
Targeting Your Ideal Customers
One of the great things about this medium is that you have a remarkable ability to zero in on types of customers most likely to be interested in your products or services.
You can choose from characteristics like these:
- Age range
- Parental status
- Age of children
- Household income
- Life events (marriage, moving, etc.)
- Marital status
- Job title
- Homeowner status
You can also select people who have connected with your business in the past or people with characteristics similar to theirs.
Paying for PPC
When you set up a PPC campaign, you don’t have to pay up front for these clicks. You set a limit on the budget you want to spend, arrange for a payment method, and the platform (Facebook, Google, Instagram, etc.) collects money with each click. You’re not paying for an ad today and then waiting for an ad to run. Your ROI, in the form of prospects contacting your company or purchasing, is instantaneous.
Flanking Traditional Media with PPC
If you have ads running on the radio or television, in print media or on billboards, you should flank those efforts with digital advertising. Why? Let’s imagine that you’re running billboards and television ads featuring the hot new Mustang model that’s just hit the showroom floor. These ads generate interest in the model.
When your prospects start thinking about purchasing, they’ll likely do their research online. One study showed that 81% of consumers contemplating a large purchase researched online for months before making a move.
As soon as the searcher goes online to start looking at features or dealerships, you want your PPC ad to appear at the top of the screens of their desktop or mobile devices. This can greatly speed up the process of converting that interest to a sale.
Does PPC Work?
Any marketing person worth their salt knows how to make PPC work. If it’s not working, it hasn’t been done right.
You might hire a company to do PPC advertising and get a bucketload of reports that seem to indicate the ads’ effectiveness. There are dozens of possible metrics that could be reported. This dazzling array might conceal the fact that your PPC ads aren’t achieving the one metric that really means anything.
That metric is cost per conversion—we’ll explain.
A conversion occurs when a person takes the action you want them to take, such as:
- Purchases products
- Signs up for a newsletter
- Requests call from sales rep
- Purchases subscription
- Calls your business
When those responding to your PPC advertising take the action you want them to take, you can work out how much each conversion costs you. Just divide your ad spend by the number of conversions.
What’s Involved in Making PPC Work?
Testing. This is what makes online or traditional marketing work. Before rolling out the entire marketing budget, ads should have many elements tested to see which are most successful.
Here are some of the features that should be tested:
- Calls to action
- Time the ad appears
- Demographic that receives the ad
- Landing page
It’s best to test one element at a time. At Worry Free, we run dozens of test ads simultaneously. Then we refine the ads incorporating the winning elements. Gradually, features that don’t work are eliminated. You’ll wind up with an effective ad and low cost per conversion. This process can be lengthy but it’s the best way to avoid paying for a bunch of ads that don’t get a result.
You can also test your audience to see which existing products or services they like or special offers they might respond to. You can test ideas for new products or services, too.
Working with a company that’s done this a hundred times and knows the ins and outs is the fastest way to achieve the goal of low cost per conversion. Some business owners try to do this for themselves, but it can be confusing and time-consuming. That’s why so many businesses come to us.
If you’re intrigued by the idea of putting this advertising to work for you, complete this form and we’ll be in touch shortly.