FAQ: Using PPC (Pay-per-Click) Google Adwords
An FAQ with info on how to use Google Adwords for Your Web Marketing
What Is PPC?
Pay-Per-Click (PPC) allows you to advertise in search engines such as Google or Yahoo. (Pay-Per-Click is also called Paid-Placement, Pay for Performance, and P4P).
You can also control the placement of your ads. The more you bid against your competitors, the higher your ad will be placed. When a user clicks on your ad, they come to your website and you pay for that click.
There are two major PPC services: Google AdWords, owned by Google, and Overture, which is Yahoo's PPC service.
PPC has precise tracking tools. You can measure click and conversion rate. You can delete ads and campaigns that don't work.
Why the Interest in PPC?
Web advertising is now nearly $10 billion per year. This is larger than the entire billboard industry, 80% of the magazine advertising industry, and half of radio advertising. General advertising is growing only 7% but internet advertising is growing 32% per year.
Companies are discovering that PPC works and they are reallocating their advertising money. Ford Motor Company moved 10% of its budget away from radio/TV to the web. Newspaper advertising has fallen 4% due to online competitors. Fully 40% of all online advertising is in PPC and that is growing extremely fast. Google doubled its revenues each year. In 2004, it doubled from $2 billion to 4 billion and it will probably double again in 2005.
PPC Isn't Blocked
Nearly every other form of advertising can be blocked. Radio listeners simply switch channels. Many are signing up for satellite radio which has no advertising. TV viewers either switch channels, subscribe to cable, watch Netflix, or are using Tivo to skip the advertising altogether.
Web advertisers who use Flash, banner ads, or image ads are discovering that users can use the Mozilla web browser and block those ads. Simply rightclick and the Flash and banner ads disappear. Advanced users have switched to Mozilla. Those people are the best buyers but they don't even see ads anymore.
An Example of PPC Ads
Let's look at an example of an AdWord. At the right side of the Google results page, there are three ads. These have a heading, two lines of text, and a URL.
These are paid ads from three companies. When you click one of these ads, you will go to that company's website. Google charges that company a fee for each click.
Google displays eight ads per page. If you go to the second page in Google, you see eight more ads.
Figure 1: In a Google search, the AdWords ads are displayed at the right.
Figure 2: Closeup of an Adwords ads.
Google Adwords vs. Overture
There are two PPC services: Google Adwords and Yahoo Overture. They cover 98% of the market. (Note: In April 2005, Yahoo renamed Overture to Yahoo Search Marketing. However, everyone still knows it as Overture.)
Distribution of Google Adwords
By advertising on Google AdWords, your ads will appear in the following search engines and content sites that are affiliated with Google:
Google's distribution network is based on Adsense. This means that Google's ads are displayed on millions of webpages. Google's distribution network is far larger than any other company.
Distribution of Yahoo Overture
By advertising on Yahoo Overture, your ads will appear in the following search engines and content sites that are affiliated with Yahoo:
By advertising in both Adwords and Overture, you get 98% market coverage. Which one should you use? Use both. See which one gives you the best results and concentrate your budget on the one that works.
How PPC Works
Here's what happens when you sign up for an AdWords account at Google.
This is a general overview. As the quote at the beginning of this FAQ points out, underneath this simplicity, PPC is bafflingly complex. It is not an understatement to say that the large advertising and marketing companies don't understand PPC.
PPC Delivers Qualified Traffic
Tracking the Conversions and Lead Generation
PPC has extensive reporting tools that let you keep track of your campaigns. You can create reports to show the results and conversion rates and keep close track on the results you are generating with every PPC campaign.
Figure 3: An example of an Adwords graph for impressions.
PPC services offer conversion tracking to show the number of conversions and cost per conversion.
You fetch a bit of HTML code at AdWords or Overture and place it in your website's thank-you page. This is the page that a customer sees when they finished a purchase. This lets you see that the visitor clicked on the advertisement, came to your site, and bought the product.
You use the reports to see what works and what doesn't work. You delete the poor performers and concentrate your budget on what works. You repeat this process over and over, and your advertising campaigns will improve in efficiency.
Targeting the Ads: Local or Global
Adwords allows you to target the ads to countries, states, regions, cities, and even down to specific neighborhoods.
Targeting the Ads: Various Languages
You can also target the ads to languages. You can select any of the major world languages, including smaller languages such as Icelandic, Urdu, and Slovenian. The keywords and ads are in those languages.
Content Targeting at Google AdSense
Google has an affiliate program called Adsense. Webmasters sign up and Google displays Adwords on their webpages. The ads are related to the page's text. When visitors click on an ad, Google gives part of the click fee to the website.
For example, someone is looking at a koi website. On the side of the page, AdWords about koi are displayed. The visitor clicks on the AdWord. The advertiser pays a click fee to Google and Google gives part of the fee to the website owner.
Adsense is Google's distribution network. Google has built an ad distribution network that has literally millions of pages. No other advertiser comes close.
Content Targeting at Google Gmail
Google Gmail is free email, similar to Hotmail and Yahoo! free email accounts. This is another way for Google to increase the display of Adwords.
Gmail looks for keywords in emails and then inserts related advertising into the email. For example, you write to your friends about plans to go bass fishing. Gmail inserts Adwords advertising that are related to bass fishing. If you're going to fish on the Tennessee River, the ads will for advertisers who provide products and services for fishermen on that river.
Most of your competitors don't use PPC. They don't know about it or they don't understand it. Of some 13 million companies in the USA, only a few hundred thousand are using AdWords at Google (Business Week, April 2004).
Further Reading: The Adsense FAQ