How Does Pay Per Click Work?


How Does Pay Per Click Work?

How does pay per click work? It might seem like a simple question, an advertiser pays a fee every click their advert receives. For the user, they will see an advert in multiple locations, like on Youtube Videos, as banner adds and as search results. But the location and use of these adverts is a complex algorithm that requires mastering in order to get the most yield from an investment. 

In this article we will explain how Pay Per Click works for the users, advertisers and how to get the most ROI from it. 

Pay Per Click is the fastest growing from of digital advertising and generates affective businesses thousands in revenue because of it. For example businesses make an average of $2 in income for every $1 they spend in AdWords (Google). How does pay per click work? Carry on reading to find out and how you can achieve better results from you PPC campaigns. 

how does pay per click work
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How Pay Per Click works for Advertisers

This is what most of the readers of this blog will care about, hence its location at the top of the article. How does PPC work in terms of the advertisers? In a short answer it works on a bidding system, the user searches a term, Google (being the biggest PPC provider) workout what websites should feature in this term by searching their index. They will also look into Adwords database to understand the adverts location on these terms. We will ignore how the SEO works from now on in this article and focus on PPC. 

The Location Bid

Before Google has generated the search results it will bid the Adwords results against one another to workout the order of the adverts. This bid takes into account budget and other aspects that we will delve into later in the “Quality Score” section. 

When starting an Adwords campaign a daily budget is set. When bidding adverts against one another the budget helps Google understand how much to bid. On average the CPC (cost per click) is $2.69 (Wordstream), Google bids your budget against other bidders for search results, with the higher budget typically taking the better position. This bidding process happens within milliseconds and the algorithms in place for the budget are incredibly complicated. 

Cost per Click

We mentioned earlier about CPC which stands for Cost Per Click. This term refers  to the price an advertiser pays each time a user clicks on their advert. When researching keywords that will be appropriate to advertise on the advertiser should also take into account the average cost per click. This will always be an average cost per click as this price fluctuates every minute depending on term used, time of day, what day and what country their advertising in. The budget set, helps Google understand what time of day will yield the most results from your budget, meaning your daily budget is wisely used. 

Keywords for PPC

Keywords are something that we have spoken about a lot in our blogs. Key terms, Keywords, long tail and short tail are all really important features of digital marketing. You can check out our blog here for more information on keywords and how they’re useful in SEO Keywords and PPC Keywords. But the short version on those articles are: for both SEO and PPC keyword research is a must to get your website or advert to rank highly. 

How Pay Per Click works for the users

The users experience of PPC is something that I’m sure most of you will know about already. But there are a few things that advertisers overlook that can have serious impacts on the users. For the user, they of course see the results page, this shows them both organic search results and advertising results. What the advertiser needs to do is work out how they can stand out beyond those other results. 

advert extensions

Standout with Adwords Extensions

The advertiser has way more opportunities to standout beyond a simple organic search results, and typically 41% of the top 3 results are advertising slots (Wordstream). So what can you as an advertiser do to standout, the answer is simple, but also a bit more time consuming, but costs nothing more, and that is advert extensions. There are a whole bunch of advert extensions, check out this article for the full list of ad extensions

To wrap that article up, advert extensions basically add more to your advert than a simple heading and description, they add the ability to insert your phone number, email, other website locations, Google reviews and so on. Basically making your advert larger and more impactful. This is a gem that most small time PPC campaigners seem to miss. 

Quality Score for ROI 

Quality score is something that almost every small time and unwilling PPC campaigner will miss out on. This is an entire section of this blog because it is very important when it comes to advert locations, conversion rates and budget. The short version of this section is that Google takes into account more than just budget when ranking adverts, and that is great news to any advertiser out there with a smaller budget, but a larger know how than their competition. 

Relevancy For Location

Location is very important, for both SEO and PPC, and like SEO, PPC is also based on the quality of your pages and meta tags (descriptions and titles). Like I said in the previous section, Google don’t base location just on the budget, the advert and the landing page need to be relevant to the search result. For example, if a company is paying £10 (the actual CPC is around £0.52) per click to advertise on a search term relating to tigers, but their advert and landing page do not have anything to do with tigers, their location is going to be terrible. This is where Googles quality score comes into affect. 

Adverts Quality Score

The advert its self, the area that the users will see when they receive their search results need to be relevant to that search term. Using the keywords in the title, in the description and the page slug (url) is crucial for this. Spamming keywords is never going to work however, all you’re looking to do by adding the keyword is to confirm that this advert is relevant to the search term. 

The quality score also takes into account how well written the description and title are. This not only needs to be well written, but also appealing, you’re not only looking to get a good location on the results page but also looking to draw a users into clicking on your advert. 

Landing Page Quality Score

The landing page is a very forgotten part of the PPC universe, when it in fact plays one of the largest rolls in conversions and actually making ROI from the campaign. Checkout our article on landing pages here for the full breakdown on what a landing page needs to be like in order to convert a user and rank higher.

The landing page like the title and description need to be focused on keywords. You’re not looking for SEO levels of keyword focus as your main focus should be on converting those clicks. But the page needs to confirm that your landing page is relevant to the search term to improve the quality score of your advert. Oh and before I forget, please, please, please don’t just use your homepage, develop a new page, understand what should be on it and how to point that user towards converting.

How Pay Per Click Works Conclusion

So let’s round up this article with a nice short snappy conclusion… Pay Per Click is a form of advertising, where the advertiser uses their daily budget to bid for locations on search results against other advertisers. Budget is very important, but so is relevancy, making sure every aspect of your advert is relevant to keywords used is a sure fire way to beat your competition, even with a lesser budget. On the users side, you not only need to focus on ranking highly, but you also need to look at how you can get those users to click on your advert and stand out. Once you’ve caught them how is your landing page going to convert them into becoming a paying customer? 

If you’re looking for help on running your PPC campaigns, looking to improve conversions and get more return on your investment get in contact with Channel Creative using the button below.