How Pay Per Click Advertising Works

Pay Per Click (PPC) Advertising is a very popular online advertising method that has been used by websites for over 5 years. It involves the bidding on search phrases (known as keywords) by websites, with the website which bids the greatest amount per click, getting listed first on the search results page.

Using pay per click advertising on search engines, you can make sure that you only pay for visitors which are interested in your product. These people are obviously more likely to buy your product than those who are not looking for this product. This is why pay per click advertising is more effective than banner advertising and gets better results for you advertising dollar. Banner advertising can be seen by anyone that visits the website (you are paying to advertise to anyone - including people who are not interested in your product), whereas pay per click advertising listings are only seen by those people who actively search for particular products/services/information. Hence, the better advertising results.

For example, let's assume you run an online ecommerce store that sell flowers over the Internet. To reach your potential customers and get people to visit your website (and hopefully make purchases) you need to advertise. Pay per click advertising is a great way to do this! You select that search phrases which you would like to be listed for. In this example, they would be flower related search phrases such as "flowers", "flower shop" "flowers online", "roses" etc. You would sign-up, deposit money into your pay per click advertising account and then choose the search phases (keywords) that you would like to bid on.

Then, comes the most important part. Choosing which keywords you want to be listed for. Generally, the more specific you are, the cheaper the cost per click will be and the better results you will get. The downside to using very specific keywords is that these very specific keywords tend to be search for a lot less than the less specific, more common search phrases. It is recommended that you find a balance between the more popular (but still targeted) search phases and the very specific, but less trafficked, search phrases

Once you have chosen the search phrases (keywords) that you want to use, you then have to select how much money you want spend per click. A good way to decide is to see how much your competitors are spending. Again, using the above example of a flower shop, you would see how much they bid and then bid the same amount, of slightly higher. If you would like to be listed first, and you competitor is bidding $0.50 per click, than you can try and list yourself higher than them by bidding $0.51 per click (for example). It is kind of like an auction, in that the higher bidder wins top spot! The advantage of being listed first in the search results is that you are the first result the searcher will see, and therefore you will generally get more traffic. More traffic means more potential customers. Of coarse, how much you spend should be dictated by how much you will make per sale. If you make $10 per sale, then you can afford to spend roughly $1 or so, per click. If you were to make only $2 per sale, than bidding $1 per click would not be a wise business decision.