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Search Engine Optimization : SEO BOOK.

Chapter 15

Pay Per Click - Overture, Google Adwords, and More

Defining PPC
If you use pay-per click advertising, you will pay each time someone clicks on one of your ds. PPC ads of various kinds have actually been used on the Web for years, but it's only the last couple of years that the medium has really taken off on the search engines. Here is how it all works:
· You register with a PPc system, provide a credit card number and load your account.
· You create one or more ads - providing a title, body text and link to the page which you want to direct visitors.
· You associate keywords with each ad.
· You bid on each keyword.

In general, when you bid on a keyword, you are bidding on a position. You can see a list of keywords in the Overture PPC system. The very first entry shows how much you are willing to bid on the keywords academic software. In other words, if someone searches for academic software, you are willing to pay $1.51 if that person clicks on your ad. And in this case, because the other people bidding on the term are not willing to pay that much, Overture will list your ad at the top. You can see how much others are willing to bid in the 5 Max Bids column. In most PPC systems, the top bid gets the top position. Google system is a little more complicated. When Google has to position your ad for a particular search result, it chooses the ads position partly based on your bid price, but also partly on the click rate or click through rate, the frequency with which people have clicked on your ad in the past. You may bid more than someone else, but because your ad has a low click through rate in the past, it may still be placed below the lower bidder. As Google puts it, "The most relevant ads rise to the top your ad can rise above someone paying more if it is highly relevant for a specific keyword." The big question is how much should you bid?
· You must understand how much a click is really worth to you; most companies do not know this.
· The higher your position, the more traffic you are likely to get.
· In general, if you are not in the first three positions, there is a good chance your ad wont be seen often and will get dramatically   lower click throughs. Google for instance syndicates their top three Adwords to sites such as results at the top of their search   results.
· Sometimes you may want to take position three, because you want to be in the first three, yet position one is just too expensive.
· Other times, you may notice that position one is just $ 0.01 more than you are already paying; it may be worth paying the extra $0.02 to leap frog the current bidder, just to boost your click- through.
· There's always a minimum bid level; $0.10 on overture, for instance and $0.03 on enhance.

Overture and Google adwords and some of the tier 2 systems automatically adjust your bid price so that you only pay $0.01 above the lower bidder.

The Two types of Ads
Note that tier 1 and tier 2 PPC systems now have two types of ads: search engine ads and contextual or content match ads.
The first are the search engine placements you have already seen. Contextual or content match ads are ads placed on web sites other than search engines. In fact, anyone can sign up to run these ads on their web sites through google's Adsense program if they would like to make money by running ads on their site. Sign up for this program, and Google examines your pages to see what ads are most appropriate for your page content. You place a little bit of code in your pages that pulls ads from the Adwords program, and google automatically places ads into your page each time the page is loaded into a browser. If someone clicks on the ad, you earn a little bit of the click price. From the PPC advertiser's perspective you should understand that these ads probably not as effective as the ads placed on the search engines. Some advertisers claim that people who click on these content ads are less likely to buy your product. E.g. than those who click on the same ad at search engine. Most PPC networks will not let you know at which sites your ads were displayed , or the specific metrics of content ads versus the standard ads. However, you can generally turn off content ads if you wish, as many advertisers do.

Pros and Cons
What is good about a PPC compaign?
· It's a much quicker way to begin generating traffic to your Website - hours or days, compared to weeks or months through natural search, as unpaid search results are often known in the business.
· It's much more reliable. With a natural search, you may put huge effort and not do well. With PPC you will get what you pay for. If you are willing to bid high enough, you will get the traffic.
· It's more stable. A site can do well in natural search results today, then disappear tomorrow. With PPC, as long as you are willing to pay, your site is there.

What is bad about PPC?
· You have to pay for every click, which can add upto a great deal of money.
· Sticker shock is likely to get worse over the next year or two; 2003 saw a huge boom in PPC, but still most people don't know what PPC is. Wait and see what happens to pricing when PPC is as well known as other forms of advertising.
· PPC doesn't always work, It's possible for every company to buy clicks at a price that is low enough to be profitable.
· Many people don't click on sponsored search results, as they don't trust them - perhaps 20 percent of all searchers, possibly more - so you are missing part of the market.
PPC should be one part of an overall marketing compaign. It should be combined with the other techniques.

The Three PPC Tiers

The PPC companies are networks; they place ads on multiple search sites. Yahoo! Owns on eof the two big PPC companies, Overture, which places ads not only on the Yahoo! And overture Web sites but also on MSN, AltaVista,CNN, InfoSpace, Juno, NetZero, Dogpile, ESPN and many others. /the major service Google's Adwords service appears on Google bul also on AOL. Google has a service called Adsense, which allows virtually any website to carry google PPC ads. PPC market as being split into the following three tiers.

· Tier 1: tier 1 comprises two companies, Yahoo! Overture and Google's Adwords. These two are responsible for more PPC placements than all the rest of the networks combined. They are also most expensive. A click that cost $0.05 on a tier 2 or tier 3 network may cost $2.00 on Overture or Adwords.

· Tier 2: Tier 2 comprises a handful of smaller networks that may still channel decent traffic to you, and at much lower prices, such as Find what, Espotting Media and ePilot. They cant channel as much traffic to you as you would get by bidding for first position on Overture or Adwords, but in some cases, they can send as traffic as you are getting on those two behemoths, simply because you cant afford the big guys' top price per click. The smaller engines don't have the same level of fraud protection as the bigger three. ePilot for instance place ads on,, Search Bug and so on. They may be small, little known sites but according to ePilot, the 100 or so systems they work with amount to almost 700million searches a month. Enhance claims 1 billion searches throughout its network each month, on sites such as EarthLink, InfoSpace and MSN.

· Tier 3: There are many other PPC networks, too; hundreds in fact, and some are little more than a scam, encouraging the unwary to pay a setup fee with real hope of ever getting any traffic. On the other hand, ther are many that can generate a little traffic for you each month; the problem is that you will spend a huge amount of time managing these tier 3 directly; rather its possible to work with a company that will sell you clicks at a fixed rate and then gather these clicks from a wide array of tier 3 PPC systems.

Where do These Ads Go?
In Google, for the health insurance search, the first two ads were placed at the top of the search results the first thing a searcher would see. Then ads are run down the right side of the page. Do the same search for AOL, and you will have the first four PPC ads at the top of the page, followed by a whole bunch of natural search results - that is, results that were not paid for - followed by another four google adwords PPC ads at the bottom of the page. At Ask Jeeves, the first four spots are reserved for ads they sell directly to advertisers, but following that they run ten of google's adwords ads, followed by ten natural search results. So ads run in different positions on different sites, and of course all this varies. It's obvious that these placements are paid ads. In most cases, the ads are preceded by the words sponsored links, or sponsored Web results or something similar, in fact the Federal Trade Commission mandates some kind of indication that a placement is paid. There is definite movement afoot to make it less and less obvious that more and more ads are appearing.

It may not Work!
Half of the money spent on advertising doesn't work and earlier there was very little way to track advertising success. Even today it's hard to know if advertising works or not except for direct mails and online ads. Because it is possible to track viewers' reactions to ads online in various different ways, it's possible to track results very carefully, which is how we know that billions of dollars were wasted on banner ads in the last few years of the last century. I am not suggesting that you should use PPC advertising, or that some people are not using it successfully. It's being suggested that you should be careful. In the days of the banner ad room, companies were paying way too much for ads, often with little regard, it seemed, for the metrics; that is measurements, the payoff. And today, many people are paying too much for their clicks, and prices are on the way up. Don't assume that just because someone else is paying $1.50 per click for the keywords in which you ar alos interested, you should be paying $1.51. A few things to remember:

· As weird as it may seem, many companies are losing money on their clicks.
· Some companies don't care if they make money on a lick, they regard it as merely part of the branding campaign - if a company is used to spending hundreds of the millions of dollars on TV ads, for instance it may not care to much about tracking the direct benefits of a few million spent on pay per clicks ads.
· Even if the company is making money on the clicks that doesn't mean you can make money based on the same click payment.

The last point is essential to understand. Say company A sells books about rodent racing, making $10 per book after paying production costs. Company B sells racing rodents, and it makes $ 200 for every racer it sells. The book company is out of luck; ther is no way it can compete for clicks against Company B could pay $50 or $100 or more on cliks for every sale it makes; clearly company A could not. Before you begin pay-per-click advertising campaign, yu really should know what a click is worth to your company.

Valuing Your Clicks

The Value of the action: Every commercial site has some kind of action that the site owner wants the site visitor to carry out: buy a product, pick up the phone and call the company, enter information into a form and request a quote, sign up to receive more information and so on. You have to understand the value of this action. Say you are selling a product. How much would you pay me if a brought you a sale? You may have a product that sells for $50, and it costs 425 to create and ship to a customer. You gross profit, then is $25, so you could afford to spend upto $25 to get the sale without losing money. The value of the click may actually be higher than this. If you sell a product for $50, you have a one third chance of turning the buyer into a regular customer, and you know that regular customers spend $ 50 with you every months for 18 months on average. Thus the lifetime value of your new customer is actually $150 not $25. ($25/monthfor 18 months divided by three).

Your Online Conversin Rate: Now, you have to know your online conversion rate, which you may not know when you begin your pay per click campaign. If you have an established Web site that has been in business for a few months or years, then it is useful information that someone in the company should have. For every 1000 people visiting your site, how many carry out the action you want? How many visitors do you convert to customers or sales leads or subscribers? For every 1000 people, not every 10o0 people for good reason. It may be a number below 1 percent. It may only be 7 or 8 out of every 1000 for instance. Because many people new to ecommerce don not realize that this is very much a numbers game, that very low conversion rate are common. There are businesses that convert a much higher proportion of their visitors; but there are also many businesses that are trying to get people to fill a form to get a quote for insurance or mortgage rtes, for instance, would have much higher conversion rates than companies selling products.

Figuring the Click Price: Coming back to the company selling a $50 product and making $25 per sale, you can assume that this company doesn't care about the lifetime value of the customer, as indeed many small companies don't. You can also assume that this company has figured out that its conversion rate is around 2 percent; I visitor out of 50 buys the product. We know that each customer is worth a maximum of $25; how much is a visitor worth, then? Fifty cents.

Different Click=different Values: The preceding is simplication, different visitors to your site may be more or less valuable to your company. If visitor A goes your site after being told by a friend that your site,"sells the best rodent-racing handicap software on the web", Visitor A is likely to be pretty valuable because she might buy several of your company's products or become a repeat customer. It's likely that search engine traffic is actually more valuable that the average value of your site visitor. Whether a click on a PPC ad or a natural search result, people who come to your site after searching for a particular keyword are likely to be more interested in your products and services than someone who simply stumbles across your site. Some large companies spend huge amounts of money trying to analyze their traffic carefully - they want to know where visitor comes from and exactly what each does. It's difficult for small companies to do this. But at least you need to beware of this issue when selecting keywords for your pay-per-click campaigns. Also that the major PPC systems provide additional services that allow you to track results - systems that will help you see what people do when they arrive at your site. You will be able to see how many PPC visitors actually buy your products, for instance, which will give a real solid idea of your site's click value.

They Won't Take My Ad!: That is when working with a PPC network is having your ads dropped because they don't match the network's standard. As often happens, because one of the company's editors thinks the ad doesn't match the network standards, or even because your web site is not acceptable. While some of the tier 2 networks are much less fussy, Overture and Google Adwords have very strict guidelines about the what sort of Web page or Web site your ads can link to. Each network is different but the following are the guidelines by Google or Overture:

· Your site requires a password. To point an ad to a password-protected web site, the PPC network should take your money and run; and affiliates must make clear in the ad that they are affiliates.
· Your site's content doesn't match the ad. Perhaps you have a very weak ad that simply doesn't provide much information about the subject area you are advertising around.
· Your ad contains abusive, objectionable, or threatening language.
· Your site appears to facilitate the use or distribution of illegal drugs. Overture wont take ads for sites that sell kits intended to help people cheat on drug tests.
· The landing page specified in the ad must either contain content related to the ad, or have an obvious 0apth to the related content.
· You used a trademarked term in your ad, but there's no content related to that product on your Web site.
· Your ad doesn't explain that the product you are selling on your site can only be shipped to a very limited areas.
· Multilevel marketing sites are not allowed to use the terms job and employment on some PPC systems, but many use the term business opportunity and work.
· You don't own the page you are linking to. If you are an affiliate, you must link to your own page, and then direct visitors to the retailer's site for instance and you cant use a redirect to automatically push visitors.
· If the ad promises information that is not on the site but will be delivered in some manner - by email or snail mail, the ad must state that fact.
· The Website must function in Internet Explorer.
· You are using a term that is not allowed for your business.
· Auction sites may not bid on terms related to products not currently on sale at the site.
· The network believes that someone searching for the keywords you chose will not find your ad content.
· Your site contains content that may not be legal or is in some other way objectionable, or links to such a site.
· Your ads may not contain superlatives or exclamation points.
· Your web sites disable the browser's Back button.
· Your web site contains many broken links or is in some other way malfunctioning.
· The language used in your ad must match the language of the target Web site. If your ad is written in Spanish, it cant direct people to an English language Web site.
· You cant put contact information, such as phone numbers and email addresses.
· Your site spawns a pop up window when the visitor arrives.

Automating The Task

Working with PPC campaigns can be rather tedious. You have got to keep your eye on the rankings each day or your ad could slip. In very competitive markets, it may be necessary to check several times a day. You may be using half a dozen systems, too. How do you handle all this without it getting totally out of control? Here a few ideas:
· Many companies hire a full time person, even two or three people, just to manage their PPC campaigns.
· Programs are available that help to automate PPC management across multiple systems; GoToast is one of the best known but various products are available.

· Some companies hire a third party to manage their PPC campaigns.
There is no easy answer. The automation software may be a good idea if you have a significant PPC campaign - tens or hundreds of thousands of dollars a month, with thousands of keywords over multiple PPC networks. On the other hand, having used one of the major automation systems, I have to say it was complicated not something you would want to use for a simple PPC campaign. Some companies manage google, Overture and two or three of the other, more productive tier 2 systems themselves, in house, perhaps using software if they have a very big keyword list. Then they use a PPC management company, or software such as GoToast or BidRank, to buy them keywords from the smaller tier 2 and tier 3 PPC companies at a fixed price per click.

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