- 1. Who works with this model?
- 2. Why is it beneficial to use PPC
- 3. Cost per click and its factors
- 4. How to measure PPC performance
PPC is an internet marketing term that translates as “pay per click”. Its essence lies in the fact that when an advertising offer is shown to a target audience, an amount is debited from the advertiser for a click on this ad, and not for the number of its impressions.
Previously, the CPM model was popular, which assumes a price per 1000 impressions of a commercial block, regardless of the reaction of the audience. But paying for non-targeted impressions is pointless, so today the option with click-through payment is recognized as a more justified pricing model ‒ you can calculate the exact number of visitors who went to the site.
This is why advertisers are interested in using PPC ‒ Pay per Click. Although there is already a more advanced model, PPA – Pay-Per-Action, its features ‒ the advertiser pays for specific user actions on his site. For example, for browsing pages, purchasing goods or ordering services, downloading files or filling out questionnaires. However, for a business that is conducted not only online, but also offline, PPC is better suited.
1. Who works with this model?
PPC is introduced into the marketing strategy by a contextual advertising specialist who leads and sets up advertising campaigns, experiments with pricing models. It also performs many more functions:
- Builds a traffic funnel together with sales specialists and determines the priority areas of product advertising.
- Adapts campaigns to the specifics of specific systems. Since there are differences between advertising in Google Ads and Yandex.Direct, in social networks, etc.
- Finds advertising tools, platforms and tests them for the opportunity to reduce the price for a perfect transition.
- Monitors campaigns and, if necessary, quickly makes changes to them, monitors performance metrics.
2. Why is it beneficial to use PPC
Since the main goal of this model’s ad messages is to get the most clicks on the ad, it becomes an integral part of the sales funnel. More precisely, it belongs to the upper part of it, allowing you to attract as much traffic to the site as possible.
Advertising message formats vary. They can appear:
- in search results ‒ graphic or text blocks;
Fig. 1 ‒ Example of advertising messages in a search engine
- on site banners (static or dynamic);
Fig. 2 ‒ Example of a side banner ad
- as contextual ads.
Fig. 3 ‒ Example of contextual messages on a news site
Since those users who are already interested in the offered information click on the ads, the chances of seeing them as customers are significantly increased.
3. Cost per click and its factors
An ad can be shown in the SERP or on the site several times within an hour. Accordingly, from 20 to 50 impressions can be recruited per day. But the payment will be debited from the advertiser’s account only after each click of the visitor.
The specific cost of a completed transition after clicking on a banner or ad that is debited from the account is CPC, or Cost-Per-Click.
The transition price can be fixed or flexible, the second option is more typical for search engines and social networks. CPC efficiency is influenced by:
- The quality of the content in your ad or banner.
- The relevance of the landing page to the user request.
- Ad click-through rates and other technical details.
- The site where the ad or banner is placed.
- Number of impressions.
- Competition in a specific niche at the time of the advertising campaign.
Any pay-per-click campaign aims to reduce the cost of going to the site by lowering the CPC value. This means that the advertiser spends less on the budget, but at the same time gets more traffic to the landing page.
In practice, there are two common ways of determining the cost of a click: calculation at a fixed price per click ‒ flat-rate PPC, and calculation at a competitive rate ‒ bid-based PPC. Flat-rate PPC assumes that the cost per click is fixed and changes only when the agreements are revised. In turn, Bid-based PPC is a little more complicated: the cost per click depends on the planning of an advertising campaign, and different ads from different employers can apply for one place at the same time. In this case, each of them strives to get the most clicks for the lowest cost.
4. How to measure PPC performance
It should be noted that the effectiveness of the PPC model is determined not only by the cost of a click.
There is a separate indicator of efficiency ‒ ROMI, or return on investment, translated as “return on investment”. It can be considered an indicator of the profitability of an advertising campaign ‒ ROMI allows you to quickly assess the effectiveness of the activities that are being carried out. The fact that the project did not pay off is shown by any negative ROMI index, that is, any below 100%.
There are PPC management systems that charge you on a PPC basis. If a user clicks on such an advertisement, he will be taken to the system’s catalog, which looks like a search engine for him, where positions are determined not by the quality of the site, but by the cost of a click paid by the advertiser. For the advertiser, the transition of the user to the page of the PPC system is free ‒ the click is paid only when moving from it to the target site.
Thus, the high performance of a PPC campaign (high ROI) is visually tracked by three indicators:
- the number of conversions;
- growth of targeted traffic;
- the most reduced cost per click.
After all, high conversions cannot be achieved with a low cost per click and inappropriate traffic.