Pay Per Click Advertising Explained for Beginners

Pay Per Click Advertising Explained for Beginners

Alright, what's up, everyone? Welcome back for another value-filled blog post.

Today, we're going to talk about Pay Per Click Advertising. This will be a quick and top-level look at pay-per-click advertising.

We're just covering pay-per-click advertising explained for beginners.

If you're just getting started with pay-per-click advertising, maybe you're just trying to learn a little bit more about it for your own business. Maybe you just got a job and pay per click advertising, and you need to know more. 

First Things First, What is Pay Per Click Advertising?

Pay per click advertising is a form of advertising where if you're an advertiser you pay for each click to your website or if you have a mobile app, something like that. So, every single click that you're driving, you're paying for each click, you don't pay for impressions. You don't pay for anything like that, you're paying for clicks specifically.

Now, Google ads is the most well-known pay-per-click advertising network along with Bing ads, I consider Facebook to be a pay-per-click advertising network, even though technically it's not.

It's really considered social advertising and you're generally paying for impressions on Facebook ads, but I still consider it to be a pay-per-click advertising network. Ultimately what it is, is advertisers are setting bids on keywords for clicks to their websites, so you're bidding on keywords, or you're bidding on audiences.

If you're an advertiser, you only pay when an advertisement is clicked. Here is an example of a pay-per-click advertising campaign through Google.

pay per click AdWords

It's specifically a search campaign where we're targeting keywords related to farmhouse décor, and if you can see here there are impressions at the top and there are interactions.

For interactions, it's just going to mean clicks in this case for this campaign and it's gonna show we almost have 3000 impressions and 16 clicks. If you look at say the average cost is 61 cents, the total cost is $9.77. The average cost is our average cost per click.

We're only paying for these 16 clicks on our website. We didn't pay at all for any of the impressions that didn't drive click.
That's why it's called pay-per-click advertising is because you're paying for each click to your website. 

Next is Going to be, How Does Pay Per Click Advertising Work?

Generally, you set a bid for clicks to your website. You're either bidding on keywords or you're bidding on audiences and you're setting a bid for how much you're willing to pay for each click to your website.

Now bids can really vary.

For something like home décor, you might be bidding 1 to $2, then for something like real estate, you might start bidding up to $5.06 dollars, $7 depending on the market you're in.

Some lawyers, some insurance companies they probably bid upwards of $20 - $30 per click. Some of the top bids go above $50 for each click to your website. How much you're paying for click generally depends on how much revenue each click and can drive to your business.

For example, if you're a lawyer, you're willing to pay $50 per click because one client can equal thousands and thousands of dollars. Same with real estate agents, they're generally gonna pay more.

Now home décor even though you're selling high-priced items, sometimes you're still only making a certain amount for each sale.

It really depends on what keywords you're targeting, what audiences you're targeting, and because you're entering an auction against other advertisers, so generally, the amount you're willing to pay for each click depends on the other advertisers as well, how much they're willing to pay for each click.

If other advertisers are willing to pay much more than you for each click, then you're going to have trouble ever winning the auction. The way it works is when you're bidding for something, let's say you and five other advertisers are bidding for a specific keyword.

Every time someone types that keyword into Google, you're going to be entering an auction to try to get your advertisement out there.

Let's look at another example. If someone types in "accounting software". If you can see in the image below, the top four results are all advertisements. They're all based on accounting software.

pay per click search campaigns

Each of these companies went to enter this auction and then also on the right-hand side these are also ads.

Those are considered Google shopping ads and the ones on the left are search ads. If you click through any of these it's going to be considered an advertisement, click, and you can see sponsored up in the top right-hand corner, you can see the ad next to each of the URLs.

This is the way it works are these advertisers are entering an auction because they're bidding on the keyword accounting software and they're each bidding a certain amount. Okay, furthermore…

All advertisements that show are based on a bid, and its ads quality score or relevancy score.

Basically, the way it's gonna work, Google is going to take into account how much the advertiser is bidding, and they also use something called quality score, which is going to look at their landing page, it's going to look at the average click-through rate historically for this advertiser.

It uses another score along with the bid to basically come up with what's called an ad rank and each ad will be ranked in the Google search results based on their ad rank. So that's going to be a combination of quality score and bid.

That's basically how the auction works, it's going to take into account the bid, it's going to take into account the quality score and whatever ad has the top ad rank is going to show at the top whatever second, it's gonna show second and so on and so forth.

You're bidding on a certain set of targeting and depending on advertisers’ other competitors and different factors are going to determine how much you're paying, how often your ad shows up in the search results, and how often your ad gets clicked.

Next, we're going to talk about, how can you get started with Pay Per Click Advertising?

You can start by using popular pay-per-click advertising networks. Google ads, Bing ads, or Facebook ads. All these are very popular. You need a website or an app to promote and then once you have your website and you're ready to promote, you generally want to create different landing pages.

Landing pages are where you're gonna be sending traffic to and then once you're ready to go.

You want to do is sign up with the pay-per-click networks, enter your payment information and you can start by creating your first campaign. Later, I'll add tutorials on this blog for how to get started with campaigns with all the top ad networks. Be sure to check back periodically. In the meantime, you may find some good walk-throughs on YouTube.

It's really easy to get started, I mean you just need to sign up, you need to enter your business information, you need to enter your website and then you just get started with creating your campaign, and over time what you want to do is, test and optimize.

Is Pay Per Click Advertising worth it?

I think the key is testing and optimizing your campaigns. I've worked with large companies, and they run pay-per-click advertising ads every single day.

Working with companies that have million-dollar yearly budgets and ultimately, they're trying to drive more leads and sales and when you're trying to rank high in Google it can be very difficult, especially when we come back to the accounting software example. Even if you rank #1 with SEO for accounting software, you're still below four different links.

There are all sorts of ads to the side. There are those links at the top, so it's becoming more and more difficult to get traffic to your website just through organic search.

That's why a lot of companies are running pay per click advertising. So, it's definitely worth it.

I think it's worth it for businesses of all sizes. But you do need to test, you do need more knowledge of pay-per-click advertising and the different pay per click advertising networks, how they work, and how to get the best results for your budget.

This is the first lesson of pay-per-click advertising, basically what is pay-per-click advertising. If you have any questions leave them in the comments section, stay tuned for more blog posts on PPC.

If you need more help or would like to discuss getting some help with managing your pay-per-click ad campaigns, check out our "Managed PPC" packages.

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