PPC or pay-per-click is a common advertising model in online campaigns that help drive traffic to a website. PPC is an effective way to quantitate the investment of return because advertisers only pay for the publishers based on the number of ads click.
How the PPC Model Works
The pay-per-click model is primarily based on keywords. When internet users type anything in the search engines or other sites, PPC is displayed to the targeted customer that uses that “keywords” related to business or products. Therefore, companies that rely on pay-per-click advertising models research and analyze the keywords most applicable to their products or services.
For example, you are searching about costumes on YouTube, PPC uses that as a keyword and displayed clothing items related to using that search keyword. Investing in relevant keywords can result in a higher number of clicks and, eventually, higher traffics to the site and getting the leads.
Benefits
For advertisers, the model is advantageous because it provides an opportunity to advertise products or services to a specific audience who is actively searching for related content. In addition, a well-designed PPC advertising campaign allows an advertiser to save a substantial amount of money as the value of each visit (click) from a potential customer exceeds the cost of the click paid to a publisher.
For publishers, the pay-per-click model provides a primary revenue stream. Already established online platforms likewise YouTube, Facebook. Online companies are able to monetize their free products using online advertising, particularly the PPC model.
Key Concepts to Understand About PPC
CPC or Cost Per Click
CPC is the price paid by the advertiser for each click on an ad. There are two paid types,
- fixed amount
- auction.
The advertiser establishes a bid or maximum price that they are willing to pay for each click because the similar product also bid for PPC and the winner product is displayed first.
CPC = cost ÷ clicks
CPC = (CPM ÷ 1000) ÷ CTR
CPC = conversion rate x CPA
Click Through Rate
The CTR is the percentage of users who click on an ad out of the total number of users who have seen it.
In some PPC systems, the CTR is a determining metric for setting the price of an advertisement, since the system rewards ads that have higher quality and therefore a higher CTR.
CPC = clicks ÷ impressions
CTR = (CPM ÷ 1000) ÷ CPC
Impressions
Each of the views that an advertisement receives to users, whether the user clicks on it or not.
Segmentation
When online advertising, you have a great deal of control over the audience you are targeting with your ads. Differ than keyword You can segment the audience that will see our PPC campaigns based on factors like age, gender, location, interests, etc. Each pay-per-click platform offers different options that you can combine to achieve a high level of accuracy. This method ensures your ads are displayed to users that have a good chance to be customers of your products.
Landing Page
The landing page is the webpage that the user is directed to after clicking on your ad. Here, well manage simple relevant website has a great chance to impress visitors and lead them to purchase.
Conversion
Conversion is probably the most important metric in a PPC campaign because it involves measuring the performance of your ads. The term “conversion” refers to each of the purchases made by a user after clicking on an ad.
The conversion ratio is the percentage of users converted into customers out of all the users that clicked on the ad.
Conversion ratio = number of conversions ÷ web visits
Frequency
Frequency means the number of times each ad is shown to a specific user during a given time period. To calculate frequency, divide the number of impressions by the number of unique users.
Frequency = number of impressions ÷ number of unique users
The user seems familiar with ads that displayed several times that they have to click and visit the landing page, but sometimes frequency is annoyed the customer and they rejected it.
Pay-Per-Click Models
1. Flat-rate model
In the flat rate pay-per-click model, an advertiser pays a publisher a fixed fee for each click. Publishers generally keep a list of different PPC rates that apply to different areas of their website. Publishers are generally open to negotiations regarding the price according to validity and longevity.
2. Bid-based model
In the bid-based model, each advertiser makes a bid with a maximum amount of money they are willing to pay for an advertising spot. Then, a publisher undertakes an auction using automated tools. An auction is run whenever a visitor triggers the ad spot.
The winner of an auction is generally determined by rank. The rank considers both the amount of money offered and the quality of the content offered by an advertiser. Thus, the relevance of the content is as important as the bid.
Examples of Where Pay-Per-Click Is Used
PPC Ads in Search Engines
Search engine advertising, also known as search engine marketing (SEM), allows you to show ads to users based on the keywords. The main search engines, such as Google and Bing, use a model based on PPC through auction.
PPC Ads on Social Networks
The main advertising tools on social networks, such as Facebook Ads or Instagram Ads, offer pay-per-click options.
PPC Display Ads
PPC is also used when displaying banner ads on websites related to a brand’s products and services or the interests of its target audience. These types of campaigns can be very effective if they are implemented well, but you have to be careful to avoid falling into intrusive advertising.
Stay tuned for the PPC II blog.
AUTHOR -RucH.Liy
