Pay-Per-Click Internet Ads: What are they? Why use them? And Keyword Use is “Essential/Mandatory”

Earlier this week on eTaildTail I commented on why “keywords” are critical when using CSEs.  Since then I received a few mails about using “keywords” when creating Internet Ad campaigns, so today let’s cover this area.

The most important thing to know about “Pay-Per-Click Internet Ads” is they can be very effective if you know what you are doing and how they work.

What are Pay-Per-Click Internet Ads?

Pay-Per-Click Internet Ads are what Google (Ad Words (you put out)/Ad Sense (you put on your site) pioneered, or least took to a whole new level!  Yahoo! (Yahoo Advertising), Microsoft (Ad Center) and others also do this very well – yes, there a lot of them out there and consolidators as Local.com, who will syndicate your ad words, exist, but for this blog let’s keep it simple.

Pay-Per-Click, for this entry, are simply small pieces of text (and Google is now beta testing video applications) that allow any company to advertise their company and products on the search engines and on websites, when those website decide to participate in programs that place ads on their sites.  Most look like this:

Designer Clothing Store
50-75% OFF on VERSACE D&G PRADA ARMANI Latest 2007 Collection!

Most Versatile Crew Truck
Get Free Info on Most Versatile Crew Truck. Review, Ratings & Prices.

These “snippets” show up on the search engines when a company participates in “paid” advertising programs on search engines and they ALSO show up on various other sites when these sites decide to act as an “agent”.  In the latter scenario, search engines place these ads on other sites using algorithms.  They take this a step further by trying to place the “right” type of ad on other sites that have something to do with ad. For instance, an ad about “services for landscaping” would appear on sites that have something to do with gardening, home care, and providing equipment for landscaping purposes and probably would not appear on a website selling baby care products.  This “intuitive” ad placement is all handled by the search engine.

The goal is to try and reach customers that are searching for a related product or service on one site to then click on your ad because they are interested.

Do these Ads Work?

We all know that Google, MSN and Yahoo! are all billion dollar companies and lots of their revenue come from these type of ads, so let’s just assume they work. Also, as reported by /Price Water House/Interactive Advertising Bureau online ad revenus for 2006 was $16.9 -- something is working -- with 62% of that amount attributed to keyword search and "display" advertising I outline below.

A company can benefit from these ad campaigns primarily because they can be relatively inexpensive and lead to excellent leads.  Let me show why these campaigns can be inexpensive.

Doing a simple cost/benefit analysis:

A. Pay $50 per month using a Pay-Per-Click Google ad campaign
B. You pay $.25 per click
C. 10 leads click on the ad lead and come to your site in one month
D. Those leads cost you $2.50
C. 2 of those leads translate to sales/clients
D. Acquisition cost of the client is $1.25
E. You have $47.50 left in your Pay-Per-Click Ad campaign for future clicks.

This is great if you provide landscaping services for $25 an hour or sell products that are more than $5.00 because:

1. You have made a sale = paid for ad campaign
2. You have a new client = ongoing revenue
3. You can market other products to that new client forever = upsell possibilities
4. Branding.

So why wouldn’t you do this? 

People often site these reasons: Click fraud, to get my company listed higher in Google is too expensive, this is too high a price to pay to acquire a client, my product margins are small and these clicks don’t lead to significant sales, and other methods of advertising work better for my company (newspaper adds, radio ads, yellow page adds, local advertising in other tabloids…etc..).

My reaction to this is simply, try it! I have never been a fan of paying a high price to get listed higher on search engines, especially for a small vendor who is often "out bid" by the bigger companies with bigger pockets. I will leave that decision up to all of you if you want to start figuring out how to get listed higher on search engines.  What excites me is the very inexpensive ads that pop up on other people’s sites, which can cost you from $.10 a click to $1.50 a click, pending on products and how you want your ad listed.

Finally, and probably the most important to small to mid-sized businesses is that the cost to see how Pay-Per-Click advertising can work for you is so inexpensive.

It is inexpensive to set up, inexpensive to create ad language, and inexpensive to track to see if it is working for you compared to other forms of advertising.  Oh yeah, and if it does not work and you get no leads you are not locked in – stop the campaign.  How simple is that?

And if the above did not convince you to at least try it here is a quotation from one organization:

“Bandworks, an Oakland rock msic school, pays an average $.25 per click when its ads pop up during a search for “rock music camp.  The school drew 17 visitors to its Web site during one week for a total all in cost of $9.00 and we had 6 sign up.  The best part is that we are able to track those leads and we were able to change our ad campaigns midstream to reflect special pricing and other fun stuff.”

Do the math…Bandworks paid about $.53 for each lead….can you do that anywhere else and be able to change your marketing language instantly and stop marketing campaigns any time?

As for click fraud…well it does happen and it is trackable. You can see if clicks are coming from the same or similar IP addresses too frequently and then the Google, Yahoo! etc…will help you with this issue.

But if you are not big company, I wouldn’t worry about it too much unless you have a next door neighbor who holds some sort of grudge, knows what you do, has a computer, has the time to “ruin you” by just clicking away on your ads!!!

HELPFUL TIPS FOR THE DAY:

1.Only one tip! Use Pay-Per-Click Internet Ad Campaigns because:

• they are inexpensive
• easy to set-up
• easy to see if they are working
• easy to reedit marketing ad campaigns in seconds
• let you reach people you can reach no other way,
• no long term contracts, and
• you can stop and start campaigns any time you want without penalities.