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Pay-per-click Advertising

Pay-per-click Advertising. PPC Terminology. PPC: Pay Per Click CTR: Click Through Rate Percentage of clicks to impressions CPC: Cost Per Click Price an advertiser pays for each click on his/her ad Daily Budget Amount advertiser is willing to spend, each day, on PPC ads. How PPC Works.

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Pay-per-click Advertising

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  1. Pay-per-click Advertising

  2. PPC Terminology PPC: Pay Per Click CTR: Click Through Rate Percentage of clicks to impressions CPC: Cost Per Click Price an advertiser pays for each click on his/her ad Daily Budget Amount advertiser is willing to spend, each day, on PPC ads

  3. How PPC Works Advertiser User enters query Advertiser s place bids Engine runs auction and displays winning ads Advertiser’s Website/Landing Page Surfer “lands” on website User Surfer clicks on an ad Search Engine Server Millions of auctions executed every day Once the daily budget is reached, the ad will no longer be shown.

  4. The PPC Auction Model Basic model Highest bidder gets highest slot Winner pays winning bid Not ideal! Why? Vickrey-Clarke-Groves (VCG) auction Second price auction Optimal for single slot Reveals true willingness to pay, no need to be strategic Winner for slot i pays maximum bid of bidder that get i+1 slot Still not the best for Google, Yahoo, MSN etc. Why?

  5. Ad Quality Score + Landing Page Quality • Main difference between Yahoo and Google until 2007 • Details for quality score: https://adwords.google.com/support/bin/answer.py?answer=10215 • Search engine needs repeat customers • Needs to improve user experience for long term • Bid transformation: • (Bid $ amount) x (Ad Quality Score) ~ (Bid $ amount) x (CTR rate + relevance)In other words, rank by expected revenue for Google • High quality ads → Lower bid amount(incentive compatibility)

  6. PPC Quality Score • Quality Score is the relationship between: • Keyword Phrases • Text Ads • Landing Pages • Goals: • Provide a Better Search Experience for Users • Maximize ROI for Advertisers • Maximize Earnings for Publishers • Determines: • Ad ranking on search results page • The minimum bid required to run on a given keyword • The actual price you pay for each click

  7. Quality Score Example

  8. PPC Components • Keyword Phrases are CRITICAL. Proper selection will ensure that we’re only paying for the right visitors • Negative Keyword Phrases filter out unqualified, and costly visitors • Text Ads Entice people to click and establish a “market to message” match that leads to a high Quality Score • Landing Pages Reduce FUD, establish Quality Score, and guide visitors thru the conversion path • Bids Help to determine your ad ranking and ROI • Geo-targeting Lets us Segment the Market

  9. What Is PPC Advertising? Pay Per Click Advertising is a form of paid search marketing. As the name suggests, PPC is an advertising model in which advertisers pay for click-thrus to their website. Advertisers bid on particular keyword phrases and search terms, and vie for positioning on a SERP (search engine results page) in a manipulated keyword auction.

  10. Benefits of PPC Advertising • PPC works because it allows advertisers to bring qualified, targeted traffic to a website. By bidding on a combination of broad, general keywords (i.e. “luxury car”, “SUV”, “sports car”) and specific keywords (i.e. “Acura TL”, “Dodge Duranxo SXT”, “Porsche 911 Carrera S Cabriolet w/ Tiptronic”), advertisers are able to match the consumer behavior in the different stages of the buying cycle (Awareness, Interest, Desire, Action, Satisfaction). • Allows you to avoid showing your ads to users who aren’t likely to purchase from you • Reach approximately 87% of Internet users • Affordable- No minimum spending limit, and you can set a maximum daily budget that the PPC engines won’t exceed • Flexible- You can change your advertising message within minutes

  11. Why is PPC so important? • Over 850 million searches are performed each and every day on search engines, and 87% of consumers do research for products and services online • Approximately 35% of Internet users actively seek and click PPC ads • PPC can help with branding efforts • PPC can enhance your Internet marketing efforts, working in conjunction with a Natural Search Engine Optimization campaign

  12. Paid and Organic Listing

  13. PPC Engines - Google • Google AdWords • Easy-to-use Interface • Excellent bulk-editing tool (AdWords editor) • Integrated client center for easy access to all accounts • Can geotarget by latitude, longitude, zip code, state, metro area • Works on CPC basis on search network, and CPM basis on site-targeting (more later) • Cost determine by bid and quality score (more later) • Allows text ads, mobile ads, image ads, video ads

  14. Yahoo! Search Marketing • Modeled after Google AdWords • Set budget at the account-level, and works on a declining pre-pay balance • Allows bulk import of Google spreadsheets • Cost determined by bid and quality index • Can geotarget by metro area (relatively imprecise) • Inability to block certain content sites • Ads must undergo lengthy editorial review

  15. MSN Bing AdCenter • Relatively clunky interface • Account-level budget • Allows incremental bidding for certain demographics • Relatively advanced research tools via adlabs • Tends to monetize traffic poorly • Lacks inventory

  16. Demographics of Users of the Major PPC Engines • Google- Business-oriented, Methodical, Information Seekers • Yahoo!- Content-oriented, Values Entertainment, Youthful • MSN- Older, not tech-saavy, values ease of use

  17. PPC Account Structure • There are several unique layers to a PPC account: • Account- Unique email address, password, billing information • Campaigns: Daily budget, target languages and locations, start/end dates, distribution preferences • Ad Groups: Ads, keywords, bids

  18. Account Structure

  19. TrufflesPremium ChocolatesChocolate StoreGourmet trufflesGourmet ChocolatesOnline Chocolate StoreNut trufflesDesigner chocolatesDiscount Chocolate StoreDiscount trufflesExotic chocolatesLocal Chocolate Store

  20. PPC Chocolate Campaign

  21. Landing Pages • 1. Have a clear and Direct Headline • Your landing pages should designed so the headline is first thing a user sees upon landing. First impressions on landing pages are as important as the offline world. Make sure the headline is a direct and simple statement of what the user is trying to accomplish. The goal of the headline is to bridge the moment of recognition so the user knows they rest of the page is aligned with completing their goal.

  22. Case Study • Audible.com • http://www.optimizeandprophesize.com/jonathan_mendezs_blog/2006/11/measuring_and_o.html • Google Adwords tutorial: • http://services.google.com/awp/en_us/breeze/2682655/index.html

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