Guide to Pay Per Click Advertising

Search engines generate huge amounts of traffic. Every day billions of queries are made via the major search engines and its been estimated that over 90 per cent of web visits are via a search engine. Many of these are billions of queries from people who are looking to buy goods and services.

The search engines provide the best set of results they can from their standard or ‘organic’ search engine results pages (SERPs). However, over the past few years they have also been surrounding SERPs with ‘sponsored’ listings to the right and often above the organic listings.

By offering products at the very moment a searcher is looking for them, an advertiser gets a golden opportunity to sell to a customer before they look anywhere else. The results are certainly impressive. The response to sponsored ads around search engines is many times that of other advertising such as the older ‘banner’ type of advertising still shown in many web sites.

It is because an ad can be tailored with such precision they are so successful. Looking for a house in Leeds? We can sell you one? Have a passion for ostriches? We got them too.

To marketers sponsored listings offer something that previously has been impossible in the history of marketing – displaying precisely targeted ads at someone who has shown an interest in a subject in real time.

These pay-per-click or pay-per-performance listings and have proved to be hugely profitable and lay behind the enormous amounts of cash that Google and Yahoo! have been reporting in the past couple of years.

The Google pay per click section is known as AdWords whilst Yahoo! offers a very similar service through its Search Marketing subsidiary which, in the UK, is still known by its original name of Overture. Other major search engines including MSN Search and Ask Jeeves are also trialling their own versions of the sponsored listings model.

By their very nature, search engines are in a unique position to deliver advertisements targeted at people at the very moment they are searching for goods and services.

Search engines deliver organic listings based on the words that a searcher types into the query box. In the same way, sponsored listings are delivered when the search term matches a keyword associated with the ad.

The difference is that in the case of sponsored search, the advertiser `bids’ for that keyword. If the ad draws the attention of the searcher and is clicked, the advertiser pays the bid price.

Clearly some keywords or key phrases will be more valuable than others as they indicate that the searcher is looking to buy. Hence ‘new cars’ is likely to be surrounded by adverts that have a high bid price whilst ‘clapped out bangers` is not.

The system not only allows the market to find its own prices for particular keywords but also adds a layer of transparency to the business. In magazines for example, you pay for your ad to go in the latest issue and you are sent a bill whether you get any response to the ad or not. In a pay per click system, the search engine delivers a potential customer to you and from there on, its up to you as to whether you can convert that visitor into a customer.

The whole process however has spawned a new generation of ‘search engine marketeers’ who spend their time looking at what searchers are typing in to search engines and extracting keywords. As the business has grown and the competition for the valuable keywords in areas such as cars, travel and financial services has driven up prices, search marketers are always on the look out for untapped key words and phrases which others have not picked up on yet and which remain relatively cheap.

The search engines, of course, don’t get paid unless the searcher clicks on an ad. Therefore Google has actually refused to run ads which it thinks will underperform no matter what the bid price is. Similarly, as with PageRank, Google also runs an AdRank system where the better performing ads are placed higher up the pecking order than others, even though their bid price may be less.

The sponsored listings programmes do not just appear on the major search engines and the bigger sites. Google and Yahoo! each have a programme for smaller web sites which allow them to display sponsored listings too with the sites getting a cut of the revenue if they perform. As with the ads themselves, the more successful the site is in delivering clicks to advertisers the more it will receive high performing ads in a virtuous circle.

Of course, anything involving money will attract the fraudsters and fraud is an increasing problem for e-commerce web sites and search marketers. Criminals have come up with many ways in which they click on ads on their own sites in order to gain revenue from the search engines or generate worthless clicks on competitor sites to force them to hand over money. Search engine professionals are increasingly aware of such techniques and will take care to ensure their customers are not subject to click fraud.