Exploring Pay Per Click Advertising (feedback and lecture)

Written by: Jonathan Briggs

November 24, 2005 [3037 views]

This activity was different from the others because it asked you to think about something unfamiliar that we had not talked about. Some of you did it well but many did it poorly, I suspect because it did not make sense. For the purposes of the assessment it was important to participate rather than get it correct but you will need to read these notes carefully and ask questions if you still don’t understand.

Your answers even when wrong were very interesting and reveal some important misunderstandings. Remember, to understand ecommerce, you need to build some mental pictures of what is going on.

Buying keywords

What are keywords for? They are words or phrases that people type into search engines (such as Google) that indicate things they are looking for. Some people type single words, some short phrases and some whole sentences (but this is less common).

You were asked to choose keywords for your case study site and some were sensible. Many were not. Sensible keywords allow the searcher to find what they are looking for. Broad terms will not be effective in narrowing the possibilities to the thing being searched.

Here are some of your suggested keywords? What companies do you think were being advertised and what products or services do they sell? Each is for a different site!

Poly, Greater London, Top Brands, Household, Print, TV, game, “award winning”, computer components

Can you see how useless these are likely to be? They are untargeted and unfocussed.

You need to select words that express a customer need that can be satisfied by the site. An advert is just a shortcut to get the customer to the site. It still needs to be sensible and targetted.

Before you choose keywords, type them into Google and see how many results they produce. Think hard about customer needs.

What adverts would you show?

Many of you cannot count. 25 characters for the headline maximum means a maximum of 25 characters! Count them! And read the Google Guidelines – CLICK HERE will not be allowed.

Good headlines respond to customer needs and combine it with a bit of selling: “Discount computer supplies”, “Top seats at great prices”, “Maximum fuel efficiency”, “Tasty health foods”, “Find Balham properties”

Your body copy was often poor too. Two lines of 35 characters is all you have. A few of you wrote good ads but many of you wrote unappealing, unconvincing sentences that would 200 characters long.

Where should your advert link to?

For many ads the home page is the perfect place but you could also link to a “landing page” specifically targeted at the offer you are making or to a product or category page. I asked you to get you thinking!

What changes would you make to the site to make the advert more effective?

Here are some suggestions (directly linked to the advertising)…

1. Landing pages
2. Special offers for visitors from the ads
3. Continuing the message from the ad on the entry page
4. Welcoming the visitor from the advert
5. Linking a decision support function to a question raised on the ad (“find out what sort of car you should be driving”)

Some of your suggestions for changes to the site were sensible but not in the context of the advertising.

The economics of Pay-per-click

I broke this question down to see how many of you could work out the types of figues that would make sense. Most of you have no idea. A few of you quoted strange numbers like 20,000 – how could this be a cost PER click? And most of you had very low average order values. Almost all of you expect a high conversion rate (visitors to customers).

Think about it. If you are selling a product for £100 pounds online the first question you need to know is what is the profit margin. Let’s be generous and say 50% (that is very high). This means that to make a profit you must not spend more than £50 on advertising.

If advertising was 100% effective then the maximum you would pay per click is £50 and you would make no money.

The scary truth is that less that 1% of the people who come to an average site buy anything. So you need 100 people to create one sale. If you spend more than 50p a click you will lose money.

For some sites the figure is even lower, say 0.25% means a maximum of 12.5p and remember this requires a £100 average order value.

Now to make matters more complicated, the position of your advert is affected by the amount of money that you are willing to pay. If you are only prepared to spend 3p then your ad will be at the bottom of the list and you won’t get many clicks.

Your questions answered

How can ads be displayed on other websites?

Google and others run advertising networks which allow you to offer your site as a place Google can show ads. You need to be doing reasonable traffic and Google pays a small part of the revenue it makes per click.

How much does it cost to advertise on the web?

Some companies spend hundreds of thousands but with PPC you can start small. The OTHER media spends about £150 per month with good results.

How can you monitor the success of a campaign?

Google, Overture and MSN provide very detailed statistics and other information. You can also see from your logs.

Is there a joining fee?

Sometimes. Google charges £5.

I can’t see adverts for the OTHER media?

We have selected keywords that help us sell our products and services to potential clients. We have imagined what they would type in and bought those keywords. If you enter those keywords you will sometimes see our adverts. Please don’t click as they cost me money!

We don’t run adverts on the OTHER media’s sites but we do help run PPC and display ads (CPM) on lots of the sites we build as well as running PPC campaigns for some of them.

Is it possible to pay for advertising by results (sales) rather than clicks?

Yes. Affiliate banners and buttons often work this way. Take a look at TradeDoubler, Afflilate Window and Commission Junction.

What about different ads in different countries.

Absolutely. You can tailor your campaigns by territory, language and markets.

How could I advertise on Amazon’s site?

The simple answer is that you can’t. There are many sites that don’t accept third party advertising. It is not part of their business model. Amazon however is a bit more complex because you could promote yourself by selling some products in the Amazon marketplace.

Do big sites use PPC?

Yes. It is becoming the dominant advertising model online and car companies, retailers and other big companies are all using it because it works.

How do I get top links to my site so that I don’t need to spend money on PPC?

Be remarkable. Get mentioned on the BBC or in the Guardian. It is extremely difficult which is why so many companies need to advertise. If there was an easy way to be at the top of the results everyone would be at the top.

How does the bidding work?

You say how much you are prepared to spend on each keyword or phrase you buy. Google shows the ads basically in the order of price but charges only 1p more than the ad below. It is a bit more sophisticated because it rates more successful ads higher even if they have bid less.

I never click on PPC ads. Why are they important?

That is why “organic results” are so much more important. Many of us filter out in our minds the ads from pages we use often. But PPC works well enough to make sites that don’t rate highly use them and they are good for targeted messages.

What if someone clicks on the ads repeatedly?

The PPC companies hate it but there is definitely some false clicking. They are all trying to filter out rogue clicks. From the advertisers point of view, we hate them because they cost us money.

What is the difference between PPC and banner advertising?

Banner advertising is normally charged on a per impression basis rather than a pay-per-click basis. This means that you buy 1000 views of your ad rather than 20 clicks. The cost can be about the same in terms of results but PPC is usually more targeted.

How do you choose the best keywords as the basis for your PPC compaign?

Meet customer needs, target your products and services, don’t be too broad, test and refine, look at your competitors.

How can you advertise for free?

Word of mouth, run a blog, talk on forums, swap links with friends, get an article written about your product or service.

Are people less likely to trust adverts from companies that are not household names?

Yes. That is why brands are so important. Your offline reputation is a big factor and makes starting a new company hard.

How do I know it will be successful?

You don’t but the tools are out there to let you experiment quite cheaply. That is what makes PPC so attractive.

How would we get links from our competitors?

You won’t! But you might get links from the sites that they get links from. Needs lots of research and work.

Recent comments:

What do you think?

Add your comments