A Beginner’s Guide to Pay Per Click Marketing

Pay Per Click (PPC) search engine marketing refers to a specific type of advertising where you pay a search engine every time a potential customer clicks on your ad. These ads appear on search engine results pages and sometimes on sites within a search engine’s network of associates.
How do Pay Per Click Ads Work?

If you look at a search engine results page (SERP) carefully, you can generally distinguish between search results that are regular algorithmic or “organic” search listings and PPC search results which are actually paid advertisements. The latter are generally listed under the headings “sponsored results” or “featured listings” and consist of specially designed text, image or video ads that are triggered to display when your target keywords are used in a search query. The PPC ads generally appear on the right hand side and/or at the top of the search results pages.
To appear in the PPC results, advertisers sign up for the PPC program of their choice and create short text ads, image ads or videos describing the product or service available on their site in a way that will best entice searchers to visit it. During the program setup, an advertiser will decide which trigger keywords/phrases they wish to bid on and how much they are willing to pay when a visitor clicks on their ad. Generally, the higher the bid, the more likely their ad will show above their competitor’s.

The Origins of Pay Per Click Marketing

The PPC industry was pioneered by GoTo.com (later re-branded as Overture before it was purchased by Yahoo! in July 2003). Despite their enormous success, GoTo’s PPC model was met with a lot of skepticism in the industry following their IPO in 1999. Their eventual purchase by Yahoo put to rest any doubts that pay per click advertising was here to stay.

In October 2000, Google which was eventually to become the world’s most popular search engine, launched their own keywords advertising model (Google AdWords), blending algorithmic search results with pay per impression ads.

In 2002, in an attempt to compete more successfully with Overture, Google expanded AdWords to include the pay per click pricing model we are familiar with today. This model proved both more popular and more successful and eventually replaced the pay-per-impression model as
By 2002, GoTo (by then rebranded as Overture), had distribution deals with an impressive range of search engines including Yahoo!, MSN, AltaVista, InfoSpace and a number of meta search engines including MetaCrawler and Ixquick. Overture’s powerful distribution network guaranteed advertisers placement of their ads in front of a LOT of eyeballs and it became clear that many were willing to pay big bucks for the privilege. Other major search engines also formed successful distribution partnerships with PPC providers during this time, noticeably AOL, AskJeeves and MSN with Google AdWords. The pay per click industry had officially arrived.

Scores of PPC search engines began to spring up following Overture’s lead, however the PPC industry continued to be dominated by the two big PPC players, Overture and Google AdWords, while Yahoo!, MSN, AOL and Google fought it out for dominance in the general search market.

In July 2003, in a move that shocked the industry, Yahoo! purchased Overture to enable them to better compete with market leader Google. In April 2005 they rebranded the PPC engine as Yahoo! Search Marketing and in 2006 they launched a revamped version of the service, code-named Panama.

Meanwhile, in October 2005, Microsoft quietly launched their own PPC service called MSN adCenter. An official launch in the US, together with a name change to Microsoft AdCenter occurred in May 2006. In May 2007, Microsoft revamped AdCenter with new features and rolled it out to advertisers worldwide.
Currently, Yahoo and Google continue to dominate the PPC landscape, although Microsoft AdCenter is beginning to make an impact. Second tier PPC engines such as MIVA (formerly Espotting and FindWhat) and Kanoodle are fast catching up to the majors.

There are now hundreds of PPC search engines worldwide, servicing global, regional and niche markets, but only a few that have achieved a significant market share of advertising revenue. A summary of the majors are listed below.

Yahoo! Sponsored Search

Yahoo! Sponsored Search is the current name for what was originally called Overture Precision Match. Yahoo! Sponsored Search prominently displays your site in search results on some of the top U.S. search properties that Yahoo! collaborates with. With Sponsored Search, you set the price you’re willing to pay for each customer who clicks on your listing.

Your ads appear at the top, bottom or right hand side of Yahoo search results pages under the heading “Sponsor Results”. Your ads are triggered on search result pages when searchers enter the keyword combinations that you’ve bid on. Your ads can be targeted by language and country.

If you create a keyword campaign and you use the ContentMatch option, your bid also buys you top listings on Yahoo’s allied sites AltaVista, InfoSpace, eBay, CitySearch, AllTheWeb and a range of news and content portals, such as USAToday, National Geographic, iVillage and NBC.

Google AdWords

Google AdWords gives web site owners the ability to promote their site when particular keyword or phrase searches are conducted at Google and associate sites. Your ads appear at the top or on the right side of search results pages in a “call out” box under the heading “Sponsored Links”. Your AdWords text, image or video ads appear on search result pages for the keywords you buy, and can be targeted by language and country.

With Google AdWords cost-per-click (CPC) pricing, you pay only when a customer clicks on your ad, regardless of how many times it’s shown. Google adjusts your bids automatically to keep you ahead of your competition at the lowest possible price. Google AdWords results appear on Google search results pages, Google’s distribution sites, Google Gmail, and numerous content sites which are syndicated through the Google AdSense program.

Microsoft AdCenter

Microsoft adCenter is the newest kid on the Pay Per Click block. It includes the ability to target your ads to MSN Live Search users who match your target regional and demographic criteria.

Microsoft adCenter allows you to submit base bids for keywords or phrases you associate with your ads. This base bid is the maximum amount you are willing to pay if any Live Search user searches for one of your keywords and clicks your ad. You can also increase your bid in order to reach specific audience targets, which help increase the chance your ad will appear for a user who fits your buyer profile.

Targeted bidding in the Campaigns tab allows you to add amounts to your base bid to increase the possibility that your ad will show to searchers who fit your optimum buyer profile. You can use your bid amounts to influence your ad’s position in the Live Search results. In general, the more you bid, the higher the position your ad will have.

You can use Microsoft’s Intelligent Targeting feature to adjust your ads to match these variables:

Geographical location
Age and gender
Day of the week
Time of day (morning, afternoon, or night)
Interestingly, Microsoft pitches the ability to “build brand awareness” with their PPC program, due to the continued exposure of your ad and brand to a large market, regardless of whether that ad attracts clicks. This is an important feature of all major PPC programs but one that is rarely promoted by Google or Yahoo!

Perhaps brand-building is adCenter’s Unique Selling Proposition (USP) because Microsoft claim to reach more potential eyeballs than their competitors: over 99 million people per month have access to their Live Search tool across MSN and Windows Live.

The Advantages of Pay Per Click Advertising

The growth of the search industry worldwide has created a huge market for paid search advertising and most search engines and directories now have some type of Pay For Performance or Pay Per Click (PPC) element to them.

Pay Per Click advertising:

Enables webmasters to target geographical and niche markets more precisely via specific search queries.
Enables webmasters to have their page URL displayed at the top of the search engine results pages without having to figure out complex search engine algorithms or pay an SEO expert to tweak their site for higher rankings.
Enables webmasters to receive new traffic instantly.
Enables a website or offline store to be found by search engine users even if no site exists or the site is not search engine compatible.
Enables small businesses to operate globally and compete on an equal footing with much larger competitors.
Enables instant sales and more measurable ROI via conversion tracking.
Enables more precise visitor pathways to be plotted (e.g. by leading visitors to specific landing pages).
Enables campaigns to be switched on and off on-demand to meet specific needs, search trends or specific events (e.g. Christmas sale)

About The Author
Article by Kalena Jordan, one of the first search engine optimization experts in Australia, who is well known and respected in the industry, particularly in the U.S.