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Use Pay Per Click Advertising Because It’s Cheap, But Beware

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Targeted AdvertisingPay per click advertising has grown into the dominant category of online advertising because it is cheap and efficient.

It’s cheap because it’s efficient. It’s efficient for the advertiser because it most often is used contextually at the major search engines — Google and Bing — along with their advertising partner sites.

Because PPC advertising is usually contextual, it appears only on the most relevant pages and search results.

Being contextual and relevant, the ads generate a higher than average click-through rate. That means fewer ads need to be displayed before the campaign budget is fulfilled.

It also is efficient with space. The great majority of ads are a few lines of text rather than a large image. Google and others often pack five text ads into the same space that is normally occupied by one image ad.

For the publisher, the efficiency comes in the form of paying only for results and paying for them cheaply.

The clicks are cheap (relatively to other forms of advertising) for three important reasons:

  1. High click-through rates make inventory plentiful. Inventory supply exceeds advertising demand, so prices stay low.
  2. Because the great majority of ads are a few lines of text, an advertiser is paying for only one fifth of a 300×250 ad space that is shared with four other advertisers rather than paying for the entire space using one image ad.
  3. Google rewards Web sites via AdSense, the text and image ad product that Google partners display on their sites for a chance at sharing some of the revenue. Google rewards them in part by providing better-paying ads for sites that continually generate more content, which in turn creates more ad inventory.

Why PPC Advertising is Great

I
t may be stating the obvious by now that pay per click advertising is a great option for promoting a business online because of the low expense.

Clients can start an account with as little as $5 a month. They can set an ongoing monthly budget or just a single campaign budget.

PPC also is great because advertisers can track the results better than just about any other advertising option.

They can track the results in four major ways:

  1. The click rate itself — and simply the fact that they clicked.
  2. The cost per click.
  3. The behavior on the landing page of the person who clicks.
  4. Whether that visitor provides the value the advertiser is seeking — site engagement in the form of repeat visits, clicking on ads that generate revenue, registering as a member or making a transaction.

Pay per click campaignsSome advertisers will claim that PPC is superior to more traditional forms of advertising because they can track results.

They say they can’t easily track results from someone who listens to a commercial on radio, TV or cable, or who sees an ad in a newspaper and magazine, or views an outdoor billboard while driving.

They might claim that they can’t even tell if people hear or see their ads at all.

But that overlooks the reasons why pay per click advertising is not always so great.

Why PPC Advertising is Not So Great

A
dvertising isn’t just about response. It’s about branding and response. The word “response” doesn’t accurately describe it either. Response can be either direct or indirect.

“Instead of paying for one-fifth of the 300×250 space at an average CPM of $5, the advertiser is now paying for the entire space at a CPM of $25.”

Pay per click advertising is mainly a direct response medium. The results are immediate and not lasting.

Try running a massive pay per click campaign until the budget runs out. Then watch the site visits plunge.

Branding through the use of image ads (the larger the better) attempts to solve that problem by planting a lasting image, name and place in the mind of the viewer.

One of the goals is indirect response, meaning the response might be tomorrow, next week or even next month.

Yes, image ads can be pay per click. But that defeats one major benefit.

Instead of paying for one-fifth of the 300×250 space at an average CPM (by converting the click rate into an impression rate) of possibly $5, the advertiser is now paying for the entire space at a CPM of possibly $25.

Pay per click advertising is an important online option for promoting any business. But beware the limitations.

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