All advertising is about return on investment. It is about spending X and getting five times X, 10 times X, or more, in return. Calculating this return on investment is not always easy, except when you use PPC forms of advertising.
PPC stands for Pay Per Click, and the most common platform for PPC advertising is Google’s AdWords. With AdWords you display ads for your business on Google’s pages and you only pay for those ads when someone clicks on them to visit your website.
You can target people who are interested in your products or services, you can focus only on your geographical area, and you can even set limits on how much you are willing to pay. It sounds great, and it can be a lucrative form of advertising, but there are also many pitfalls.
How Does AdWords Work?
When you set up an AdWords PPC campaign you have two main options for where your ads are displayed. The first, and most commonly used, is on Google’s search results pages. These are the “results” in the right-hand column after you do a Google search, and they also appear above the organic results.
The second option is to run your ads on Google’s Display network. This means your ad can appear on hundreds of thousands of different websites that have signed up to the Google AdSense program.
Most people choose the first option because it is highly targeted. The crucial element is keywords. These are the words and phrases that you put into Google when doing a search. When setting up your AdWords campaign you can specify the keywords that you want to target, ensuring that your ads are only displayed to people actively searching for your products, or for words or phrases related to your industry.
What Will It Cost You?
How much PPC costs depends on a number of different factors, but it only costs you money when someone clicks on your ad. You don’t have to pay anything in a PPC campaign to display your ad. In other words, if 10,000 people see your ad but nobody clicks on it, you don’t pay anything. Likewise if 10 people click on it, you pay for those 10 clicks.
Many businesses like this charging method because it is directly linked to results, but it still doesn’t really answer how much it will cost you.
This is because every ad and every AdWords campaign is different. The factors that influence the cost of your campaign include:
- How much competition there is for ad space
- The relevance of your ad to the search query
- The quality of your landing page
- The budget per click that you set
As a result the cost of campaigns can vary greatly from industry to industry. It is even possible to see significant variations of cost within the same industry. For example, an ad that is poorly targeted will cost a lot more than one that is well targeted.
It is possible to make money using AdWords PPC campaigns, though, and in future articles we will go through the process of setting them up and optimizing them.