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FAQ: Using PPC (Pay-per-Click) Google Adwords & Overture

An FAQ with info on how to use Google Adwords and Yahoo Overture for Your Web Marketing

  • “(PPC) is at once starkly simple, bafflingly complex, and highly effective.”?
    -- Rick Bruner, Director of Research, DoubleClick.com

Summary

  • PPC (Pay-per-Click) lets you place your ad in search engines such as Google.
  • Your PPC ads are displayed when a user searches for your service. This means your ads are shown only to people who are interested in your product or service.
  • Your ad's placement is based on how much you bid against your competitors: the more you bid, the higher your ad will appear.
  • Of all advertising (telemarketing, magazine advertising, newspapers, radio, TV, banner ads, email marketing, etc.), PPC brings the highest conversion rates and the most qualified leads.
  • In contrast to nearly every other form of advertising, PPC is fully trackable: you know what works, what doesn't, and you can concentrate your budget on what works.

Authors

  • Andreas Ramos and Stephanie Cota build and manage ecommerce websites in Silicon Valley. Andreas Ramos has Google Certification for Adwords Professionals (CAP). Stephanie Cota has a certificate in advanced SQL database design. For more, see CreativeConsultantsGroup.com

What Is PPC?

Pay-Per-Click (PPC) allows you to advertise in search engines such as Google or Yahoo. (Pay-Per-Click is also called Paid-Placement, Pay for Performance, and P4P).

You can also control the placement of your ads. The more you bid against your competitors, the higher your ad will be placed. When a user clicks on your ad, they come to your website and you pay for that click.

There are two major PPC services: Google AdWords, owned by Google, and Overture, which is Yahoo's PPC service.

PPC has precise tracking tools. You can measure click and conversion rate. You can delete ads and campaigns that don't work.

  • Someone famously quipped that in traditional advertising, 50% of your budget works and 50% doesn't work. The problem is that you don't know which 50% is the one that works.
  • With PPC, you know precisely to the number of clicks which ad works. You can delete the ads that don't work and concentrate your budget on the ads that work.
  • By deleting the bad ads and developing new ads based on the good ads, your campaign will improve, month after month.

Why the Interest in PPC?

Web advertising is now nearly $10 billion per year. This is larger than the entire billboard industry, 80% of the magazine advertising industry, and half of radio advertising. General advertising is growing only 7% but internet advertising is growing 32% per year.

Companies are discovering that PPC works and they are reallocating their advertising money. Ford Motor Company moved 10% of its budget away from radio/TV to the web. Newspaper advertising has fallen 4% due to online competitors. Fully 40% of all online advertising is in PPC and that is growing extremely fast. Google doubled its revenues each year. In 2004, it doubled from $2 billion to 4 billion and it will probably double again in 2005.

PPC Isn't Blocked

Nearly every other form of advertising can be blocked. Radio listeners simply switch channels. Many are signing up for satellite radio which has no advertising. TV viewers either switch channels, subscribe to cable, watch Netflix, or are using Tivo to skip the advertising altogether.

Web advertisers who use Flash, banner ads, or image ads are discovering that users can use the Mozilla web browser and block those ads. Simply rightclick and the Flash and banner ads disappear. Advanced users have switched to Mozilla. Those people are the best buyers but they don't even see ads anymore.

  • PPC works entirely different. Users choose to search at Google. The ads are context-related. If they search for organic cat food, they see only ads about organic cat food. There is no clutter of irrelevant ads. There is no incentive to channel surf or block the ads.
  • We expect that PPC will continue to seize market share from other forms of online advertising. Online advertising will continue to carve out revenues from traditional marketing.

An Example of PPC Ads

Let's look at an example of an AdWord. At the right side of the Google results page, there are three ads. These have a heading, two lines of text, and a URL.

These are paid ads from three companies. When you click one of these ads, you will go to that company's website. Google charges that company a fee for each click.

Google displays eight ads per page. If you go to the second page in Google, you see eight more ads.

Figure 1: In a Google search, the AdWords ads are displayed at the right.

Figure 1: In a Google search, the AdWords ads are displayed at the right.

Figure 2: Closeup of an Adwords ads.

Figure 2: Closeup of an Adwords ads.

Google Adwords vs. Overture

There are two PPC services: Google Adwords and Yahoo Overture. They cover 98% of the market. (Note: In April 2005, Yahoo renamed Overture to Yahoo Search Marketing. However, everyone still knows it as Overture.)

Distribution of Google Adwords

By advertising on Google AdWords, your ads will appear in the following search engines and content sites that are affiliated with Google:

  • Search engines include: Google (40% market share), AOL (16%), AskJeeves (8.5%), About.com, Lycos, InfoSpace, Netscape, CompuServe, Earthlink, AT&T, Shopping.com,
  • Content sites include: New York Times, USNews.com, Forbes, ABC, Economist.com, Fox, TheStreet.com, Thomson, National Geographic, Linux World., All Recipes, LowestFares.com, MacWorld, Business.com, The Weather Channel, Reed Business, Food Network, HGTV, HowStuffWorks.com, iVillage.com, and others.
  • Adsense: Google also has Adsense, which is an affiliate program. Several million websites display Google Adwords ads.
  • Other Google services: Your ads will also be displayed in other Google services such as G-Mail (Google's free email.)

Google's distribution network is based on Adsense. This means that Google's ads are displayed on millions of webpages. Google's distribution network is far larger than any other company.

Distribution of Yahoo Overture

By advertising on Yahoo Overture, your ads will appear in the following search engines and content sites that are affiliated with Yahoo:

  • Search engines include: Yahoo (30%), MSN (30%), InfoSpace (2%), AltaVista (1%), Excite, Metacrawler, Dogpile, Web Crawler, AllTheWeb, Go2Net, Sympatico.ca, and the Microsoft IE browser.
  • Content sites include: CNN, Juno, Netzero, Advertising.com, Away Network, CitySearch, Cool Savings, Consumer Review Network, ESPN, Edmunds, Homestore Network, Knight Ridder newspapers, MyFamily Network, National Geographic, Wall Street Journal, and others.

By advertising in both Adwords and Overture, you get 98% market coverage. Which one should you use? Use both. See which one gives you the best results and concentrate your budget on the one that works.

How PPC Works

Here's what happens when you sign up for an AdWords account at Google.

  • You create a small AdWords button. The AdWord has a title, two lines of text, and the URL.
  • You add a list of keywords. When visitors at Google search for any of these keywords, your ad is displayed.
  • You set the maximum for your daily budget. If you set this at $20 per day, then Google will display your ads until you reach $20 in clicks and then it stops for the day. Google spreads your ads across the day, so you won't use up your entire budget in the morning.
  • You can set the bids for each keyword. Google charges your account for each click. If you bid 12¢, Google charges you 12¢ for the click. (The actual amount is lower due to various factors.)
  • The account is linked to your credit card, which Google bills monthly.
  • Your ad's position on the list is based on the amount of your bid. The more you bid, the higher your ads appear.
  • Reporting tools show you the number of clicks, the percentage of views vs. clicks, the cost per click, your ad's average position, whether the visitor was converted to buying, and so on.

This is a general overview. As the quote at the beginning of this FAQ points out, underneath this simplicity, PPC is bafflingly complex. It is not an understatement to say that the large advertising and marketing companies don't understand PPC.

PPC Delivers Qualified Traffic

  • 15% of users use search engines to find products or services. They are looking to buy. The PPC ads bring these buyers to you. You sell to these customers who have already decided to buy. No other form of advertising can do this.

Tracking the Conversions and Lead Generation

PPC has extensive reporting tools that let you keep track of your campaigns. You can create reports to show the results and conversion rates and keep close track on the results you are generating with every PPC campaign.

Figure 3: An example of an Adwords graph for impressions.

Figure 3: An example of an Adwords graph for impressions.

PPC services offer conversion tracking to show the number of conversions and cost per conversion.

You fetch a bit of HTML code at AdWords or Overture and place it in your website's thank-you page. This is the page that a customer sees when they finished a purchase. This lets you see that the visitor clicked on the advertisement, came to your site, and bought the product.

You use the reports to see what works and what doesn't work. You delete the poor performers and concentrate your budget on what works. You repeat this process over and over, and your advertising campaigns will improve in efficiency.

Targeting the Ads: Local or Global

Adwords allows you to target the ads to countries, states, regions, cities, and even down to specific neighborhoods.

  • One of our clients is dentist in Oakland. Her ads are shown only to users within 34 miles of her office, which is the distance that her patients are willing to drive. The ads aren't shown in Los Angeles so she won't have to pay for clicks from people who will never become patients.
  • Another client wanted to broadcast her ads only into certain neighborhoods. We used longitude and latitude points to create a polygonal shape for those markets.
  • For another client, we broadcast the ads into five Asian countries which are markets for their products.

Targeting the Ads: Various Languages

You can also target the ads to languages. You can select any of the major world languages, including smaller languages such as Icelandic, Urdu, and Slovenian. The keywords and ads are in those languages.

  • We manage PPC accounts for clients in languages such as Chinese, Korean, Japanese, German, French, and Spanish. We manage campaigns in South America, Europe, and Asia.

Content Targeting at Google AdSense

Google has an affiliate program called Adsense. Webmasters sign up and Google displays Adwords on their webpages. The ads are related to the page's text. When visitors click on an ad, Google gives part of the click fee to the website.

For example, someone is looking at a koi website. On the side of the page, AdWords about koi are displayed. The visitor clicks on the AdWord. The advertiser pays a click fee to Google and Google gives part of the fee to the website owner.

Adsense is Google's distribution network. Google has built an ad distribution network that has literally millions of pages. No other advertiser comes close.

  • If you have a popular webpage, add Adsense. When people click on ads, you get part of the click. You can write web pages that will get high ranking and add Adsense ads to earn money.
  • To see an example, go to www.andreas.com/faq-cell911.html and note the AdWords.
  • To sign up for Adsense, visit www.google.com/adsense
  • Read the Adsense FAQ.

Content Targeting at Google Gmail

Google Gmail is free email, similar to Hotmail and Yahoo! free email accounts. This is another way for Google to increase the display of Adwords.

Gmail looks for keywords in emails and then inserts related advertising into the email. For example, you write to your friends about plans to go bass fishing. Gmail inserts Adwords advertising that are related to bass fishing. If you're going to fish on the Tennessee River, the ads will for advertisers who provide products and services for fishermen on that river.

Conclusion

  • PPC lets you buy the top positions at search engines. Due to the nature of PPC, small companies can compete against large corporations.
  • PPC brings a stream of interested, ready-to-buy customers. Your sales and revenue will grow.
  • PPC's tracking and report tools let you delete what doesn't work and improve what works.
  • PPC is the most cost-effective method for advertising your products and services. It works.

Most of your competitors don't use PPC. They don't know about it or they don't understand it. Of some 13 million companies in the USA, only a few hundred thousand are using AdWords at Google (Business Week, April 2004).

Further Reading: The Adsense FAQ

End Notes: Creative Consultants Group, LLC

Andreas Ramos and Stephanie Cota at Creative Consultants Group, LLC build and manage PPC/CRM campaigns for companies. Andreas holds a Google Certification for Adwords Professionals (CAP). Stephanie has a Microsoft certificate in advanced SQL database design. Creative Consultants Group, LLC is a privately-funded and profitable company in Palo Alto.

Copyright Notice

FAQ: Using SEO and PPC by Andreas Ramos and Stephanie Cota. © 2005 Andreas Ramos and Stephanie Cota. All rights reserved. This document may be distributed as long as it remains unchanged.

Trademarks

Trade names of companies and products in this document are trademarks, registered trademarks, or trade names of their respective holders, and have been used in an editorial fashion only, with no intention of infringement, nor are intended to convey endorsement or affiliations.

Coutesy: Andreas Ramos

October 19, 2006
By Team Position²