PPC (Pay Per Click) is one of the most used advertising model adopted by advertisers to promote products over the Web. If we closely look PPC it is way ahead of other online marketing models such as affiliate marketing, email marketing and many more. But have you ever think about what is it that made PPC so popular and widely adopted. Whether you are new to PPC and learning it or using it over a long period, knowing about the basic success pillars of PPC is always beneficial to learn PPC as it is today and the way it will be in future.
Following are the four pillars which made PPC so popular:
We will have a close look over each of the mentioned pillar in the post following.
PPC revolved around the word ‘Relevance’. Showing ads related to someone actively searching is the key which added to the success of PPC. These related ads are much more connected to the searcher and have high potential to be clicked.
Before the days of PPC, most of the ads on the internet were banner ads which had nothing to do which the content user actively browsing over the Web. Advertisers were paying for the impressions of their ads irrespective of their relevance and effectiveness related to the end-user(searcher). Advertisers need to buy thousands of impressions, out of which only few would have potential to be clicked and most of the time precious advertisement money is wasted for irrelevant impressions.
By displaying ads relevant to what someone is actively searching makes sense and created connect between advertiser and the searcher. These relevant ads have much higher potential to be clicked in comparison of irrelevant advertisement impressions. Showing relevant ads created win-win situation for both advertisers and searchers, advertisers got customers for their product/service and searchers got products/service which they are looking for.
Before PPC most of the ads were banner ads for which advertisers need to pay for per thousand impressions (CPM model of advertising). To start such CPM based advertising campaign companies need to burn a handsome amount for these large number of impressions (most of the times many thousands) they need to buy for their banner ads. Even burning a handsome amount was not the guarantee of how many ads would be clicked and ultimately convert. In such a scenario, even for entering a small advertising campaign companies need to have good budget in hand. This high entry barrier kept small businesses and individuals away from the internet marketing.
With the PPC, advertisers have to pay only for the advertisements which are clicked and not for the impressions made. This is what we can call performance based advertising. Now advertisers have the flexibility to burn only a small fraction of money to get the taste of PPC. This lowered the entry barrier for internet marketing and thus PPC attracted many small companies and individuals. As the money commitment for PPC is very small in comparison to the CPM model, more and more companies are able to opt it and use it within their budget limits.
Now one more thing worth noting is that search engines get paid only when an advertisement is clicked. It forced search engines to show only relevant ads on search pages and show better and relevant organic search results to get more searchers on their search engines so that the chances of an advertisement click can be increased.
Self-service model removed the need of a sales person between the search engine and advertiser. An advertiser using the self-service advertising model can sign-up for the advertising campaign and create advertising copy to start the campaign. The self-service model helped to lower the cost of advertisement by removing the need of paying middle man commission. On the other hand it has given the control of advertisement campaign to the advertiser itself who can now start, stop and manage his advertising campaign by himself without making any telephone call.
Self-service model helped PPC to grow faster than ever. Self-service model enabled new advertisers to experiment with online advertising with the minimal budget they want to put in and thus attracted companies of all sizes.
Auction played an important role in the success of PPC. Search engines do not have fixed price for advertisements, it is the advertisers who sets the price of the advertisement. If you are ready to pay higher price than you can have your advertisement displayed higher on the page.
The price of an advertisement depends on the position you want on the search page and the relative competition for the keyword for which you are willing to show your advertisement. Thus you can see why top positions for highly competitive keywords are expensive.
This way search engines get a high price for high demand advertisements and generates higher profits. On the other hand it has low entry barrier for keywords in low demand and lower positions. An advertiser can adjust campaign depending on his budget by auction based on keywords and position.
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As I had discussed the four pillars Relevance, Pricing, Self-service and Auction of PPC advertising. These four pillars are the basis around which all the PPC world revolves. By understanding these basics helps to know the concept of PPC better as it is today and the way it will grow in future.
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