What Does Pay-Per-Click Mean?

March 16, 2024

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When it comes to search engine advertising, pay-per-click (PPC) is perhaps one of the most effective ways of putting your business in front of the right audience and getting qualified traffic. Sure, SEO, content marketing, and other search marketing techniques are still necessary, but most of them take time to show results. PPC advertising, on the other hand, is quick and effective – that if you know how to implement it correctly, of course.

But, you’ve probably heard all that already. What you want to know is how paid search works and how PPC ads can boost your conversion rates and scale your business.

Here are the basics behind pay-per-click advertising and why it could be a great idea to incorporate it into your marketing strategy.

Another Blog that you may be interested in is: Will Google Adwords Help My Business

What Is PPC?

Pay-per-click is a search engine advertising method in which you pay a fee every time your ad is clicked by potential buyers.

Here’s an example: Let’s imagine that your company helps students save money on textbooks by offering deals or selling used ones and you want your ads to show for search queries such as “college textbooks” or “cheap textbooks for college students.” Whenever someone that searches for these keywords clicks on your ads and lands on your website, you have to pay a fee for those clicks.

Building an effective, profitable PPC campaign is no easy task. There’s a lot of work that goes into it, from researching and selecting relevant keyword lists to creating ad groups and optimizing the landing pages. Moreover, Google even has a rewarding system where if your ads and landing pages are truly useful to your customers, then they charge you less per click.

A Little Bit of PPC History

Pay-per-click advertising was introduced in 1998 by an internet start-up company named GoTo.com founded by entrepreneur Bill Gross. The website, which was, in fact, a search engine, allowed advertisers to bid on keywords and earn a favorable position at the top of search results.

Gross had been looking for a way to develop a search engine that would make money without using banner ads, which he saw as intrusive and annoying. So he came up with the idea of paid search that would allow websites to pay to show up at the top of GoTo.com results page. So, companies bought ads for search words that were relevant to their products and services.

Advertisers understood pretty quickly that paid search could be very cost-efficient. Instead of spamming prospects with annoying banners and irrelevant offers, they would pay for ads directed to consumers with a buying intent. Moreover, the pricing scheme Gross came up with was bold and creative. Companies would only have to pay when people clicked on their ads and would have to bid for the keywords used in their ads. The higher the competition for a particular keyword, the higher the price they had to pay.

Bill Gross’s website went public in June 1990 and seemed to have a promising future. However, after a deal with AOL and new syndication partners, the company became Overture, and Gross let go of his dream. The website could no longer become a portal of its own, as it was going to focus solely on advertising.

Google AdWords

Right now, Google AdWords is the most popular PPC advertising system that relies on bidding for keywords and paying for clicks on ads.

So, how does it work?

Every time a user initiates a search, Google chooses a set of advertisers to display in the top part of the results page. Google looks at the advertisers’ Ad Rank to decide which ads to display and where. The Ad Rank is a metric that consists of a combination of factors, such as the quality of the keywords and ad campaign, the size of keyword bids, and so on. The formula is rather simple and is the result of the maximum cost-per-click (CPC) bid times the Quality Score.

  • The CPC Bid is the highest price an advertiser is willing to pay for a particular keyword. In other words, if the advertiser wins the bid, they will not pay more than that price for a click – the actual cost of a click will, in most cases, be much smaller.
  • The Quality Score is a variable Google uses to determine how useful and relevant the ad will be for users. An advertiser’s Quality Score depends on several factors: their click-through rate (CTR), their AdWords account performance, how relevant each keyword is to its ad group, the landing page quality and relevance, the ad text’s quality, and so on. However, other than the fact that the click-through rate is the most important element, advertisers don’t have a lot of information about how Google calculates the Quality Score and the importance of each factor.

Google Display Network

Google’s lesser-known advertising network allows you reach out to your audience and promote your business while they are browsing their favorite websites. Keep in mind, though that all the websites featured on the display network are part of Google’s suite, such as YouTube, Blogger, AdSense publisher sites and any other platforms that participate in the DoubleClick Ad Exchange.

The question you may be asking now is how can you leverage Google’s display network and find the perfect audience for your PPC campaign. Here are some options you should consider:

  • Target by Interest – Target users that have already shown interest in products, services, brands or other websites similar to your company’s. You can do that by choosing your audience’s relevant interests and then letting Google do all the work and finding them.
  • Target by Demo – Target users according to their geographical location, their gender, their marital status, and many more attributes that can narrow down exactly the type of customer you’re looking for.
  • Target by Activity – Target users through cookies and come back to those that have filled out forms, abandoned shopping carts or previously purchased products.

Pay-per-click advertising seems to be the answers to targeting prospects without annoying them. People don’t seem to mind ads as long as they are relevant to their needs. In fact, 65% of consumers will click on an ad when they are ready to purchase.

So, how can you leverage the power of PPC advertising and scale your business?

You don’t because we can do it for you.

At Australian Internet Advertising, you can find a team of PPC experts that can drive qualified traffic to your website, boost your conversion rates and grow your bottom line. Get in touch with us to see what we can do for you.



Billy P.

About The Author

William Polson founded Australian Internet Advertising in 2013 and has over 12 years of experience immersed in Digital Marketing.

With an in-depth level of digital marketing knowledge, William has been sort after by and worked for, many large national brands including Subaru, Blooms The Chemist, and Nova 96.9.

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