Pay per click: The most widely used model of online advertising

Due to the popularity of Google Adwords (Google’s online advertising management platform), pay per click (PPC) has become the most widely used online ad-buying model today.

What is the pay per click?

The pay per click is an online payment method for ads in which you only pay when a user clicks on the ad or banner.

This is an important advantage for you, the advertiser because you will not have to pay anything for ads that appear on a certain website until the user clicks and browses the link.

Furthermore, the fact that someone clicks on your ad suggests that, in theory at least, that person has a certain need related to the product or service that you can offer to them. In other words: he/she is a potential client.

How are prices set?

The exact price of the PPC is almost always set by means of an automated bidding system in which the advertiser must carry out the following actions:

  • The advertiser creates an ad on Google Adwords or a similar platform.
  • Keywords are associated with the ad in question.
  • The advertiser themselves choose the maximum amount of money they are willing to pay.
  • Among the brands or companies that are interested in the same keywords, an automatic bid is carried out, and, finally, the ad for which you have selected the highest price is displayed.

CPC is not the only system

Although over time it has become the most used system by companies, in addition to the PPC there are other online advertising methods:

  • Pay per thousand impressions (CPM). The advertiser chooses the number of times they want their ad to appear on a page, and thereafter a price is set for every 1000 impressions (occurrences) the banner or ad is shown. You will understand it better as an example: if a price of $10 per 1000 impressions has been set to advertise on a certain website and the advertiser wants only 100 impressions to come out, the cost of this campaign will be $1.
  • Pay per action (CPA). In this case, the price is paid each time the user performs a more complex action than a click. For example, subscribing to a newsletter and even actually buying the advertised item.

The choice of one model or another will depend, in any case, on the specific objectives of the campaign. If what you want is to enhance your branding or brand image, CPM is the method that will provide you with more visibility on the net. On the contrary, if your intention is to achieve a return on investment (ROI), it may be interesting to pay per specific action (CPA), especially if you frame it within a general affiliate marketing strategy.

How to design a profitable PPC strategy?

Returning to PPC, the truth is that for it to be a profitable system it is necessary to  analyze a series of factors very well before publishing the ad in a campaign on Google Adwords or on the main social networks:

  • Choose keywords. Obviously, you should select the keywords that best fit the product or service you offer. But it is not the only thing you have to value: their effectiveness is another fundamental question.
  • Set the maximum amount. This is a complex issue because the bid price is highly variable, depending on the keyword and other factors such as the location of the business. For example, the word “plumber” is not quoted at the same price for a company in a small town as it is for a business located in a large city like London or New York. Fortunately, there are PPC management services and tools like Google Adwords Keyword Tools or SEMRush, which give fairly accurate PPC references for different keywords
Published by Kidal Delonix (1061 Posts)

Kidal Delonix is a contributor to Mr. Hoffman's blog. The views and opinions are entirely his/her own and may not reflect Mr Hoffman's views.

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