Pay Per Click (PPC) is a form of advertising usually found on search engine results and general websites. For PPC’s, the marketer will only pay if a prospect (visitor) actually click on your advertisement. For search engine PPC’s the marketer (you) specifies and bids on a list of keywords. Then, when a prospect surfing the internet searches on any one of those keywords in that list, that activity will trigger your ad in the sponsored listings. When a surfer (a prospect) types in a term, the search engine will display a page that are relevant to that term (keyword).
There are two types of search results:
Organic search results
These are the natural listings that appear through something called SEO (Search Engine Optimization). You do not pay for these listings, instead, you work to build your listing as high in the page results as possible SEO does not happen overnight. SEO happens over time because of a lot of consistent and diligent effort on your part. There are many techniques that you can learn to increase your visibility in the organic listings.
Sponsored search results.
We call these Pay Per Click (PPC). Advertisers (you) can use PPC to drive tons of traffic quickly - if you are willing to pay for it. With PPC, the advertiser (you) will only pay if the surfer (your prospect) clicks on the advertisement (your advertisement). When you see sponsored results on the page (usually the right side of the page in Google), the advertisers are not paying because their ad displayed. The advertiser (you) will only pay if a visitor ‘clicks’ on your link (which will take the visitor to your landing page (or whatever page you have the ad linked to). As an advertiser, you want to bid on as many ‘high converting’ keywords as you can which will trigger click throughs to your site.
What is the Click Through Rate?
Click Through Rate (CTR) is the percentage of people who actually click your ad when it is seen. An ad that is displayed, and seen by a visitor, is called an impression. So when someone types in a key word, and then if your ad is triggered so that it appears in the search engine listings, it will be called an impression. For example, if there are 100 displays (impressions) of your ad, and 4 people actually click on your ad, then your CTR will be 4% (that would be considered a pretty good CTR.
How does ad placement work with PPC for Google and Yahoo (most important Search Engines).
Ad placement typically goes to the highest bidder, in Google and Yahoo it is more complicated. Your ability to secure the position you want in the page ranking depends on a combination of the following. Bid price (how much you are willing to pay). Quality of your advertisement (is it relevant to your landing page?). Quality of your landing page (does it deliver what your advertisement implies and does it follow certain guidelines, e.g. ‘keyword density’). Effectiveness of the ad you write. In other words, do people tend to ‘click’ on your ad when they see it? The search engine likes that, because that is how they make their money.
The good implication:
People who are newer to internet marketing with smaller budgets can actually compete effectively for high positions (listings positions) on the search results. Small players can be rewarded for quality score and size of budget is irrelevant, so write good ads and have high quality content. In order to get a higher CTR means that you have lots of impressions and good placement. Getting lots of that means that you sometimes have to spend more than you would like.
In conclusion, make your focus on High Quality and Relevant advertisements. Make your focus on High Quality and Relevant landing pages. You will find that Google will reward you by lowering the price you have to pay for your bids. Keep in mind that Google manages more than 53% of all internet searches, Yahoo more than 28%, that is a total of 81% of all the total traffic on the internet world wide.