PPC advertising is a term that refers to paying for one click on an advertising banner or ad. The metric is used in an advertising model called PPC (Pay Per Click). The advertiser pays money for the user’s active action – clicking on an advertising link to the site’s landing page.
The PPC model is beneficial for advertisers. They only pay for those users who have shown interest in their offer. Those who clicked on the ad are considered a warmer audience than those who just viewed the ad.
Pay-per-action advertising models are mainly used in contextual advertising.
How Pay-Per-Click Advertising Works
The advertiser chooses one of the sites specializing in online advertising (I will discuss them below) and submits an advertisement. It is checked for quality and put into operation.
The user sees a banner or text google ads prompted to click on to learn more about the product/service or make a purchase. If the user clicks on the link, the system records the click and charges the advertiser a fee.
There are two ways to pay per click: flat fee and auction. A fixed amount is when the advertiser assigns PPC on their own and pays precisely this amount. The auction is used mainly in Google contextual advertising – the advertiser sets the upper threshold for Pay per click in the campaign. An internal auction takes place in the system. Based on its results, PPC is set.
Where Is PPC Advertising Used?
Several powerful platforms specialize in advertising, including pay-per-click advertising.
- Ads in search results. This is one of the main types of contextual advertising when the user is shown ads next to the effects of his query. Most often, ads are at the top or side of the page. When a user performs a target action, the search resource receives payment.
- Advertising on partner sites in the contextual display network of search resources: Google has this display network such networks include millions of sites and mobile applications, the owners of which have entered into a special agreement and allow advertising on their resources. According to Adwords, the Google Display Network covers 90% of all resources on the Internet.
- When an advertiser submits an ad to the network, the system looks for suitable thematic sites and places ads in the designated area. This model is considered less effective than search engine advertising because users need to go to a particular site to see it. Display networks are more likely to use pay-per-impression, pushing PPC to second place.
- You can work with networks on your own, but some agencies are ready to set up and run an advertising campaign for a fee.
- Advertising on sites participating in the CPA network. It is similar to the previous model. The only difference is that the intermediaries are not good search networks but special PPC advertising services. Site owners offer advertisers to place their ads. PPA translates as Pay Per Action – payment for an action (filling out a form, downloading a file, installing an application, etc.). This also includes the PPC model as one of the directions. There are a lot of such services, so there are unique ratings and reviews so that customers can choose the right intermediary.
How To Calculate Pay Per Click
PPC can be calculated using a formula. To do this, the Pay for advertising is divided by the number of clicks made by users.
For example, an advertiser pays for 1000 banner impressions for 40R.S. After 10 thousand images, users made 20 clicks. Let’s calculate how much one transition cost him.
According to the PPC formula, we multiply 40R.S by 10 (thousand impressions) – we get 400 R.S . We divide the result by 20 clicks and get the Pay for one-click – 20 R.s. Whether this is a good indicator or not depends on the scope of the advertiser and the product. But in any case, the main principle is always true – the lower the PPC (cheaper click), the more influential the campaign.
PPC statistics are often used to compare ad campaigns and understand which ad is more effective. Suppose one banner after 40 thousand impressions gave only 5 clicks, and the other after 10 thousand images showed a result of 30 clicks.
In that case, it is obvious which one worked better. It remains only to draw conclusions and determine the factors that the ad turned out to be more effective. This may be due to its placement settings or the creativity itself.
How To Optimize PPC Advertising
When placing ads with Pay per click, the advertiser cannot control the entire process since it depends on the system algorithms and user behavior. For example, with contextual advertising, the system automatically selects ads with the help of auctions that will be placed at the top of the search engine results page (there are many advertisers, but there are only 4 vacancies) and sets the bid.
But some indicators can be adjusted independently. So, you can set the upper and lower bid limits, the area for advertising on the partner site, and create an attractive creative, and a high-quality page that the link will lead to.
You can choose to automatically set up your ad campaign on many platforms. Still, it’s much more efficient to set it up manually.
What indicators affect the Pay per click (PPC ) :
- The frequency of search queries for the exposed keywords. The higher the frequency, the greater the reach of the audience and the higher the competition, which means that the Pay per click increases.
- User response to an ad (CTR) — the more actively users react to an ad and click on it, the more often the system shows it and the cheaper the click. User behavior depends on the quality of the content: ad design, well-formed offer, and call to action.
- The specifics of the industry and the saturation of the niche. In destinations with high competition and many players, the Pay per click will always be higher.
PPC is the most important metric in the online advertising model. This is the first stage of the conversion, where a passive user turns into an active one and demonstrates their interest. This is a global transition from a simple viewer to a potential client.
It is important to analyze all the indicators related to a click on an ad, including Pay Per Click.