Beyond the Basics Pay Per Click Advertising

by Conrad Saam

Pay per click, or PPC, is a common method of paying for advertising impressions. People who advertise via PPC only pay when someone clicks on their ad. Google AdWords is the largest PPC provider due to their massive reach.  The other major players are Bing (Microsoft) and Yahoo.

The Quality Score
In the early days of PPC advertising, the advertiser who appeared the highest was the one with the highest per-click bid. But now your ad ranking is determined by both your per-click bid and your Quality Score. For each keyword you bid on, you’ll get a Quality Score (QS) between 1 and 10. Your ad ranking for each keyword is based on factors that include both the pay-per-click bid and the quality score for that keyword.
The QS is the search engines’ way of favoring ads that have a high click-through rate. Those ads are favored, both because people click on them (which makes them money) and because they’re likely to be the most relevant ads (which also makes them money). They also want to avoid favoring ads that nobody clicks on or that turn out to be misleading, because that harms the AdWords brand. The QS helps Google to make sure that ads are both relevant and high-quality – that is, so that visitors who click on an ad get to a landing page that satisfies them.

How is QS Calculated?
As with the engines’ methods of determining which pages rank for given queries, the search engines deliberately keep the inner workings of the quality score secret as proprietary information. But Google has released the following list of factors that affect the QS:
• The click-through rate for the keyword and the ad on Google.
• The click-through rate of the ads and keywords in your account.
• The click-through rate for display URLS in that ad group.
• The quality of the landing page that your ad leads to.
• How relevant the keyword is to ads in the group the ad appears in.
• How relevant both the keyword and the ad are to the search query.
• How your account performs in the same region of the country that your ad shows.
Make no mistake: pay per click marketing is hard, and most of the reason for that is tied to the Quality Score.

Account Structure
Below, I’ll describe the basic structure for running a pay per click campaign.  I’m using Google as the example here – both Yahoo and Bing have very similar approaches, although some of the vernacular is different. 

Google AdWords follows a particular structure: Your account includes campaigns, which are broken down into ad groups, which are further broken down into Keywords & Ads, like so:
Account > Campaigns > Ad Groups > Keywords & Ads.

For each campaign, you get to select for your ads both where and when they will appear.  The “where” is very important – geotargeting ensures your ads will only show up to searchers within your geographic area.  For example, there are 193 restaurants across the country with “Vinny’s” in the title. There is no need to bid for clicks for Vinny’s Italian Restaurant outside of your restaurant’s immediate area. Then you choose the keywords that trigger each ad at the Ad Group level. You also designate what page those users who click on your ad will land on.

Don’t make the mistake that many advertisers make: being generic. You don’t want to just come up with a huge list of every keyword you can think of and connect each to one piece of ad copy, then send every user who clicks on your ad to your home page. You’ll do a lot better if you have more than one piece of ad copy and attach different groups of keywords to different pieces, and send clickers to the most appropriate pages on your site.

By creating more than one ad group, you can match the most relevant ad copy with the best keywords for it, and send those who click on your ad to the most appropriate landing page for what you hope they’re looking for. Doing so will raise your click-through rates and QS, which means that you rank higher and pay less. You’ll also win more genuine interest for your restaurant.

Tips for Good Ad Copy
• Capitalize the first letter of every keyword in your ad. This increases the click-through rate for that ad.
• Use your keyword in your ad copy. This also increases your click-through rate, because if a searcher uses that keyword in a Google search, it will be bolded in your ad.
• Create different versions of your ad. This way, you can perform A/B testing on each ad. A/B testing is the process of scientifically finding out which ads generate more interest.  

What Are Content Network And Search Network Ads?
Your ads can appear in front of potential customers in one of two ways. They can show up in searches, so that when a user types in a query, your ad shows up in the list of results for that search. Or they can appear when users are browsing a website, through Google’s content network. Content network ads appear spliced in with the website’s content.

Make sure you separate your content network ads and your search ads at the campaign level in Google AdWords. The two types of ads may not sound very different, but they perform very differently. And content network ads may sound like a good deal, but that doesn’t mean they always are. They can waste a ton of money and you might be better off avoiding them altogether if you aren’t able to track their performance.
In fact, you can waste a lot of money on any ad if you can’t track its performance. Whether you do the tracking or have a professional do it, it’s worth it. Otherwise, you won’t know whether your ad is costing more than it’s worth to generate leads. If you think beforehand about how much you’re willing to spend in order to generate leads or clients, you can compare your ad’s performance to that target and know when you’re exceeding it.

Conrad Saam is the Director of Marketing for Urbanspoon, the widely popular restaurant review and reservation site and top 25 downloaded iPhone application. His columns have appeared in Search Engine Land, Law.com, ClickZ, Technorati, and Search Engine Strategies Magazine.  He is an ardent advocate of in-sourcing technical marketing.  He tweets @conradsaam.