How Does PPC Work?

Pay-per-click (PPC) is a powerful marketing strategy where an advertiser pays when users click on online ads. For many advertisements, the advertiser pays for views on an ad or how many conversions the ad produces. Although PPC is a popular paid advertising strategy, many people wonder, How does PPC work? In this blog post, we provide an overview on PPC advertising. For starters, let’s address that pressing question.

How Does PPC Work?

With PPC, there are three parties involved–advertisers, publishers, and PPC networks. The advertisers are people who want to promote their products or services using PPC. They have to pay the middleman or PPC network (Google Ads, Facebook Ads, Bing Ads) to display the adverts. This method can be incredibly helpful in boosting sales. It’s estimated that 63% of shoppers click on Google ads before they make a purchase. This means there is a great chance people will purchase your product if they like what they see in your Google advertisement.

How Much Does PPC Cost?

Just like with most marketing methods, the cost of PPC ads is a primary concern for business owners. The amount you pay per click will depend on your competition and the keywords you’re targeting. However, no matter if you’re a startup business or a seasoned veteran, you can set an appropriate budget for your campaigns. This is because PPC is a customizable strategy, and you can increase or decrease the amount you spend on the ads. Besides that, you can set how much you’re willing to pay when someone clicks on the ad.

PPC for Less Competitive Industries

In less competitive industries, you may be able to pay a few cents per click. However, for industries like rehabilitation, insurance, and legal you can pay hundreds of dollars per click, in some situations. Most ad networks allow you to set a budget to control the costs, but this may not lead to sufficient marketing. This is because the advertising network will almost always show the business who is paying more. Another factor that affects the cost is the quality score. This is a combination of a landing page, click-through rate, and the keyword that triggered it. If your ad has a high quality score (QS), you will spend less to earn the top position.

It’s important to note that Google Ads are typically more expensive than Bing Ads. However, they can be more effective. Google uses a simple formula to calculate how much you earn per click. They take the rank of the ad below yours divided by your quality score +0.01. There are also many aspects you can control as you run your ads. These elements include your competitor’s ad quality and their max bid. A normal annual PPC budget can easily be $100,000+ for a business. It’s not uncommon for a small businesses to spend about $5,000 a month while large businesses may spend up to $500,000 per month.

How to Lower the Cost of PPC Advertising

If you want to lower the cost of your PPC advertising, you should make sure your PPC ads are relevant. In other words, make sure they relate to the keywords you are putting money towards. Apart from that, you must lower the bids based on devices, locations, and times. You should also consider which is your best-selling day. This means, which day do you see the most success from? Also, which locations bring more traffic? Which devices perform better? These are factors to consider when refining your PPC campaign to save money.

What’s a Typical ROI on PPC?

The return on investment (ROI) on PPC is determined by factors such as competitors and the products being sold. Even the most experienced Google Ads managers will tell you that you should go beyond creating the campaigns to boost your PPC ROI.  You should use them to get long-term customers that you can work with for many years to come. However, ROI is an important factor for business owners.

How to Boost Your ROI

Generally, for every one dollar spent on PPC ads, you should expect a return on investment of two dollars. When trying to boost your ROI, the first thing you should look at is the account structure. You have to optimize the foundation of your PPC campaign. And, most importantly, keep your ad groups manageable. Don’t forget to eliminate the keywords with a low click-through rate.

Another important factor in improving your ROI on PPC is calculating the customer value. The customer acquisition cost is determined by the number of customers acquired through the campaign and the cost of your PPC. According to the latest statistics, PPC advertising yields 50% more conversions than traditional advertising. In other words, your customer value can be lower than other paid marketing methods. So, be sure to take this into account when trying to boost your PPC campaign’s ROI.

How Long Does PPC Take?

Another prominent question along with, “How does PPC work?” we get is, “How long does it take?” The time PPC takes to work will depend on your goals. If it’s your first PPC campaign, you should expect a minimum of three months to ramp up the results. This is enough time for Google to know you and your business’ value.

While you’d expect to hit the ground the first week, other factors affect performance. Also, since Google algorithms are complex, it takes time to be exposed to your campaign. You need to gather enough clicks to tell Google that your ads are relevant. When a campaign runs for a long time, it will generate the best results. So, what happens in the first three months? A lot happens within the Google Ads interface. The focus is mainly on adjusting keyword bids, testing ad extensions, experimenting with your audiences, and researching your competitors to boost performance.

What’s more, you should focus on numbers like conversions and ROI. Sometimes, it can take more than three months to analyze your PPC optimizations. You may want to invest more time to get accurate data and grow your business. If you’re working with an account manager, it takes one to two weeks to launch an account. So, try to be patient, even though this is easier said than done. And according to some sources, it can take as much as nine months to fully optimize your PPC campaigns for optimal results.

What are the Various Ways of Doing PPC?

Whether you run a small business or an established one, PPC can be a game-changer. It all starts with the right practices for improving your ROI. But, how do you run your PPC ads for your business? Let’s jump right in!

Display Ads

Display ads often include a photo and a text. They appear on Google’s partner websites and help to reach out to people interested in your business. Your keyword should focus on people who visit similar websites to yours. This is the best approach if you want more people to discover your brand. Remember, Google must approve your ad copy, or it will get denied. So, follow the policies they have in place to ensure you get approved.

Social Ads

This is a type of PPC campaign where ads appear on different social media platforms like Facebook, Twitter, Instagram, LinkedIn, and Pinterest. Before you run your campaign, you should do some research on which platform your audience visits the most. Social media ads can be the most effective PPC options out there if you use the right platform.

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Search Ads

These PPC ads appear on the top or bottom of Google or another search engine. They contain texts with no visuals. First, you should choose the keywords that trigger the ads to appear on the search results. Use long-tail keywords because they drive more leads to your business. Don’t forget to set the minimum and the maximum amount you’re willing to spend when someone clicks on the ad. This will ensure you stay on budget and spend only what you are comfortable spending.

What’s the Difference Between Google and Bing PPC?

Google accounts for 65% of search while Bing takes 33% of the market share. While both platforms perform the same way, they are different. Bing allows advertisers to set a daily or monthly budget while Google allows you to set the budget daily.

If you want to boost your ROI on PPC ads, you may want to work with a marketing agency that deals with PPC campaigns. And because you pay the provider when the user clicks on the ad, you can build your business without wasting money if for some reason no one clicks on your ad.

Conclusion

Pay-per-click advertising is a powerful method of attracting more conversions. If you have room in your marketing budget to practice PPC, we suggest doing so. Hopefully, after reading this blog post, all your main questions about PPC will be answered, and you can even give other people an overview of how it works. If you ever do have any additional questions about how PPC works, please feel free to reach out to us, or read our other blog posts on this topic.

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