Are You PPC Curious? An FAQ for PPC Beginners and Hopefuls

Any questions?

If you’ve been considering taking the plunge into PPC marketing, and you have some basic – very basic – questions before getting started, look no further. Here you’ll find answers to 10 frequently asked questions from PPC beginners and hopefuls – that is, people who have heard of pay-per-click marketing and Google AdWords, but don’t know much else.

Naturally, if you have a beginner question that isn’t answered here, let us know in the comments and we’ll do our best to help you.

Table of Contents

1. What is PPC marketing?
2. Nobody clicks on ads, so why have them?
3. Why do people click on AdWords ads?
4. Why use pay-per-click marketing?
5. What type of businesses should be using internet advertising and why?
6. How does Google AdWords work?
7. Why is Facebook’s click-through rate less than Google’s?
8. Why does sponsored search have higher CTR than banner ads?
9. Why is Google PPC bigger than Bing/Yahoo PPC?
10. How much does Google AdWords cost?

Keep reading to find out the answers!

What is PPC marketing?

PPC, or pay-per-click marketing, is a form of web advertising that allows companies to place advertisements in search results or elsewhere on the web, paying only when somebody clicks on an ad, rather than paying for impressions.

There are two main types of PPC:

• Search engine advertising: Advertisers bid on keywords in order to have their ads appear in the search engine results when somebody performs a search that is relevant to their business. It’s a brilliant system because the search query provides a strong indication of what the searcher is looking for, so advertisers can focus their marketing dollars on the audience that is mostly likely to buy from them, rather than broadcasting a message to a very general, unspecified audience (as in traditional TV, radio, or magazine advertising).
• Advertising on partner networks: You can also place ads (both text ads and display ads, or banner ads) on a large network of partner sites. These tend to be less targeted than ads tied to particular keywords, but they are also cheaper (i.e., have a lower cost per click). (Remarketing campaigns, however, are highly targeted, because they show display ads to a specific audience that has already visited your website.)

PPC marketing is a “pay to play” way to get exposure in search engine results. Organic search engine optimization (SEO), on the other hand, consists of efforts to “earn” a free spot on the SERP. Both SEO and PPC have advantages and disadvantages, and most businesses will find that a mix of both marketing channels (along with other methods of lead generation) works best.

Nobody clicks on ads, so why have them?

Au contraire! This is a pervasive myth, fueled by all the people who go around loudly claiming “I never click on ads!” I’ve personally never understood why this would be a point of pride, as if clicking on an advertisement means you got duped somehow; it’s not like you pay to click an ad, the company doing the advertising pays! In any case, the evidence suggests that many of the people who claim “never to click ads” either don’t realize that some of the results they are clicking are ads, or they’re lying. Here’s some of that evidence:

• Almost all of Google’s substantial revenues (97-98% of its annual revenue, over $40 billion in 2012) comes from advertising. That means, you guessed it, someone is clicking on ads.
• For search queries with high commercial intent, sponsored results (AKA ads) can take up to twice as many clicks as organic results. Most search queries are informational or navigational in nature, so most clicks overall still go to organic results. But for queries that show intent to buy, ads get a lot of space on the SERP and they do get plenty of clicks.
• If there is no right-hand column, almost half of people (45.5%) can’t tell the difference between organic and paid search results, according to one study.

Note also that search ads on Google have a much higher average click-through rate than the typical web banner ad. More on this below.

Why do people click on AdWords ads?

You can’t answer this question without a little speculation, because we’re talking about human motivation/psychology. Leaving aside the small percentage of clicks that can be attributed to click fraud and accidental clicking, here are some of the reasons that Google users might click on an AdWords ad:

• They don’t know it’s an ad. See above. Some users can’t tell the difference between paid and organic results, and they wouldn’t be doing a web search in the first place if they didn’t intend to click on something.
• The ad is the most relevant result for their query. If the searcher is looking for a specific product or service, with clear intent to buy, an ad could well be the best “answer” to their “question.” Product listing ads, which include a picture of the product in question, can be especially appealing, because they show you exactly what you’re looking for. Google’s Quality Score system works to make AdWords beneficial for everyone – if Google serves up only the best, most relevant ads, they are more likely to be clicked, which is a win-win-win situation for advertisers, searchers, and Google alike.
• The ad catches their attention indirectly. Sometimes an ad is served that is only indirectly related to the searcher’s query. Or they may not be searching at all – they may see an ad on the content network (while they are checking their email or reading a news article, for example). Nonetheless, the ad might be relevant to their interests.

Any of these reasons could work for your benefit, but the safest path to success as a PPC advertiser is to try to make your ad the most relevant result for the search query. Then they’ll have no reason not to click.

Why use pay-per-click marketing?

There are many good reasons to use PPC. We recently provided 10 of them:

1. It’s scalable
2. It’s measureable
3. It’s flexible
4. It’s faster than SEO
5. It’s (usually) easier than SEO
6. It’s taking over the SERPs
7. It’s engaging
8. It converts
9. It’s complementary to other marketing channels
10. Your competitors are doing it

You can read more about these 10 reasons here. Like any marketing channel, PPC has a learning curve, but once you get the hang of it, it can be a highly cost-effective and dependable source of leads.

What type of businesses should be using internet advertising and why?

Almost every type of business should be using some form of internet advertising, because that’s where the people are! Some of the business types that can benefit especially from PPC include:

• Business with high customer lifetime values like dentists and doctors, online degree programs, and cable and internet providers.
• Businesses with high margins like lawyers, repairmen, and sellers of big-ticket items like appliances and cars.
• Businesses that sell hard-to-find products, which people often order rather than looking for in brick-and-mortar stores.
• Businesses with a wide, diverse array of products like Amazon, eBay, Target, and department stores. 
• Seasonal businesses like florists and gift baskets.

But, again, the internet is for everybody, and whatever your business, there’s probably a form of internet advertising that you should be taking advantage of.

How does Google AdWords work?

Google AdWords is basically an auction system, where advertisers bid on keywords in order to place their ad in the search results when people search on terms related to those keywords. However, it’s an auction where the highest bidder doesn’t always win – Google awards higher ad placements to advertisers with high-quality, relevant, well-organized ads and campaigns, not just those that spend the most money.

We created an infographic that illustrates in more detail how this auction system works. Click to see the full-size infographic:

Why is Facebook’s click-through rate less than Google’s?

The average CTR of a Facebook ad is around 0.05%. The average CTR of a Google display ad is around 0.4% — almost 10 times higher. Search ads have even higher CTR, around 2%. There are any number of reasons why Facebook’s ad CTR might be comparatively low:

• Facebook’s ad formats are more restrictive and less engaging than Google’s.
• Facebook ads are more obviously ads, whereas Google ads blend in more seamlessly with the organic results.
• People are not in shopping mode when using Facebook.

However, none of this means that you can’t make Facebook advertising work for you. For expertise in that area, check out the aimClear blog.

Why does sponsored search have higher CTR than banner ads?

As mentioned above, the average CTR of a search ad is around 2%, while the average CTR for a banner ad is 0.1-0.2%. That means that search ads get 10 to 20 times more clicks for the same number of impressions. The reason is that search ads are more targeted. The keyword bidding system (along with negative keywords) allows advertisers to control when and where their ads appear, focusing on audiences that are more likely to be interested in what they’re selling. Banner ads are generally less targeted, and people are more likely to tune them out.

Why is Google PPC bigger than Bing/Yahoo PPC?

Google PPC (AKA AdWords) is bigger for the simple reason that Google has a greater share of the search engine market than both Bing and Yahoo. Currently Google has 83.85% of the global market share. In the US, it’s close to 70%. For this reason, many PPC advertisers focus all their efforts on AdWords. However, by using adCenter as well, you can access that other 30% of the market, often at lower costs.

How much does Google AdWords cost?

As much as you want it to, essentially. You can set your own AdWords budget, depending on your overall marketing budget. You can spend as little as a few hundred dollars a month; the minimum to get started with AdWords Express is a rather absurdly low $50.

There are a few things to keep in mind when determining how much to spend on AdWords:

• There may be a tipping point that you have to cross in order to turn a profit. Sometimes you have to spend more to get more.
• If you want to hire someone to manage your PPC, you’ll have to spend enough to justify that cost. It doesn’t make sense to hire a PPC manager at $50K a year if you’re only spending a thousand dollars a month on PPC, obviously.
• There’s no reason to arbitrarily cap spend on profitable campaigns. If you create some test campaigns and find that you’re getting ROI from PPC, you might as well spend more to make more.

Some companies spend literally millions of dollars per month on AdWords, but there’s plenty of room in the middle for smaller businesses to play too.

This post originated on the WordStream Blog. WordStream provides keyword tools for pay-per click (PPC) and search engine optimization (SEO) aiding in everything from keyword discovery to keyword grouping and organization.